Expanding infrastructure helps Gabon's economy grow

With improvements to the road, rail, shipping and aviation networks a key government goal, Gabon’s transport sector is undergoing a major transformation. While population pressure is modest, with around 1.7m people in the country, existing links are limited; the two largest cities, Libreville and Port-Gentil, had, until work began on one recently, no road connection. Beyond improving internal connectivity and expanding capacity at international gateways such as the Port of Owendo and Libreville’s Léon M’ba International Airport (LMIA), the improvements are also a key part of the Emerging Gabon Strategic Plan (Plan Stratégique Gabon Émergent, PSGE), which aims to boost activity in the industrial and services sectors.

Spending is determined in large part by the country’s National Infrastructure Master Plan (Schéma Directeur National d’Infrastructures, SDNI), which was launched in June 2012, with an increasing emphasis – in part due to budgetary constraints following the drop in the price of oil – on private sector participation, building on a handful of existing concessions and public-private partnerships (PPPs).

The SDNI aims to improve connectivity between the country’s main cities, notably Libreville and Port-Gentil, with the goal of bringing infrastructure up to international norms. It also intends to increase rail capacity for transporting both passengers and minerals out of the interior. The plan outlines 21 key projects to be carried out by 2025 in various sectors including energy, telecoms, transport and tourism. However, due to budgetary constraints, there is now an increasing emphasis on private sector involvement.

Government Priorities

Increasing the quality and efficiency of transport infrastructure is a priority for the government, particularly as it tries to improve connectivity to more remote regions where it is seeking to promote both agro-industrial and mining activity. In addition to expanding and improving the road network – the primary method for internal trade, travel and distribution – the government is also working on developing air transport by expanding the airport in Libreville in the coming years. The airport in Port-Gentil, the country’s second-largest city and economic hub, is also being revamped to accommodate international air transport.

As for maritime transport, the government continues to work on upgrading river ports and improving sea ports to increase efficiency. Upgrades to the country’s railway are also under way. However, with capital expenditure down by CFA47.1bn (€70.7m) to a total of CFA596.7bn (€895.1m) in the 2015 state budget (see Economy chapter), Gabon will have to rely increasingly on external financing to advance major infrastructure projects.

Oversight

Created by the government in 2010, the National Public Works Agency (Agence Nationale des Grands Travaux, ANGT) oversees all public building projects in the country. The ANGT, a collaboration between the government of Gabon and US firm Bechtel, aims to implement priority infrastructure projects outlined in the SDNI, part of the government’s Emerging Gabon plan. It is seeking out partners from the private sector, while international institutions such as the African Development Bank and the World Bank are also investing in Gabon. The government is working to develop a PPP framework, and at present PPPs are governed by sector-specific regulations, with the ANGT providing oversight.

In July 2015 the Council of Ministers decided to abolish the ANGT and create a new agency to replace it, the National Agency for Public Infrastructure Works (Agence Nationale des Grands Travaux d’ Infrastructures, ANGTI), which will also encompass the Road Fund (Fonds Routier, FR), the body previously responsible for the construction and maintenance of roads. The ANGTI will assist the government in implementing policies for major infrastructure projects. Further details were unavailable at the time of press.

Road Network Expansion

Unsurprisingly, road activity remains the primary method of moving people and goods in Gabon, as is the case in many markets in Africa. “Road transport is the most important sector for economic development in Gabon. Enhancing the road network reduces distances, brings people together and opens the country to economic opportunities,” Jean-Félix Edjodjom’ondo, transport specialist for the African Development Bank (AfDB), told OBG. Gabon currently has a 10,130-km road network, up from some 9000 km in 2013, with around 2000 km of roads paved by the end of 2014 – roughly double the length of the network in 2009, when it was less than 1000 km. The government’s goal is to have a total of 3600 km of paved road by 2016, with an additional 2500 km between 2017 and 2025, increasing the country’s total length of paved roads sixfold from 2009 to 2025. The overarching objective is to make the country’s interior more easily accessible.

