DBI Gabon by Rohit Juneja

doing business in

2013

Gabon Will this country become the Singapore of Africa?

Austria

APIEX AGENCY FOR THE PROMOTION OF INVESTMENTS AND EXPORTS

Austria

11°

10°

GABON

12°

Sangmélima

Ebolowa

13°

14°

3°

CAMEROON Ovenga

Ambam Nte m

Minvoul

Ebebiyin

Mongomo

Oyem

Mbin i

Evinayong

(RÍO MUNI)

O ff o ué

Guidouma

Etéké

Bongo

Gamba

Malinga

Ndendé

Moabi

Lagune Ndogo

Mbinda

Lébamba

Nyali

Divénié

National parks National capital Provincial capital

Kibangou

Moulèngui Binza

4°

Kakamoeka

3°

Town, village Airports

ri Nia

Nzambi

2°

Zanaga

Mossendjo

Mabanda

Ndindi

GABON

Pa s sa

Boumango

NYANGA Mayumba

Franceville

CONGO

Tchibanga 3°

Lékoko

Lekei Lékoni

O go ou é

Mbigou

1°

HAUT-OGOOUÉ

Moanda

Pana

Mimongo

Mouila

Guietsou

Akiéni

Mounana

vé

Onga

L é ko n i

Koulamoutou

NGOUNIÉ

Lagune Iguéla

Aboumi

Okondja

Fougamou

Mandji

Setté Cama

Sé

Lastoursville Iboundji

unié go

Iguéla

Las s

Ikoy

Sindara

Nkomi Nk omi

Omboué

0°

O G O O UÉ - L O L O

oué

OGOOUÉMARITIME Lagune

CONGO

Booué

Lambaréné

O go

djé

Ndjolé

L. Onangué

1°

Ogooué

MOYEN-OGOOUÉ

Port-Gentil

Mindemba

Bifoun

C. Lopez

2°

ou a

a ng Ab

Ko mo

Foulenzem Four-Place Gongoué

Ovan

o in d

0°

Makokou

Lara

ESTUAIRE

Equator

1°

OGOOUÉ-IVINDO

Kango

Mékambo

ié jad

G ab

Bélinga

Libreville

Ntoum

Pointe Pongara

Denis

Sam Mitzic

ondah eM

C. Esterias

Médouneu

Aboun

d B.

Baie de Corisco

h oua Dj

Corisco I.

1°

Nsoc

Akurenam

Sembé

WOLEU-NTEM Ou

Cogo

Cocobeach

Bibas

a un

EQUATORIAL GUINEA

ATLANT I C OCEAN Mbini

2° Aïna

Niefang

Bata

Bitam Assok-Ngoum

Loués sé

2°

International boundary Provincial boundary Main road

Loubomo

4°

lo u

Secondary road ui

Railroad

0 0

25 25

9° Map No. 4033 Rev. 2 UNITED NATIONS January 2004

100 km 75

Pointe-Noire

100 mi 10°

11°

CABINDA 12°

(ANGOLA)

The boundaries and names shown and the designations used on this map do not imply official endorsement or acceptance by the United Nations.

13°

14° Department of Peacekeeping Operations Cartographic Section

Gabon

2013

Contents  Top 7 Reasons �� 4

 Top Companies �� 34

 Country Overview �� 6

 Banking �� 36

 APIEX services �� 8

 Capital Markets �� 39

 Success Stories �� 10

 Development Bank �� 40

 Economic Outlook �� 12

 Transport Infrastructure �� 42

 Setting up Business �� 14

 Social Infrastructure �� 44

 Special Economic Zones �� 20

 Mining �� 46

 Forestry Upstream �� 24

 Telecoms & IT �� 48

 Forestry Downstream �� 26

 Agriculture �� 50

 Oil & Gas Upstream �� 28

 Fisheries �� 52

 Oil & Gas Downstream �� 30

 Tourism �� 54

 Power �� 32

 Practical Information �� 56

Dear reader: The chances are you may not be as well acquainted with Gabon as I am. Yet my country is well worth reading about, and this short publication gives you an introductory perspective.

as Total, Shell, Olam, Tata Chemicals, Areva and many others. In fact, just this past year, well over one hundred companies invested more than $700 million in Gabon.

Believe me, Gabon offers many reasons for you to invest, and we explain these grounds in the following pages. Gabon is politically stable, has an excellent growth pedigree, abundant resources, enlightened governance, improving infrastructure, and offers a range of incentives for foreign investors.

Discover how my entire team and myself are at your disposal to help you. Please turn to pages 8 and 9 for full details. We look forward to greeting you in Gabon.

ouna Nina Ab

With such strengths, it will come as no surprise that Gabon has one of the best track records in terms of attracting foreign direct investment in Africa. Among the foreign companies choosing Gabon are such names

Nina Abouna CEO, APIEX

Austria Austria

Top 7 reasons to invest in Gabon

Political stability Gabon has long been a beacon of political stability in a neighborhood more accustomed to political turmoil. Since shortly after independence from France in 1960, until his death in 2009, Omar Bongo was the ruler of Gabon. His son, Ali Bongo Ondimba, was elected in August, 2009, winning over two main opposition parties. Gabon has never experienced a non-democratic change of rule in its post-independence history.

Strong economic indicators Over the past five years, Gabon has witnessed annual growth rates above 7% per annum – enough to render industrialized nations and some BRICS countries jealous. Economic forecasts are very positive, and will continue as Gabon diversifies its economy away from its long-standing over-reliance on oil exports. Gabon is an upper middle income African country, with one of the highest African GNP per capita rates, at about $17,300 per inhabitant in 2011 according to the World Bank, second only to South Africa. Gabon’s government enacts conservative spending policies, with balanced or even surplus budgets, despite strong recent long-term investments in infrastructure, social housing and education.

