Gabon, a country of only 1.5 million people, is packed full of natural resources such as oil and manganese, and has some of the most pristine rainforest in the world. Its relative stability compared with its neighbouring African nations such as the Democratic Republic of Congo, helped in part perhaps by French troops based in Gabon, gives the country another advantage.
Current figures available from United Nations Conference on Trade and Development’s World Investment Report show that FDI into Gabon has been steady since 2003 at about $200m to $300m per year (though 2009 showed a sharp drop due to the global recession). Though the figures are modest by world standards, the new entrants in Gabon over the past year mean its FDI projections for 2010/11 are far better as a result, perhaps as much as double the figures of previous years.
What is particularly encouraging is that many of these new investors have not been from Gabon’s traditional source countries, France and the US (as a former French colony, Gabon has strong links with French companies, and the US has been involved in the country due to the oil reserves there). Instead, investment is coming from Singapore and India as part of a widely reported ‘Asian package’ announced by Gabon president Ali Bongo Ondimba in August last year.
The new president is more visible both within Gabon and internationally; Mr Ondimba went on a fundraising mission to Asia at the end of last year, visiting Singapore, Japan and South Korea helping to cement his Asian package. He is hosting foreign dignitaries too – and was recently visited by Turkey's president, Abdullah Gul, securing seven conventions with Turkey relating to issues such as tourism, taxation, investment protection and agricultural co-operation.
Olam International, a Singapore-based multinational agro-food business, is partnering with the Gabonese government to invest in the palm oil industry, the first phase of which will involve a plant that covers 50,000 hectares and is worth about $230m in inward investment.
A spokesperson at the company says: “Gabon can be a very cost competitive producer given its soil and agro-climatic conditions that are very suitable for palm cultivation... [the palm oil grove] will also benefit from government incentives on taxes and duties.” Olam has already invested in similar projects in Côte d'Ivoire, Ghana and Nigeria.
What is different also about the Olam investment is that historically Gabon has attracted foreign investment in the energy sector: oil still accounts for more than half of the country’s GDP, and energy companies in Gabon such as Shell are developing liquefied natural gas production, which will contribute to this sector’s dominance. Experts have long advised on the need for diversification in Gabon and Olam’s palm oil investment provides just this. Olam is also involved in a new special economic zone (SEZ), which is being developed in co-operation with the country's government, mainly to be used for the timber industry, which also plays a big role in Gabon’s trading history.
Mark Valentin, director of the oil and gas audit practices at Deloitte, which has an office in Gabon's capital, Libreville, says: “Gabon’s oil reserves are going down and down so it really needs to diversify and foreign companies coming in are critical to that.”
Another non-energy-related investment is by the Bharti Group, the Indian-based telecoms company better known as Airtel, which is investing $100m over three years in Gabon to expand its mobile network and launch a wireless product. It operates in 15 other African countries as well as Gabon, and as part of Gabon's ‘Asian package’, Indian company M3M will be building $100m-worth of social housing, amounting to about 5000 homes.
But Gabon does need to work on basic infrastructure, particularly its transport networks. This area is still largely undeveloped and most long journeys have to be taken by aeroplane. When it comes to international flights, suppliers are limited: until recently the only international carrier to Gabon was Air France.
Yet the lack of sophisticated development is, of course, also part of Gabon's charm from an ecotourism point of view, another important source of FDI for the longer term. For this reason, the government has one eye on its green credentials: in 2007, Gabon's National Agency for National Parks was set up primarily to protect specific areas, but also to develop the ecological aspects of the country's potential.
President Ondimba appears to want to distance himself from his father, Omar Bongo Ondimba, who ruled Gabon for 40 years. One of his main problems is that the elder Ondimba was renowned for his lavish lifestyle and numerous properties around the world. In 2008, corruption charges were brought against him in France, though later dropped. Gabon is ranked joint 110th out of 178 in Transparency International’s Corruption Perceptions Index 2010 -- pointing to the fact that corruption within the country is still at the forefront of potential investors' minds, and something Mr Ondimba needs to make extra effort to tackle.
But the new president is prepared for such a task. When he appointed his first government, he required each minister to publish their personal assets. In addition, the country is hoping to reach compliant status with the Extractive Industries Transparency Initiative, which requires full disclosure of revenues and payments in the industry.
As Deloitte's Mr Valentin says: “The outlook is promising. Everyone is saying good things [about Gabon]. The new president has brought a new impetus into the economy: new contracts, new companies; this is good news.”
For the Gabonese, these look like promising times, particularly if they secure a home win in next year’s African Nations Cup.