One of the key platforms outlining the priorities for road upgrades is the Development of the Road Network Programme (Programme d’Aménagement du Réseau Routier, PARR), which was launched in 2002 with the aim of building and modernising 2500 km of roads by 2015. There are a number of projects under way or in the planning stage to improve road connectivity, including a CFA585bn (€877.5m) initiative to build the first inland link between Libreville and Port-Gentil (see analysis). Another key intercity connection under way is the final 97-km section of the N4 connecting Franceville to the main road network between Laleyou and Lastourville, which was upgraded and paved in 2014 at a cost of CFA68bn (€102m). The second phase, launched in 2011, is ongoing and aims to improve access to the south-west of the country.

Work on the 91-km stretch of the N6 between Ndendé and Tchibanga, funded by FR, began in 2013 and is expected to finish in July 2017 at a cost of CFA70bn (€105m). Meanwhile, the ANGT is upgrading the section of the N1 between PK12 and Ntsilé, with work divided among four separate contractors. The first stretch, between PK12 and Ntoum, is carried out by Ceddex and will see the road widened to accommodate double lanes of traffic, easing congestion into Libreville. It is due to be completed in November 2015 at a cost of CFA178bn (€267m).

An 18-km section from Kougelou to the Agoula bridge is scheduled to be completed in 2015 by Acciona at a cost of CFA29bn (€43.5m), while the 20-km stretch between the Agoula and Como bridges was carried out by Colas at a cost of CFA27bn (€40.5m).

Additional ongoing road projects include the 30-km stretch between Moanda and Bakoumba. Work is being carried out by Sinohydro and the CFA15bn (€22.5bn) cost is being financed by the FR. The project is due to be completed by November 2016. Meanwhile, the 106-km section between Tchibanga and Mayumba, funded by the state at a cost of CFA167bn (€250.5m), is expected to be completed by October 2015. The Tchibanga connection is crucial to the aim of establishing Mayumba as a major mining export port. All of these projects are part of a state plan to improve access to the interior of the country and connect all the provincial capitals.

Road Maintenance

Maintenance has traditionally been a challenge for Africa’s infrastructure, and Gabon is no exception in this regard, but in recent years the country has sought to ringfence funding to maintain the quality of its roads. The responsibility of maintaining roads throughout the country lies with the FR, which has a separate budget for maintenance in addition to funds allocated for investment in new road projects. Created in 2012, the FR replaced the Second Generation Road Fund, established in 2006.

The FR’s investment budget for 2014 fell by 39% year-on-year (y-o-y) to CFA147bn (€220.5m), reflecting an anticipated reduction in the number of infrastructure projects as well as lower oil prices, since one of the primary sources of funds is a tax on gas. The 2014 maintenance budget was CFA37bn (€55.5m).

As part of the government’s broader push to improve local content policies, it has sought to boost the capacity of local firms to provide maintenance services, which should not only reduce costs but also improve job creation. In 2015 infrastructure firm Louis Berger was awarded a $2.7m EU-funded contract to train some 20 small and medium-sized enterprises (SMEs) on road maintenance and monitoring. Part of the Sector Governance Support Programme, the contract is the second one awarded to the firm, which was also involved in providing institutional capacity building for road maintenance from 2007 to 2012.

Toll Roads

Financing has been a constraint on the implementation of road development projects in Gabon, and with the pressures on the state budget, this is unlikely to change in the near or medium term. Gabon does benefit from substantial support from development finance and multilateral institutions for its road upgrades, but nonetheless challenges in tapping funding sources have led to delays or slowdowns on a number of projects.

Work on the 71-km section of the N1 between Mouila and Ndendé, which began in 2012, was stopped due to a lack of financing. The third section, a 36-km road connecting Port-Gentil with Mandarové, is also on standby. While the AfDB agreed in 2011 to finance this phase, the agreement was cancelled when the government failed to meet the loan requirements within the 18-month limit. The 16-km stretch between Ntoum and Kougelou, undertaken by SOCOBA, has also been delayed beyond the anticipated 2015 completion date. To help address this, the country is exploring the potential of PPPs, including a toll system soon to be established on the exit road from Libreville. This is set to boost funds available for road construction and maintenance in the coming year, following a study on the feasibility of a toll system conducted in 2014 by the FR. One toll station will be set up by 2016 at the entrance to Libreville on the N1, some 50 km outside of the city. By 2016, 20 vehicle weighing points will also be established.