Infrastructure and Special Economic Zones (SEZ) What China kick-started in 1980 with the Shenzhen economic zone, Gabon expects to replicate with three SEZs on the planning boards. The first SEZ at Nkok, about 30 kilometers from Libreville, will be operational in 2013, and will host over 60 companies, mostly active in the wood transformation industries. The second SEZ, called Mandji Island, will be located near the coastal oil town of Port Gentil, and will focus on both oil downstream transformation industries as well as high-tech developments. A third SEZ is planned near the Congo border at Franceville, and will focus on agro-food projects. All the SEZs benefit from substantial incentives, including fiscal advantages, as well as access to government-sponsored common infrastructure.

Regional hub Gabon’s geo-strategic position makes it a convenient entry point or regional hub for both the 120-million consumer CEMAC zone, and the 450-million consumer CEEAC area. CEMAC is the monetary zone, and CEEAC is the customs and economic community for about ten Central African countries. Gabon’s high rate of immigration is proof of the country’s attractiveness and open-mindedness.

Doing Business in Gabon | 2013 EDITION

Top 7 Reasons

Bustling downtown Libreville, the Gabonese capital.

Economic diversification For much of its history, Gabon was content to live off the wealth of its natural resources, namely the troika of oil, manganese and wood. Since 2009, a clear strategy to diversify the economy has taken hold. Gabon wishes to increase its share of transformative, valueadded industrial production, and has started implementing actions to do so. The sectors of the economy that are being targeted include the wood sector, the oil downstream sector, and mining. For the wood sector, this implies attracting a greater number of stage 2 and stage 3 actors (see pages 26 and 27). For the oil sector, a new development zone is being created near Port Gentil, and will see the development of petro-chemical manufacturers and a large fertilizer project. For mining, the transformation industry for manganese will be near Moanda, where the largest mines are located. Overall, the goal is to increase national GDP by an extra 2% to 3% thanks to transformation industries, and new economic sprouts: agro-processing, fisheries, tourism, construction materials, and new extractive industries.

Abundant resources Located on the equator, covered in lush tropical rain forest, washed along its 885-kilometer coastline by the Atlantic Ocean, irrigated by numerous rivers, Gabon enjoys a wealth of natural resources, both above and below ground. As far as the eye can see, there are trees - in all over 22 million hectares, critical for the wood industry. Below ground, oil has been pumped since the early 1960s, making the country sub-Saharan Africaâ&#x20AC;&#x2122;s sixth largest producer. Manganese, used to produce strong steel alloys, is Gabonâ&#x20AC;&#x2122;s second most important underground ally, with several mines operating in the country. The country has plans for its enormous iron ore potential at Belinga. This deposit is so large that once developed it would make iron a larger GDP component than oil. Gabon is also pushing its gold, uranium and rare earth mining activities.

Favorable business environment Fitch ratings has granted Gabon a BB+ (positive outlook) rating. There exist numerous support services to facilitate doing business in Gabon, including the APIEX Invest in Gabon agency. The legal framework for foreign investors, namely mining and oil companies, is long-established and guarantees their protection. Gabon has the best track record in attracting investment from abroad among Central African nations, and can boast of a sterling list of investors from all continents and across very diversified areas.

2013 EDITION | Doing Business in Gabon

Land of Promise Gabon originally was a land of pygmies who spoke several African languages. In time they were superseded by peoples who spoke only bantu. The pygmies were dwarfish people, the bantus more to the African norm. The first European explorers arrived in the fifteenth century, naming the country after the Portuguese word "gabao", meaning cloak. On August 17, 1960 Gabon, long a colony of France, gained its independence from Paris. The country is one of the least-densely populated African nations, having only 1.5 million inhabitants. Gabon has a 885-kilometer coast on the Atlantic Ocean. Equatorial Guinea and Cameroun border it to the north and the Republic of Congo (i.e. CongoBrazzaville) to the east and south. The country, as a whole, straddles the equator. Gabon has a multi-party presidential form of government. Omar Bongo served as president for 32 years, until his death in 2009. A constitutional amendment had facilitated life-long retention of power. Ali Bongo Ondimba, his son, was then swiftly elected to replace him. Normally elections in Gabon are held every seven years, with the president chosen

by universal suffrage. Gabon’s parliament is bi-cameral. The Senate has 102 members, nominated by municipal councils and department assemblies. The National Assembly (house of representatives) has 120 members elected directly for six-year terms. The main political parties are the ruling PDG (Parti Démocratique Gabonais) and the UPG (Union du Peuple Gabonais). The difference between them has more to do with traditional African social politics than Western ideology. Gabon is composed of nine provinces, comprising 37 departments. The economy relies heavily on oil, which accounted for about 47% of GNP, by the latest available count. Mining, manufacturing, agriculture & forestry, retail & financial services each account for about 5% of GNP.

Economic growth in real terms has run above 5% per annum for the past four of five years. Business in Gabon received a boost from the highly successful 2012 Africa Cup of Nations soccer tournament, cohosted by itself and Equatorial Guinea. Oil is half of GDP The construction of stadiums and road infrastructure helped provide the impetus. Percentage of GDP by sector of the economy (2011) Construction 2% Agriculture, forestry, fishing 4% Transport, storage 4%

Electricity, gas, water 2% Finance, real estate 0%

Mining, quarrying 4% Manufacturing 5% Oil 47%

Trade, tourism 7% Other services 25%

Source: African Economic Outlook (AfDB)

Doing Business in Gabon | 2013 EDITION

Over time, Gabon has accustomed itself to ever more stringent fiscal policies, and at present shows a surplus budget balance and a positive current account. With substantial exports of oil, manganese and timber, the country also enjoys a positive trade balance. Exports accounted for about 62% of GDP in 2011, up from previous years because of higher oil prices and rising manganese production. Gabon produced a total of $17.1 billion in goods and services in 2012, according to the World Bank, and given its relatively small population of 1.5 million people, this implies a rather high wealth level per capita. The World Bank estimates this at $17,300 per person (at PPP) for 2012, making Gabon an upper middle-income nation. GDP grew by 7.4% in 2012, according to the Ministry of Economy. •

