Gabon Special Economic Zone: A world-class integrated woodworking destination

In 2010, the government of Gabon banned exports of raw timber and promoted the processing of natural resources within its territory to generate employment and boost the economy. Since then, the Gabonese government has taken many initiatives to provide an amenable ecosystem and infrastructure to facilitate the secondary and tertiary processing of timber and other natural resources. The Gabon Special Economic Zone (GSEZ) is the outcome of a shared vision of the government of Gabon and Singapore-based Olam International Limited to eff ectively master the transition towards the industrialisation of Gabon. Spread over 1,126ha in Nkok (20km from the capital city of Libreville), the GSEZ is one of the largest industrial parks in Sub-Saharan Africa aimed at promoting sustainable production and processing of timber and various other resources in the country.

INDUSTRIAL ECOSYSTEM WITH RELIABLE INFRASTRUCTURE AND UTILITIES

GSEZ SA is the administrating and managing agency for Nkok SEZ. The executive team of GSEZ SA is headed by a full-time chief executive officer who is assisted by functional heads in several departments, namely fi nance and accounts; operation and maintenance; and marketing and business development, among others. The government of Gabon is further represented on site by the Nkok SEZ Administrative Authority, which provides assistance on statutory public administration approvals through their single-window clearance office. The single-window clearance was created by article 20 of the SEZ Law 010/2011, and its offi ce based in Nkok SEZ is exclusively responsible for completing all formalities

and giving approvals to investors in the SEZ.

GSEZ SA has developed all modern infrastructure and utilities within Nkok SEZ and the same is available to all industrial units settling in the SEZ at a reasonable tariff . Infrastructure and utility provision at Nkok SEZ has been done for the entire 1,126ha, however, the operational area is currently only 650ha. Further land preparation for new industrial units will be undertaken when the requirements arise. The infrastructure and utilities developed at Nkok SEZ include:

• Dedicated water supply scheme

Seven bore wells are the source of water within the SEZ. Water storage tanks with a daily capacity of six million litres have been constructed and commissioned, and a fi ve-hectare artifi cial lake has also been developed. Water is priced at US$0.86 per 1,000 litres.

• Sewerage and common effl uent treatment plant

A sewerage network has been developed for the entire 650ha of developed land, and a common effluent treatment plant is also available for treatment of effluent disposed of by industrial units.

• Dedicated 70MW dual-engine power plant

The source of power is a 70MW dual-engine power plant which can run both on gas and diesel. This source is already operational and can be augmented to 105MW. A connection to a hydro-electric power plant as second source of power is being implemented. The laying and commissioning of a 90KV electrical transmission system and a 20KV distribution system has been completed. One main receiving substation and fi ve zonal substations have already been constructed and are operational. Electricity is priced at US$0.09 per kWh. With good reserves of petroleum, raw material for the power station is also not an issue in Gabon. Furthermore, another high-tension line connecting SEZ to a hydroelectric power plant is also under construction. Both the quality and quantity of power are suitable for industries.

• Information technology infrastructure

24/7 operational high-speed fibre optic broadband Internet connectivity is provided by GSEZ SA within the SEZ.

• Roads and connectivity

Nkok SEZ has 45 kilometres of metalled internal roads with ample green areas and street lights, including over 350 solar street lights. Nkok SEZ enjoys all forms of connectivity:

Road: Nkok is located on RN 1 (national highway network).

Railway: GSEZ recently acquired Somivab, a large sawmill adjoining Nkok SEZ. Its railway siding on the Trans-Gabonais railway line is now part of common logistics facilities available to industries at Nkok SEZ. Waterway: A quay with a 200-metre long berth has been constructed at the SEZ. It connects the SEZ to Owendo Port and other parts of Gabon. The port is around 37km from Nkok SEZ by road, 24km by rail and 18km by waterway.

Nkok SEZ has ISO 14001, ISO 9001 and ISO 18001 certified operation and maintenance for infrastructure and utilities.

• Raw material supply chain

As part of its business facilitation role, GSEZ operates a log supply chain for units in Nkok SEZ and off ers a long term contract to all wood processing units for an assured and unhindered supply of raw material (eg, logs).

FURNITURE MANUFACTURING CLUSTER – AN INITIATIVE TO PROMOTE “MADE IN GABON”

Nkok SEZ also has 60,000sqm of readyto-use sheds in a Furniture Manufacturing Cluster to promote manufacturing of fi nished products in Gabon. As of now, there are ten units working in this cluster.