Key Ports

Given Gabon’s limited ability to meet some aspects of domestic demand, such as food staples or industrial equipment – a common challenge in many emerging markets – it is heavily reliant on imports for consumer goods and technical supplies. As a result, ensuring sufficient maritime capacity is of vital importance. Two major ports, Owendo and Port-Gentil, handle 80% of Gabon’s imports and exports. Located 15 km south of Libreville, Owendo handles the majority of imports, while Port-Gentil deals mostly with exports, primarily oil. Both are managed by the Ports and Harbours Office of Gabon (Office des Ports et Rades du Gabon, OPRAG) and Gabon Port Management (GPM). OPRAG is a state agency charged with overseeing and monitoring maritime ports. GPM, a subsidiary of Singaporean firm Portek International, signed a 25-year concession in 2007 for activities including infrastructure maintenance and dredging.

Owendo is the most important port in Gabon with nearly 75% of the country’s commercial trade. It has a 455-metre-long quay with an 11-metre draught, an 8-ha yard for general cargo, a 10-ha container yard and three berths, one of which is solely dedicated to oil products. Société des Terminaux de Conteneurs de Gabon (STCG) is responsible for operating Owendo’s container terminal, which has a capacity of 4000 twenty-foot equivalent units (TEUs), as well as handling domestic distribution, ship loading and goods storage. STCG is a joint venture between Bolloré Africa Logistics and Necotrans Gabon, and entered into a concession agreement with OPRAG in 2007 for the exclusive use and management of Owendo’s container terminal for 20 years.

Port-Gentil’s commercial port is the primary exit point for Gabon’s hydrocarbons exports. The port’s main quay is 375 metres long and has a draught of 11 metres. The port also has a fishing quay as well as a 10-ha container yard. The majority of Gabon’s exports of hydrocarbons pass through the Cap Lopez terminal, which is operated by Total Gabon. This oil terminal has the capacity to receive 300,000-tonne ships and store up to 640,000 cu metres of goods.

Port Traffic

Maritime traffic in Gabon is increasing, according to OPRAG, with the combined number of ships at quay in Owendo and Port-Gentil reaching 610 in 2013, the latest year for which figures are available, up 17.8% from 518 in 2011. The quantity of imports passing through the two main ports in 2013 was up by 23% y-o-y, with construction materials up 61.3% y-o-y and food products growing by 17.9%. As for outbound freight, these key ports saw an increase in 2013 of 26.9% y-o-y, primarily reflecting energy product exports, which grew by 81.8% y-o-y. The total freight tonnage coming through the ports in 2013 reached 4.46m by the end of September, up 16.1% y-o-y. While freight tonnage through Owendo rose 16.7% y-o-y to 4.2m in 2013, Port-Gentil saw a 5.7% y-o-y decrease to 226,528 tonnes in 2013.

Looking ahead, the industrialisation of agriculture and the 2017 Africa Cup of Nations (Coupe d’Afrique des Nations, CAN) are both expected to drive growth in the medium term, although volumes are forecast to fall by around 10-15% in 2015, due to the decline in purchasing power brought about by the drop in international oil prices and the sharp rise in the value of the dollar. All of the shipping lines serving the country are reporting a drop in volumes on headhaul trade into Gabon, although exports, particularly of wood, have remained strong.

Port Expansion

Insufficient port infrastructure for current transport volumes has resulted in considerable congestion in Owendo. However, efforts are ongoing to enhance infrastructure and boost capacity. “The port’s recent equipment upgrades, such as the new cranes, have allowed the port to substantially reduce waiting times,” Oswald Séverin Mayounou, the managing director of GPM, told OBG. In 2013 construction began for a new 500-metre quay with a 13-metre draught. The structure will serve container ships on one side and bulk cargo ships on the other. UAE-based Divers Marine Contracting initially estimated the project at a cost of $62m. However, completion of the works, which was expected by mid-2015, has been delayed. Meanwhile, preliminary feasibility studies have also been carried out on implementation plans to extend the main quay.

Libreville was previously home to another port, Port-Mole, dedicated to smaller vessels, primarily fishing boats. It had a 280-metre-long quay with a 3-metre draught. A CFA120bn (€180m) redevelopment project shuttered the port in 2013 with the objective of building a new marina and expanding the site with hotels, office buildings, and retail and leisure space. The project, undertaken by China Harbour Engineering Company, has been delayed since mid-2014, when its financing plan underwent a review.