Country Overview

Central Africa at a glance Nigeria Population*: GDP*: GDP per capita*: Avg. GDP growth*: FDI*:

Morocco Algeria Cameroon Population*: GDP*: GDP per capita*: Avg. GDP growth*: FDI*:

Equatorial Guinea Population*: GDP*: GDP per capita*: Avg. GDP growth*: FDI*:

Libya

20 26 1,180 2.73% $360

0.7 19 19,041 9.58% $1,369

Benin

158 384 2,427 9.10% $8,915

Egypt

Niger

Sudan Chad

Nigeria

Ethiopia Central African Republic

Cameroon Equatorial Congo Guinea (Brazzaville)

Kenya

GABON

Gabon Population*: GDP*: GDP per capita*: Avg. GDP growth*: FDI*:

Congo (Brazzaville) Population*: Tanzania GDP*: GDP per capita*: Avg. GDP growth*: FDI*:

D.R. Congo

1.5 17 7,740 3.25% $728

Angola Population*: GDP*: GDP per capita*: Avg. GDP growth*: FDI*:

19 116 6,097 12.3% $5,586

South Africa Population*: GDP*: GDP per capita*: Avg. GDP growth*: FDI*: Sources: World Bank for FDI AfDB for all others (2009 is latest year available).

Angola

4 16 2,150 5% $2,931

Zambia

South Africa 50 522 10,334 3.6% $5,807

* Population in millions * GDP 2010 $ Billions * GDP per capita 2010 in $ * Average GDP growth 2002-10 * FDI net inflows 2010 $ Millions

2013 EDITION | Doing Business in Gabon

Introducing you to Gabon APIEX was created in 2010, to help boost inbound foreign direct investment into Gabon.

“F

or too many years, Gabon did not have its own investment promotion agency,” explains Nina Abouna, the head of APIEX (Agence de Promotion des Investissements et des Exportations, the ‘Invest in Gabon’ agency). “We are now catching up lost time, and the first fruits are here to show. Gabon traditionally relied heavily on French investors. We are now diversifying with investors from China, India, Singapore, Turkey, the USA, and of course a multitude of EU countries.” Despite its small size, Gabon has stellar foreign direct investment (FDI) results, in part helped by its rich natural resources. Gabon is by far the highest FDI per capita recipient, well ahead of traditional African mainstays such as South Africa, Nigeria or Kenya (see chart). Gabon’s level of FDI is also on the rise, with an average annual increase of 55% over the 2008-2011 period. APIEX’s purpose is two-fold. On the one hand APIEX provides advice and orientation for foreign investors interested in Gabonese opportunities. On the other hand, APIEX is responsible for the active promotion of exports, meaning that it acts as your partner if you seek to source imports from Gabon. Importantly, all APIEX services are completely free of charge.

For investors, APIEX can provide several key aids: • inform investors about specific investment opportunities; • provide updates on regulatory changes; • assist foreign investors with required administrative procedures; • introduce local partners – both for business and administrative purposes. APIEX is organized into different divisions. The first, called Division de l’Investissement, does the ground work for foreign investors who are prepared to set up a business and need assistance for the various procedures, as well as market research or financing. The second division covers business development and is in charge of promoting Gabon abroad. 8

Doing Business in Gabon | 2013 EDITION

The main government ministries in Libreville.

Overall, APIEX has a staff of eleven people, all of whom operate from the Libreville headquarters, located across the street from the Presidential Palace. Different specialities “Within our staff, we have specialists in several key areas that the government has identified for priority development,” explains Nina Abouna. “The government’s strategic plan has three key pillars: Gabon Industriel (putting emphasis on manufacturing and transformative industrial activities), Gabon des Services (developing the service economy, for example in tourism or financial services), and finally Gabon Vert (referring to the important place we place

Very attractive for investors Comparison of FDI per capita in Central Africa Angola Kenya Cam eroon DR Congo Tanzania Nigeria Sth. Africa Zam bia Gabon Congo Eq. Guinea - 400 - 200

200

400 600 800 FDI per capita, 2011

1,000 1,200

Source: World Bank for FDI

Services Apiex

No lack of foreign investors With its relatively low country risk, Gabon has always been of interest to foreign investors. According to the French credit rating agency Coface, Gabon’s risk level is well below that of neighbors such as Cameroon, Nigeria, Congo or Angola. The volume of incoming foreign direct investment (FDI), as measured by the UNCTAD has been consistent, and places Gabon well above its neighbors in terms of relative appeal. In fact Gabon has one of the highest FDI-per-capita attraction rates: almost four times the level of South Africa and almost ten times higher than Nigeria.

on our ecological assets, be it forests or waters). We are structuring our specialists to reflect those priorities,” concludes Nina Abouna. More specifically, APIEX has identified eight key areas for investment development: the wood sector, agrofood processing, extractive industries (minerals as well as oil & gas), power, social housing, infrastructure and transport, telecoms and information technology, and eco-tourism. APIEX has tight connections to various useful government agencies, and makes these ties available for foreign investors, thus simplifying and accelerating

Growing fastest Comparison of FDI-per-capita and FDI growth rates 300 250

Gabon

FDI growth, 2008-2011 (%)

200 150 Zambia

100 50 0 -50

Congo

Nigeria 0

$200

$400

$600

$800

$1,000 $1,200

FDI per capita, 2011 ($)

South Africa

Eq Guinea

-100 Source: World Bank for FDI

What’s more, FDI into Gabon has seen excellent growth rates: from 2008 to 2011 (latest data available from the UNCTAD), FDI had jumped four-fold, to almost $750 million. Over the same period, Nigeria has basically seen flat FDI, whereas South Africa has seen a very steep decline, losing over 40% of its FDI in four years. With its programs for Special Economic Zones and boosting transformative industries, the FDI levels are bound to increase further.

