Travelling across the dirt road towards Nkok, it is hard to imagine that this small town, 27 kilometres outside Gabon’s capital, Libreville, will host the biggest special economic zone in sub-Saharan Africa.
With investments worth $200m committed to this joint venture between the Gabonese government and the Singapore-based commodities firm Olam International, this partnership encapsulates the government’s determination to become an emerging market by 2025. This one-stop shop focusing on timber processing will facilitate all the business steps for investors. Aiming to attract $1.1bn a year in foreign investment via tax breaks, the launch on September 9 of this special economic zone was no small deal. So it was only fitting that musical maestro R Kelly inaugurated the zone with his classic hit The Storm Is Over.
Upon assuming power in 2009, ‘Emerging Gabon’ has been a cornerstone of president Ali Bongo Ondimba’s policy reforms to diversify and industrialise Gabon’s economy. Speaking at his palace in Franceville, he says: “We are in a post-oil era, so we must shift from being an exporter of raw commodities to an internal manufacturer of materials.”
Need for diversification
Gabon has been traditionally reliant on oil production, which accounts for 50% gross domestic product (GDP). Yet uncertainty resulting from a drop in oil prices in 2008 and the depletion of oil fields in the south of the country means it cannot rely solely on its hydrocarbons sector.
Encouraging signs of the reform process are visible. Large-scale construction projects in and around Libreville are ubiquitous. The African Economic Outlook report attributed the recovery of Gabon’s GDP from -1.4% in 2009 to 5.5% in 2010 to several projects, including upgrading main roads, building low-cost housing and processing timber locally. Numerous infrastructure developments mean the public investment share of GDP growth will advance from 0.1% in 2010 to 0.2% in 2011 and 2012.
China, Singapore and India are significant as their direct funding of these projects will generate 50,000 jobs over the next three years. The president, however, is quick to emphasise: “Although we did not specifically target any region, our Asian partners have been extremely responsive. However, we ensure that we balance international companies’ investments with attracting local companies. We want the Gabonese to know [that] international investors are interested in working with them.”
Watch and wait
Yet from looking at Gabon’s position of 156th out of 183 countries in the World Bank's Ease of Doing Business ranking and prospects of a decelerated GDP growth of 4.2% in 2011, one can be forgiven for doubting its capacity to reform successfully.
Mr Bongo’s is honest in his appraisal of Gabon’s shortcomings, but is keen to stress that his through his reforms the country will be in a good position to overcome them. “Our workforce lacks the requisite levels of technical training. We also cannot build a strong domestic economy with only 1.5 million people. We will always be a country of exports. Nevertheless, the reforms will tackle education and how we can process our commodities within Gabon," he says.
“Africa is the last frontier. It is the last continent with huge reserves. This means we will have several investors vying for our resources. We must negotiate what is in it for us, to be among the players, not the spectators.” Perhaps, as R Kelly sings, the storm is over, and this time round things will be different.