Deep-water port services in Gabon are poised to expand in the future. Studies are under way for the construction of a deep-water port in Mayumba, in the south-west of the country. The port will facilitate the export of resources such as iron, wood, oil, talc, gold and manganese, among others. A preliminary study suggested that the port could be built at a cost of around €260m. However, little progress has been reported on the project recently and there is not yet any specific timeline for development as implementation awaits the necessary funds and a company prepared to undertake the work. Long-term plans include linking the deep-water port in Mayumba to Mbigou with a railway connection. The port is also expected to receive passenger traffic, opening the region to potential tourism development.

Inland Maritime Connections

The plans for a passenger connection to the port in Mayumba will build upon the comparatively large number of inland waterway ports. Gabon extensive river network – which comprises an estimated 3000 km of usable inland water highways – sees significant activity, although much of it in the country’s interior is informal, with pirogues and small ferries plying the waters between towns. There are larger and more formal links as well, however, notably between Libreville and Port-Gentil, where no land passage currently exists, though a road connecting these two cities is under construction. The state-owned Compagnie Nationale de Navigation Intérieure et International ( CNNII) is responsible for operating the route as well as other maritime, river and lagoon operations in Gabon.

The company’s second high-speed catamaran running between Libreville and Port-Gentil returned to service in 2014 after undergoing refurbishment in Cameroon since 2010. Further projects to upgrade CNNII’s fleet, which included the rehabilitation and construction of five docks on the Ogouée River as well as a new river port at Lambaréné, are on standby since the AfDB funding programme was cancelled. In December 2014, the government made 55% of its shares in the firm available to the private sector in an effort to finance the entity privately. While Gabon has an estimated 3000 km of inland water highways, only around 20% are currently in commercial use.

Airport Infrastructure

Gabon has a relatively extensive aviation network, with a total of 35 public airports, including three international facilities. The National Civil Aviation Agency (Agence Nationale de l’Aviation Civile, ANAC) regulates and oversees air transport. A new civil aviation code aligning legislation with International Civil Aviation Organisation standards is still waiting for official signature.

There is plenty of potential for expanding capacity within the country, but the current focus is on the quality of air transport infrastructure, which received a 3.6 score out of 7 in the “2014-15 Global Competitiveness Report” published by the World Economic Forum (WEF), which ranked Gabon 109th out of 144 countries. As a result, several infrastructure improvement projects are set to enhance the country’s air transport network considerably, notably the modernisation and expansion of the Port-Gentil International Airport (PGIA), the country’s second-largest international gateway, with connections to Libreville and Pointe-Noire in the neighbouring Republic of the Congo. At an estimated cost of over $100m, the project is expected to be finished by 2016.

The upgrade includes a new 5800-sq-metre terminal, which is due to be completed by January 2016, though plans to further expand the facility to 9500 sq metres are already being considered. The airport’s runway will also be extended to 2600 metres in order to accommodate long-haul aircraft. Future plans include building an additional 3000-metre-long runway and updating the facility’s electronic equipment.

The Agency for the Security of Aerial Navigation in Africa and Madagascar (Agence Pour la Sécurité de la Navigation Aérienne en Afrique et à Madagascar, ASECNA) oversees operations at air transport facilities across the country, including PGIA and smaller airports in the provincial capitals of Tchibanga, Oyem, Koulamoutou, Makokou, Mouila, Lambaréné and Franceville. Up to 90% of ASECNA’s revenue currently comes from the management of PGIA.

The primary hub for air transport in Gabon is LMIA in Libreville. Aéroport de Libreville (ADL) has operated the airport under a 30-year concession contract for 27 years. The current contract, to maintain and develop LMIA infrastructure, is up for renewal in 2018. An extension project began in 2011, although the expansion of the facility is limited by its location as the space around the airport has become gradually overtaken by the development of Libreville. The northern stretches of the city’s outskirts – where the airport is located – are now a target for new housing and mixed-use projects.

With an eye towards dealing with expanding capacity at the airport, ADL carried out upgrades to the runway in 2014 and plans to make improvements to the taxi-way in 2015. More ambitious plans to expand the airport, including the integration of mobile gateways that can accommodate two aircrafts, hinge on the extension of ADL’s concession beyond 2018.