procedures. The privileged connections also extend to existing foreign investors, namely in the key Special Economic Zones, where accelerated development is expected, and entry procedures expedited. One stop shop APIEX strives to provide answers and assistance for all the usual queries that a foreign investor will have. Four areas are worthy of further explanation. Firstly, financing. APIEX does not provide direct financing itself, but the agency has privileged access to many of the top actors in the Gabonese financial sector, be it the state-owned Development Bank, or private sector banks such as BGFI or BICIG. Secondly, APIEX knows all the inner workings for setting up a company in Gabon. Thirdly, APIEX can help you identify relevant government aids or incentives that may accompany the specific type of project you wish to develop. Linked to the above, and fourthly, APIEX can explain in great detail the nature, location and advantages of the various special zones that Gabon has developed or has on its planning boards. • For more information: APIEX (Agence de Promotion des Investissements et des Exportations), B.P. 3403, Libreville Ms. Nina Abouna, Managing Director Tel: +241 04 58 24 24 or +241 04 58 25 25 (mobile phones); Fax: +241 01 72 15 40; www.apiex.ga 2013 EDITION | Doing Business in Gabon

Success stories Africa offers some of the most promising emerging markets worldwide. Yet investors know that the African risk profile is different. Why Rougier in the forestry sector, Olam in the agro-food area, and Vamed in health care have chosen Gabon.

ougier SA is no newcomer to Gabon. In fact, its involvement in the country dates back to 1930, when it started purchasing logs for transformation in its French sawmills and plywood factories. One of the company’s early uses was to manufacture cheese boxes, the round wooden ones used for camembert or livarot, to preserve their freshness and aroma! Founded in 1923, Rougier is one of the largest actors in the Gabonese wood sector, along with SNBG, the partly state-owned company. Rougier’s worldwide 2011 revenues amounted to Euros 147 million, of which fully 75% from transformed wood (as opposed to raw logs). Between 1930 and 1952, Rougier was an active purchaser of Gabonese wood, but did not have a local presence aside from its commercial (purchasing) office. In 1952, Rougier acquired its first Gabonese

Vamed has played a key role in hospital construction and management.

forest licenses. In 1978, Rougier expanded its local presence by purchasing a sawmill in Owendo, the harbour located about 15 kilometers south of Libreville. Rougier is currently active in three equatorial African countries: Gabon, Cameroon, and Congo. Although the smallest country of the three, Gabon remains a prime investment platform. As Rougier evolved from a ‘purchase - in - Africa - and - transform - in - Europe’ company to an African value-added company, Rougier has proven its deep attachment to Gabon. Gabon has reciprocated by acquiring, via the Caisse des Dépots et Consignations (a sort of sovereign wealth fund for

Investing heavily Olam's projects in Gabon Name

Gov't share Nature

Size (ha.)

Budgeted cost Notes ($ Mill.)

Olam Palm

30%

Palm oil

50,000

$322

Includes 3 palm oil mills

Olam Rubber

20%

Hevea plantation

28,000

$183

Includes one mill to produce 62,000 tons/year

Olam Gab

n.a.

Forestry exploitation & Timber sawmill at Nkok SEZ

866,000

$17

2 sawmills with capacity of 60,000 m3/year

Gabon Fertiliser Company

12%

Fertilizer production at Mandji Island SEZ

n.a.

$1,500

Partnership with Tata Chemical. Scheduled to start in 2016

Nkok Special Eocnomic Zone

40%

Special Economic Zone for wood and mining transformation industries

1,126

$240

Co-owner and organizer with Gabon government Also tenant for timber activities. Source: Olam and Mediaside analysis

Doing Business in Gabon | 2013 EDITION

Success Stories

Gabon stovetop. See chart. For its core agro-food businesses, the company has large investments in both palm oil plantations and in rubber plantations. Also linked to its food business, but in the upstream area, Olam is the lead shareholder in the Gabon Fertilizer Company, a vast industrial complex planned near Port Gentil. Somewhat beyond its normal remit, Olam is also active in the timber sector in Gabon, and finally Olam is the majority shareholder in the Nkok SEZ. For Olam, Nkok makes double sense: it not only promises to be a profitable business as a real estate investment, but Nkok is also where Olam will locate some of its manufacturing plants, namely a palm oil refinery, a rubber transformation plant, and a sawmill. state shareholdings) a 35% stake in Rougier Afrique International in 2011 for Euros 24 million.

Like Rougier, Olam has the Gabonese government as its equity partner in most projects. The government's share varies from project to project, but never drops below 10% and never exceeds 40%. See chart.

In Gabon, Rougier currently operates sawmills and one Stage 2 transformation plant (producing 37,000 m3 of plywood annually). Rougier is wellOur decision to invest regarded by boat builders for its treated Okoumé veneers, offering in Gabon was a high water resistance.

long-term strategic one

Olam Compared to Rougier, Olam is a relative newcomer to Gabon. Now based in Singapore, Olam is the brainchild of Indian-born but Nigerian-raised Sunny Verghese. Verghese saw vast untapped potential in Gabon, and decided to make the country one of his group’s strategic priorities.

“Gabon has different assets that led us to implement our operations here,” explains Gagan Gupta, the group’s Gabon managing director. “Among the five most notable are: the political and economic stability; an attractive and stable fiscal climate; the excellent agro-climatic conditions; the opportunity to operate while respecting the environment and local communities; and finally the ability to invest in projects linked to the Emerging Gabon national policy.” “For Olam, the decision to invest in Gabon was a long-term strategic one,” explains Gupta. “And because of the appeal of Gabon we also decided to invest beyond our usual scope in the agro-food area.” In fact, Olam has five different pots boiling on the

Vamed AG Unlike Rougier and Olam, that are actively involved in primary and secondary sector activities (agriculture, forestry, manufacturing), the Austrian company Vamed AG has chosen services as its focus in Gabon.