FISCAL INCENTIVES TO INVESTORS

Investors in GSEZ enjoy the following fi scal incentives on their industrial investments: • No income tax for fi rst 10 years and a preferential rate of 10% over the next fi ve years • No customs duty on the import of equipment and machinery for the industry • No VAT • No property tax • 100% foreign ownership permitted • 100% exemption from capital gains tax • Other relaxations and waivers o Relaxed labour laws and fl exibility in employing expatriates o Reduced export duty for products manufactured in the SEZ o 100% repatriation of profi ts o Up to 25% of domestic tariff area sales permitted

FOREIGN INVESTMENT IN GABON

Gabon is a good investment destination for all kinds of businesses as it has an investor-friendly environment. Since gaining its independence in 1960, Gabon is one of Africa’s most politically and socially stable countries and has a per capita gross domestic product of US$19,200. Gabon has the best assessment for country risk of the Central African sub-region with a B rating and is ranked second in Central Africa for good governance in the Ibrahim Index of African Governance. The country is ranked second in Sub-Saharan Africa as per the United Nations Development Programme’s 2018 Human Development Reports. In the World Bank’s 2017 “Ease of Doing Business” ranking, Gabon ranks above most of the African countries. Some benefi ts of doing business in Gabon include: • Safest and most stable country in Central and West Central Africa • No currency devaluation risk – currency is permanently pegged to the euro [655.957 CFA franc = 1 euro] • Easy application process for electronic visas and work permits • No natural calamity – earthquake-, cyclone- and tsunami-free zone • Foreign investors do not need a local partner and can own 100% of shares in a company, as well as own assets in the country • Among the least polluted countries of the world – also can be called the “oxygen cylinder” of the world

GSEZ SA facilitates its investors in availing credit facilities for fi nancing the initial investment and working capital from leading banking institutions like BGFIBank Group, Union Gabonaise de Banque(UGB), United Bank for Africa(UBA), Caisse des Depots et Consignations(CDC), African Export-Import Bank (Afriexim Bank), among others.

SINGLE-WINDOW CLEARANCE – A DIFFERENTIATOR

Through the single-window clearance office, GSEZ assists to obtain all necessary regulatory and statutory

GSEZ SA, through its subsidiaries, has developed mineral and general cargo ports in Owendo, where Nkok SEZ industries have preferential tariff and services for inbound and outbound traffic.

clearances required for setting up an industry in the SEZ from various government departments, simplifying the process in granting speedy approvals to all units. To ensure that the investors do not have to run from one offi ce to another, all 23 concerned 23 departments and agencies from which approvals are required are housed in a special building within the SEZ. This has proved as a clear diff erentiator for entrepreneurs in choosing this location for establishing their units.

SUSTAINABLE RAW MATERIAL AVAILABILITY

Gabon follows a sustainable forest management (SFM) system – the best known system that will ensure the natural regeneration of trees and that the country’s wood stock does not deplete. Adhering to SFM rules, Gabon will never face situations similar to those of countries in South East Asia. Given the reckless degradation of forests, many countries in South East Asia have imposed several full, partial or temporary logging bans. Gabon’s neighbouring countries in the Congo Basin are also expected to impose bans on the export of round logs very soon (according to the International Tropical Timber Organization). With all these developments, combined with China’s decision to stop the harvesting of

Since 2017, India’s Greenply has already been operating its unit in Nkok SEZ. Century Plyboard from India also started their construction of its veneer unit in 2019 and their plant is likely to be operational later this year. This plant will cater to both European and Asian markets.

natural forests, it makes immense sense to invest in a manufacturing unit in a country that is rich in timber resources. Gabon is the best option available today. Another aspect is use of wood certifi ed by the Forest Stewardship Council (FSC), and with proper traceability and legal certifi cates for furniture manufacturing. Most of the big buying houses in the United States and Europe have made a resolution to ensure that by 2020, at least 30% of furniture sourced are made with FSC-certifi ed wood. FSC-certifi ed wood in this quantity has limited availability but it is abundantly available in Gabon.

To further ensure legality and traceability of logs entering Nkok SEZ, GSEZ SA created TRACER-Nkok, an agency independently run by two reputed entities, namely FRM and Brainforest. TRACERNkok ensures complete traceability of logs from their entry into the SEZ to delivery to the processing unit. TRACERNkok issues a due diligence certifi cate to log suppliers that authorises them to supply logs to Nkok SEZ. TRACERNkok aims to promote the progressive certification of the wood sector in Gabon.

NKOK SEZ TODAY

Nkok SEZ currently has 166 investors from 17 nations, and the expected foreign direct investment exceeds US$1.7 billion. Out of the 166 investors, 70 are from China, India and South East Asia. The industries making the SEZ their base are mainly in wood transformation (eg, sawmill, veneer and plywood); ferro-alloys; construction materials; pharmaceutical; food processing; telecom equipment; waste and metal recycling; and warehousing, among others. Currently, 77 companies are already under production and another 30 companies are in different stages of construction. It is expected that more than 100 companies will be under commercial production by mid 2021.

In April 2016, Africa Finance Corporation (AFC) made an investment of US$140 million in GSEZ SA. Established in 2007, AFC is a pan-African multilateral financial institution aimed at being a catalyst for private sector infrastructure investment in Africa and in funding power, industry, transportation and telecoms infrastructure. This investment by AFC is the independent validation of GSEZ’s business model, its future prospects and the ability of its team to execute and deliver. P