Air Traffic

The continuous rise in passenger numbers underlines the need for infrastructure expansion in the sector. Libreville’s airport has seen steady growth in passenger traffic over the past five years. According to ADL, Libreville saw a total of 24,655 commercial flights passing through its airport in 2014, up 1.1% y-o-y. The total number of passengers travelling through LMIA in 2014 reached 965,578, up 5.7% y-o-y. International passengers, excluding those from the Economic Community of Central African States (Communauté Économique et Monétaire des Etats de l’Afrique Centrale, CEMAC) region, increased by 6.4% y-o-y to 469,762. Of the total number of passengers in 2014, 304,212 were domestic (up from 279,265 the previous year), 92,749 were in transit (down from 103,518) and 98,855 were travelling within the CEMAC region (up from 89,126). While growth has been steady, traffic is expected to remain stable in 2015, with ADL anticipating a similar number of passengers as 2014. Numbers are likely to rise in 2016 and 2017, as Gabon prepares to host the CAN.

As the majority of freight in Gabon travels by ship, air freight traffic is relatively limited. LMIA is a point of passage for air freight traffic, although the flow has decreased 2.1% over the past five years from the record-high 20,097 tonnes in 2009 to 19,458 in 2014.

Passenger traffic through PGIA stood at 289,843, according to figures provided by ASECNA. The third-most-important transit centre for air traffic, Mvengué El Hadj Omar Bongo Ondimba Airport in Franceville, had 63,265 passengers in 2014. The total number of passengers in the eight national airports under the mandate of ASECNA, including PGIA, reached 376,734 in 2014. As for freight, a total of 3111 tonnes passed through airports in 2014.

Airlines

LMIA is currently serviced by a total of 16 national and international airlines. The year 2014 saw a few minor changes in air transport services. Afric Aviation, a regional airline based in Port-Gentil, suspended its services to Douala and Yaoundé in 2014 and the company launched a new connection to Sao-Tomé. Allegiance, a national airline, suspended its service to the northern provincial capital of Oyem. Meanwhile, Air France is planning to launch a new direct service between Paris and Port-Gentil twice weekly by 2016 in addition to its current daily service from Paris to Libreville. South African Airways is also looking to expand its service from Libreville to West Africa, but new plans have not yet been made public. The airline currently provides service four times per week to Douala and Johannesburg. In addition, three companies, DHL, Sky Gabon and Corex, currently offer freight services in Gabon.

Railway

The country’s single-line railway network plays a key role in transporting materials for many industries, notably timber, mining and construction, but its reach is currently limited. While it operates at reduced capacity, breakdowns have the potential to significantly impact activity in related sectors. Both the state and the operator aim to increase the capacity of the railway and rehabilitate the line. The need for upgrades is clear, with the quality of the country’s railway infrastructure scoring 2.4 out of 7 in the “2014-15 Global Competitiveness Report” published by the WEF, ranking it 76th out of 144 countries.

The only existing line is the Transgabonais, which extends over 658 km from the Port of Owendo, south of Libreville, to Franceville, in the south-east. The railway has been operated by Société d’Exploitation du Transgabonais (Setrag) since 2005 under a 30-year concession. Setrag is a subsidiary of the local mining company Comilog, which is itself part of the French mining group Eramet. The line carries both passengers and freight, but is operates at less than half its capacity, according to the International Finance Corporation (IFC). Mining transport makes up over 80% of the line’s volume, dominated by Comilog, which operates its own trains and pays Setrag an access fee.

The user fees paid by Comilog and other railway users are not sufficient to cover the costs of needed upgrades. Indeed, the average travel time from Owendo to Franceville has increased by 65% since 2007 as a result of trains having to reduce their speed to avoid the risk of derailment due to problems related to the line. To ensure the financial sustainability of the railway, a revised pricing structure is being considered, which would see mining companies and the state share the costs of maintenance and line renewal, as well as facilitating the running of the line at a higher capacity. The new access fee formula will be based on data setting out track maintenance costs as well as the expense of upgrading the line. Efforts are also being made to reduce operational costs.