Created in 1982 for the completion of the Vienna General Hospital (2,200 beds), Vamed is a Euro 850 million company that offers, among other services hospital construction and management. Vamed is active in five sub-Saharan African countries, including Ghana, Nigeria, Mozambique and Mali. Vamed’s involvement in Gabon dates back to 2002, when it designed, built and now operates a 160-bed regional hospital in Franceville and two somewhat smaller facilities in Port Gentil and Koulamoutou. The company has completed six major projects since 2002, and is currently involved in two further projects in Gabon, including the two major training hospitals (CHU) in Libreville and Owendo. For more information: Rougier – www.rougier.fr Olam – www.olamonline.com or www.gabonadvance.com Vamed – www.vamed.com 2013 EDITION | Doing Business in Gabon

Economic ascent How Gabon embarked on an ambitious program to transform its economy from a producer of primary materials to a modern one based on transformation industries and services.

Growth rates After a slight hiccup in 2009, the roiled year of the death of longtime president Omar Bongo, when the Gabonese economy declined by -2.9%, it then took wing, again. 2010 registered growth of 6.9% and 2011 went even higher at 7.0%. When all the figures are announced, 2012 is expected to clock in at 7.4%. Also positive is the fact that it is the non-oil part of the economy that has powered this ascent, accounting for 9.9% growth in 2012. Gabon’s success may be explained via three main factors: continuing structural reforms which are bearing fruit; the input of large public works projects for the African soccer cup CAN 2012; and the implementation of several of the operational provisions of the Gabon National Strategic Plan (PSGE).

Growth prospects look excellent, namely in the construction sector.

though the primary sector suffered a small -1.7% decline, the secondary sector soared by 29.6% and the tertiary (services) sector increased by 8.1%. The main reason for the decline of the primary sector was the impact of the ban of raw log exports due to which the forestry sector saw an overall 15.8% decline. But, as previously noted, this was foreseen by the plan. In 2011, construction witnessed a 70.4% boom, mostly due to frenetic activity in preparation for the African soccer cup. Stadiums had to be rushed to completion, roads, hotels and other tourism facilities built. By contrast, the growth in agroindustry was due to higher domestic demand – largely for more domestically-produced mineral

Growth unseen in Europe Evolution of GDP growth rates 7.50 7.40 7.30 GDP Growth %

s Gabon on the cusp of an economic boom? Having relied since independence on its abundant natural resources, it is now preparing itself for a stage-2 economic take-off. As one of the wealthiest African nations, Gabon already qualifies as an “intermediate” revenue nation, and, as such, no longer needs the financial aid accorded very poor or debtor nations. It has progressed to the economic league of, say, a North African, or even, of a Central European nation. The debt that it carries is seen as reasonable and thus well-graded by ratings agencies. Economic growth is seen to be well founded on a plinth of democracy and freedom of expression, not necessarily expected in other nations of Africa.

7.20 7.10 7.00

For the 2012 to 2016 period, growth is planned to average 9.9% annually, for the non-oil sectors. The growth drivers are such value-added processing industries as wood, mining, and construction.

6.90

Even now Gabon’s economy is starting to show the benefits of planned vertical integration. In 2011, even

Doing Business in Gabon | 2013 EDITION

6.80 6.70

~ 2010

2011

2012

2013*

Note: Estimate for 2013; Source: DGEPF, Ministry of Economy

Economic Outlook

Employment In 2010 a national survey of employment was carried out. The result was published in 2012, showing a national unemployment rate of 20.4%, using BIT standards. Unemployment was higher in the young segment of the population. Counteracting this trend has become a government priority. Jobs are relatively easier to find in the informal private sector, where 47% of employment occurs, followed by 15.7% at formal, established companies. Impact of commodity prices The year 2011 was characterized by a promising start, whereas its final months witnessed strong commodity price declines. The causes included rising financial tension in Europe, and the deceleration of economic growth worldwide.

water, sodas and beer, but also from increased export of processed rubber. For 2012, primary sector activities rebounded encouragingly by 2.3%. Mainly due to a rise in forestry activity following the slump of 2009, the rebound was also helped by better mining results (from manganese and gold). The relatively small secondary and tertiary sectors both grew healthily (10.1% and 7% respectively). Although this was less than in 2011, it still helped. Inflation For 2012, inflation was 2.7%, and is expected to drop slightly to 2.5% annually for the 2014 to 2016 period, well below the regional average. Inflation is expected to be checked by several factors: the shift to locally-produced agro-foods as well as the growing efficiency of the wholesale and distribution circuits. This expectation is attributed to government efforts to improve the national supplychain infrastructure (roads, harbors and rail). Price controls for foodstuffs are expected to contribute to the positive impact. Investment The Gabonese government lends importance to longterm investment in national economic development. As a token of that it will be earmarking 40% of tax income for investment in public projects. From a level of $0.6 billion in 2009, public investment shot up three-fold to almost $1.9 billion in 2012. This aimed to enable the completion of 21 large projects in the Strategic Plan. Areas benefitting were transport infrastructure, power generation and distribution, telecoms, and social infrastructure.