Financial Rail Upgrades

Given the push by the government to expand mining activity and boost agro-industrial output from regions in the interior, the scope for expanding rail capacity is significant and Setrag has embarked on an ambitious investment campaign. According to local press reports, the government will provide a subsidy to finance the rehabilitation of rail platforms and bridges, while Setrag has also applied for a loan from the IFC to help fund its projects over the next five years, with an estimated investment of CFA205bn (€307.5m). These projects include infrastructure rehabilitation aimed at reducing transport time and doubling the railway’s transport capacity up to 16 trains per day from the current eight. The IFC is considering financing 50% of the overall investment programme, which is expected to be implemented from 2015 to 2022, on the condition that the concession agreement between the state and Setrag be revisited and a corporate reform plan be created to ensure Setrag’s financial sustainability.

If the loan is approved and work goes ahead, Setrag anticipates doubling its capacity by 2023. A new management team from Belgian company Vecturis, manager of several private African railway operations, is assisting Setrag in executing its reform plan over the coming four years. Setrag is also planning for the acquisition of new rolling stock. The company intends to add six newer shunting locomotives, the first new acquisitions since 2011. They are expected to be in Gabon by September 2015.

New Rail Lines

Future plans include the construction of two new railway lines covering some 300 km. The first is expected to connect agricultural zones in the south with a future deep-water port in Mayumba, in the south-west, stretching from the port to Mbigou. While plans for the port are advanced, the state is currently seeking a partnership to help fund the project. As for the rail connection, studies are under way, but no concrete plans will be developed until the port project is started. Both projects represent an important area for future growth in the sector, but Gabon will first need to secure financing or find investors before they can move ahead.

Access to the future rail line and port in Mayumba will be facilitated by a new 106-km section of road being built between Tchibanga and Mayumba, which is well under way and expected to be completed by October 2015. The CFA167bn (€250.5m) state project is part of the government’s effort to connect key transport hubs in the country.

Another plan for a new railway line will connect the existing railway to the Bélinga iron ore mine in the north-east of the country, facilitating the movement of resources from the mine to the capital city and the Port of Owendo, which is also being expanded. Construction of a new 500-metre quay at Owendo is being carried out to reduce congestion and facilitate transport to and from the capital city. Initially expected to be completed in 2015 at a cost of $62m, the project, which is currently delayed, is designed to enhance the port’s capacity.

Rail Safety Improvements

As road traffic has increased in recent years, the safety of level crossings has become a growing concern. An audit identified six crossings that will be improved with signals and automatic barriers, financed by the state. Another safety issue is the presence of squatters along a number of sections of the line, and the government is developing a programme to move them. In addition, the introduction of a semi-automated operation system is also expected to increase security in the network, as well as make operations run more smoothly and reduce the time lost at each station.

Urban Transport

Given the country’s high urbanisation rate, estimated at around 87% in 2014, and the fact that half of the population is concentrated in the cities of Port-Gentil and Libreville, the improvement of urban transport continues to be a priority for the government. The ANGT is working to implement plans to improve roads in major cities. Efforts have also been made to alleviate congestion in the capital. The renovation and widening of a 1.2-km road in the neighbourhood of Glass was completed in early 2014 by infrastructure company Acciona. The transformation of the road into a dual carriageway is helping to reduce travel times between the city centre and the industrial and port area of Owendo, in addition to easing circulation in the area.

Improvements to Libreville’s public transport are also helping to reduce traffic, notably a fleet of new buses purchased for CFA7.5bn (€11.2m) in 2014 from Brazilian manufacturer Marcopolo. However, further expansion of the bus routes is complicated by the structure of the city, which can only accommodate the larger buses in some streets and areas of town.

To maximise efficiency, the country’s transport authority is planning to widen streets and dedicate a special bus lane on main routes. A fleet of 100 new taxis equipped with meters, GPS, Wi-Fi, air conditioning and video surveillance was introduced by Société Gabonais du Transport, the agency responsible for public road transport in Libreville, in 2014 and will also contribute to intermodal connectivity.

Outlook

Substantial expansion of Gabon’s road network and improvements to existing roads will help open up the interior of the country and connect provincial capitals to major transport systems in the Libreville area. Meanwhile, expansion projects at the Port of Owendo and the Port-Gentil airport as well as the development of a public transport system in Libreville will help reduce congestion and expand economic development opportunities.

Planned upgrades to the railway system are also set to improve the state of Gabon’s transport network. Although a major overhaul of the transport infrastructure is currently under way, increased investment will nevertheless be required to move development projects forward. The government’s infrastructure focus will bring increasing opportunities for private sector involvement in transport projects across the country.

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The Report: Gabon 2015

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