Markets for agricultural commodities as well as energy remained buoyant, due to strong speculative intervention and sustained demand from the emerging markets, principally China and India. In 2012, commodity prices remained volatile, and this trend is expected to continue in 2013, due to the unstable global economy, and persistent political tension in parts of the globe. However, the BRICS seem less affected and there is reason to count on their continued import of goods they need, and are now accustomed to get, from Gabon. Public accounts Gabon can boast of healthy public accounts. In 2011, government receipts exceeded expenses by $1.1 billion ($5.2 billion vs. $4.1 billion respectively). The 2012 budget included a slight increase in receipts and a far larger jump in expenses (both at $5.4 billion). The planned 2012 receipts of $5.4 billion derive for the most part ($2.9 billion, or 58%) from oil revenues. The oil revenues are from three main sources: company taxes (about 20% of the total), royalty sharing revenues (28%), and production sharing revenues (49%). About $2.1 billion in receipts are from taxes, with the leading components being customs, followed by direct taxes. The 2012 budget includes about $485 million in longterm loans for infrastructure projects. This figure is flat with respect to 2011.â&#x20AC;&#x201A; â&#x20AC;˘ This note was prepared on the basis of the documents provided by the African Development Bank and the Gabon Ministry of Economy (Tableau de Bord Economique written by the DGEPF). Refer also to www.africaneconomicoutlook.org. 2013 EDITION | Doing Business in Gabon

Setting up in Gabon Setting up a company in Gabon is still quite complex, but it is getting easier, especially in the Special Economic Zones, where the one-stop window system is being introduced.

S Madeleine Berre Managing Partner Legal and tax advisor registered CEMAC Deloitte Tax and Legal

etting up a business in Gabon is perhaps not quite as simple as in Singapore or the United Kingdom, but it is simple enough, and as many of my clients can attest, the process is worth the effort, given the good return on investment the Gabon market offers.

In these next pages, I have tried to summarize some key information on setting up a business and taxation in Gabon. Legal environment The legal environment surrounding the creation of a company in Gabon refers to various principles and basic standards, including: Openness to foreign investors and guaranteed freedom of enterprise. Gabon’s Investment Charter of 1998 has been designed to encourage and stimulate investments in Gabon. The Charter reiterates Gabon’s compliance with international treaties relating to foreign investment, and defines investor’s rights. Reliability and regulation of the banking and financial system. As a member of the Economic and Monetary Community of Central Africa (CEMAC), Gabon

Special Economic Zones are capturing much of the new FDI.

provides a safe and secure banking and financial system to investors, linked to the sub-regional monetary and financial markets. Furthermore, as a member of the Inter-African Conference on Insurance Markets (CIMA), Gabon guarantees the viability and the safety of policy holders in the insurance sector. Exchange control. As member of the African Financial Community (CFA), whose currency is the CFA franc (XAF), Gabon applies exchange control regulations based on the principle of free movement of capital. The agreement between France and the CFA Community guarantees the functioning of the exchange system, as well as the unlimited convertibility of the XAF to the euro at a fixed parity, therefore inducing monetary stability and simplifying cross-border operations. Encouraging investment in specific sectors. By the means of specific tax, customs and financial policies and incentives, Gabon encourages investors wishing to operate in key sectors of the economy: industry, petroleum, mining, agriculture, and tourism.

Eight steps to setting up a company in Gabon Step 1 Articles of Incorporation + Subscription form

Step 2

Step 3 Blocking Capital

Source: AMDI

Doing Business in Gabon | 2013 EDITION

Step 4 Notarial statement of Subscription and Payment

Acts deposit/ Establishment of fiche circuit to the CDE

Setting up Business

coopérative in French) incorporated without minimum capital requirement and either a minimum of five partners (simplified form) or 15 partners (with a managing board). The management of the LLC/SARL, the most flexible company form, is typically handled by an appointed manager. The public limited company/SA (larger, more complex structure) can be managed with or without a board of directors, depending on whether the SA is ‘unipersonnelle’ (single shareholder), or has at least three shareholders. The public limited company/SA necessarily involves the appointment of a statutory auditor (commissaire aux comptes in French).

Company types The creation of a legal structure follows the provisions of the Uniform Act relating to commercial companies and “Groupements d’Intéret Economique” (Economic Interest Groups). The OHADA (Organisation pour l’Harmonisation du Droit des Affaires, Council for the Harmonization of Corporate Law which groups the 16 countries using the CFA franc) has established a pan-African legal framework for companies. The main commercial structures proposed to investors by the OHADA legal framework include: • branch of a foreign company; devoid of separate legal status from the mother company but must be registered near the commercial and trade register, and with the tax administration. The ‘branch’ status has been the subject of recent amendments, to limit its initial duration to two years and its renewal. • limited liability company (SARL in French) with one or more partners and a minimum registered capital of XAF 1 million (€1,520); • public limited company (SA in French) with one or more shareholders and a minimum capital of XAF 10 million (€15,200); • economic interest group (GIE in French), with two or more members, an unlimited liability and no capital requirement; • cooperative corporation or partnership (société

Step 5 Register of Commerce Registration Establishment of RCCM number

Step 6

Setting up a company is best done via the CDE (Centre de Développement des Entreprises), a sort of single-window service center. Without including time for notarial documents, the current time to create a company is seven days, which corresponds to the delay for obtaining the ‘fiche circuit’. Exchange regulations Currency exchange is overseen by Decree number 02/00/CEMAC/UMAC/CM, of April 29, 2000. This CEMAC-wide regulation is based on the principle of free movement of capital. However, there exist specific controls for foreign direct investments exceeding XAF 100 million (ca. $200 K), which require a prior declaration of investment to the Ministry of Economy. Regulation of financial markets The rules applicable to the financial markets of Central Africa derives from the provisions adopted by the: • CEMAC (Communauté Economique et Monétaire de l’Afrique Centrale); and • COSUMAF (the Commission for the Supervision of Financial Markets of Central Africa). Moreover, Libreville hosts the headquarters of the CEMAC Stock Exchange (BVMAC, for Bourse des Valeurs Mobilières d’Afrique Centrale). Reliability and consistency of the banking system The banking system in Gabon is governed by: • the regulatory framework of the CEMAC community of 16 member countries;

Step 7 Registration with the statistics oﬃce

Step 8 Oﬃcial Gazette Publications

Social Security Aﬃliation

2013 EDITION | Doing Business in Gabon

Setting up Business

• the regulations imposed by the COBAC (Banking Commission of Central Africa); • and national provisions. Social environment The current labor law in Gabon results from the Labour Code of 1994 (last amended in 2010) which governs the use of private sector employees. The employment of expatriates is subject to obtaining individual work permits and employment visas from the Labor Administration (except for Special Economic Zones, which have specific regimes). The employment of Gabonese nationals is encouraged. The social security system is governed by the social security law and its implementation decree. The system integrates various compulsory social security benefits, for which employers and employees must be registered and pay social security contributions to the managing agency (CNSS, National Social Security fund). The overall contribution rate is 20.1% for the employer having responsibility for occupational hazards and pension contributions, and 2.5% for employees (only pension contributions), capped at XAF 1.5 million monthly or XAF 18 million annually. Ordinance No. 22/2007 dated August 21, 2007 establishes a compulsory health insurance and social guarantee regime. This is managed by the CNAMGS (National Insurance Fund for Health and Social Guarantee), and will be extended to include the private sector by the end of 2013. The rates applied to the private sector will be 4.1% for the employer, and 2.5% for the employee, capped at XAF 6 million per month. Property environment Property has been the subject of a recent reform, defined in Ordinance No. 00005/PR/2012, of February 13, 2012 which defines the system of land ownership in the Gabonese Republic. Tax environment Gabonese tax derives from the General Tax Code of 2009, enacted finance laws, instructions from the Tax Administration, as well as international tax agreements. The Finance bill of 2013 has introduced several changes and tax incentives for certain sectors. Corporate taxes Corporate taxes in Gabon are called “impôt sur les sociétés (IS)”, and apply to any company either carrying out an activity or having a regular office in Gabon. This applies to an office, factory, construction site, storage or exhibit or shipping facility, or to a 16

Doing Business in Gabon | 2013 EDITION

representative office having the authority to sign contracts on behalf of the company, etc. The corporate tax rate was reduced from 35% to 30%, applied to the net profit. Corporate tax cannot be less than 1.1% of revenues, or XAF 600,000 (ca. $1,200), except during the first two years of operation. A reduced rate of 25% applies to public entities, nonprofit organizations and associations, and for real estate promoters in urban areas or for social housing projects. Certain sectors benefit from attractive tax incentives, including the tourism sector with a tax exemption for the first five years if a net minimum of XAF 300 million (ca. $600 K) is invested. At the end of the five-year grace period, the company qualifies for a further 50% reduction in its tax burden for the next 5 years, implying a net corporate rate of 15%. A tax credit equal to 5% of the investment amount is also provided. Certain economic areas also benefit from customs incentives affecting imports: forestry and wood, industrial complexes, cement, social housing, tourism investment, and agriculture, among others. Capital gains taxes Capital gains taxes are called ‘Impôt sur le Revenu des Capitaux Mobiliers’ in Gabon. The scale of applicable rates is as follows:

Type of capital gain

Rate

Dividends paid to individuals “Indemnités de fonction”

20%

Dividends paid to companies

15%

Dividends paid to CEMAC-based companies

10%

Interest income from gov’t bonds

15%

Interest from Gabon-emitted bonds with less than 5-year maturities

“Branch tax” paid on profits remitted to foreign mother companies

10%

Revenues from credits, loans or deposits, for non-residents

20%

Value added tax (VAT) The standard rate is 18%, with reduced rates at nil, 5% and 10%, as well as higher rates at 25% (e.g. luxury goods). Exports are not subject to VAT. VAT

Your partner in Gabon and Central Africa. Present in 150 countries and with over 195,000 professionals from the top schools and universities, Deloitte is a global professional services leader in the areas of Audit, Finance, Business Organisation, Tax and Law. Thanks to their geographical presence and their HR, environment, business and market expertise, you can rely on the multidisciplinary teams of Deloitte to guide your development in Gabon and Central Africa. Contact us at: www.deloitte.ga

Audit - Advisory â&#x20AC;&#x201C; Accounting Services Nicolas Balesme BP 4660 Libreville Gabon Email : nbalesme@deloitte.ga Tel: 00 241 01 77 21 43 Fax: 00 241 01 74 41 92

Tax and Legal, HR Madeleine Berre BP 3927 Libreville Gabon Email : mberre@deloitte.ga Tel: 00 241 01 77 28 34 Fax: 00 241 01 77 40 77

Deloitte Touche Tohmatsu BP 4660 Libreville - Gabon Telephone: 241 77 21 43 Fax: 241 74 41 92 Email: deloitte@deloitte.ga Deloitte Tax and Legal BP 3927 Libreville - Gabon Telephone: 241 77 21 42 Fax: 241 77 40 77 Email: deloitte.jf@deloitte.ga

ÂŠ 2013 Deloitte Touche Tohmatsu Member of Deloitte Touche Tohmatsu Limited

Annonce presse Gabon A4 2013.indd 1

14/05/13 12:22

Setting up Business

Decree No. 010/2011 of July 18, 2011. ZERPs are specific geographical areas of the country, where the government wishes to incentivize projects related to territorial planning, business development, research and innovation, or sustainable development.

applies to companies having revenues either in excess of XAF 60 million (service companies), or XAF 80 million (other activities). Certain service companies benefit from a lower XAF 40 million threshold, whilst forestry companies have a XAF 500 million threshold. Personal income tax Personal income tax is called IRPP (impôt sur le revenu des personnes physiques). Unless otherwise stated by international treaties, IRPP is due by all persons having a residence in Gabon, or having resided there for at least 183 during a fiscal year. IRPP is withheld at source, and is applied according to the following scale:

Income bracket (figures in XAF million)

IRPP rate

Up to XAF 1.5 million –1.5 to 1,92

1.92 to 2.7

10%

2.7 to 3.6

15%

3.6 to 5.16

20%

5.16 to 7.5

25%

7.5 to 11.0

30%

11.0 and above

35%

IRPP is applied to all income sources of the taxpayer, including real estate revenues, salaries, pensions, capital gains, profits from commercial or industrial activities, as well as profits from agricultural or noncommercial revenues. IRPP takes into account family situation in assessing the taxable income. Special Tax Regime for ZERPs ZERP refers to an Economic Zone with Privileged Regime, which covers Special Economic Zones and other development centers. ZERPs benefit from 18

Doing Business in Gabon | 2013 EDITION

Within this framework, the following were created: • in 2012, the Nkok ZERP (Decree no. 461 of October 10, 2012 establishing and organizing the Nkok special economic zone) to promote investments in activities related to the timber transformation; • in 2013, the Port Gentil ZERP (Decree no. 126 of January 22, 2013 establishing and organizing the Port Gentil special economic zone) dedicated to investments in the oil & gas downstream activities. ZERP regulations guarantee full economic and competitive liberties to investors, and establish incentives at different levels: • administrative: a flexible framework has been established via a single interface (“one stop shop” or “guichet unique” in French), to enable investing companies to complete all formalities and administrative procedures relating to the ZERP. This interface allows for easy installation and start-up, by providing relevant information to investors and establishing a simple link between companies and the different government agencies; • commercial: the imports necessary for operations, and the exports of finished products to and from the ZERP are not subject to any license, permit or quota. • tax: ZERP investors enjoy various exemptions, within certain conditions and limits: tax holiday for industrial and commercial profits; exemption from value added tax for sales within the ZERP and on export; no tax on dividends; no withholding taxes; no property taxes for either land or buildings; no transfer or stamp taxes as well as some capital gains exemptions; • customs: imports into the ZERP are exempted from customs duties and taxes, as well as any other indirect taxes or duties normally collected by the customs bureau. This also applies for any other taxes, fees or charges levied by government agencies and institutions, with the exception of port services; • social: ZERP investors enjoy a simplified procedure for issuance of entry visas and residence and work permits for expatriate employees. They are subject to the payment of fees for obtaining a residence permit, but exempt from repatriation deposits. For more information: APIEX on SEZs – www.apiex.ga Nkok SEZ – www.gabonadvance.com

Gabon

APIEX AGENCY FOR THE PROMOTION OF INVESTMENTS AND EXPORTS

Land of Opportunities G

APIEX Your partner to support investment and exports in Gabon. The catalyst of your opportunities, accelerator of projects and solutions provider.

VIC

STRIAL GABO N

OR S E

IENTED GAB

APIEX (Agency for the Promotion of Investments and Exports) PO Box 3403, Libreville, Gabon | www.apiex.ga | contact@apiex.ga Tel: +241 01 72 22 27 or +241 04 58 25 25

O N

Our services • Facilitation: APIEX offers facilitation and integrated platform services, to provide your company with the information and assistance for your investments in Gabon • Promotion: Development and promotion of your products in export markets • Business intelligence: APIEX provides access to the necessary information to help your company better understand its markets, and implement its strategic investments • Training: As an export service provider, APIEX enables you to access the EXPORT CLUB

DU IN

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Our mission • Support the development of sustainable and continuous investments and exports for the economic diversification of Gabon • Advise and encourage both domestic and international companies to invest in the Gabonese economy • Promote and enable Gabonese companies to become better integrated within international trade • Promote “Made in Gabon” and contribute to the improvement of the business climate, in order to encourage more foreign direct investment, and boost the domestic private sector

ABON EN G E R

Shenzhen on Ogooué Like China in the 1980s, Gabon is betting on a series of Special Economic Zones and development poles to help boost private enterprise, employment, and transformative industries. The national strategy is to give each SEZ a specific industrial or service focus.

s catalysts of economic growth, special economic zones (SEZs) need no introduction; the runaway success of the Pearl River delta around Shenzhen and Guangzhou in southern China is the perfect case study. Started in 1979, the SEZ has collected over $30 billion in foreign investment and has made Shenzhen the fourth Chinese city in terms of economic power. So why re-invent the wheel, when one can borrow a page from history? That is what the Gabonese economists thought when in 2010 they proposed to launch a series of Gabonese SEZs. Quite logically, the first SEZ was conceived to accommodate the needs of the wood transformation industry. Planners decided to locate this first SEZ at Nkok, what had been a sleepy village about 27 kilometers east of Libreville. The basic infrastructure has been laid, and the first tenants are building their factories, warehouses and offices. Nkok SEZ was initially planned as a wood transformation zone, but

At Nkok, about 30 kms from Libreville, the first SEZ is being completed.

now includes other specialities as well. It is strategically located only 12 kilometers from the main node where the road supply chain for the forestry areas of Oyem, Makokou, Koulamoutou and Ndjolé meet. SEZ Nkok is a joint venture between Olam, a $14 billion Singapore-based agro-food company, and the Gabonese government. Their holdings are 60% and 40% respectively. One of the major contributions of the government is the grant of about 2 million hectares of forest for exploitation by the SEZ tenants. SEZ Nkok is currently set to cover about 1,126 hectares of mixed use land, including industrial areas, residential areas, public areas and commercial areas. The total investment is expected to reach $240

SEZs and development zones Specialization

Expected Employment

1,200

Multiple uses

7,000

Olam (Singapore)

37 kms southeast

1,126

Information technology, mobile banking, incubator

7,000

n.a.

Palm oil & wood

Name

Location (Province)

Distance from Libreville

Nkok

Estuaire

37 kms southeast

Nkok - IT Park

Estuaire

Size (ha.)

Anchor Tenant

Kango

Estuaire

100 kms southeast

7,500

1,100

Olam (Singapore)

Moanda

Haut Ogooué

470 kms southeast

n.a.

Manganese (raw and refined)

400

Comilog (France)

Franceville Haut Ogooué

520 kms southeast

n.a.

Dry harbour (logistics)

n.a.

Gabon Port Management (Malaysia)

Bakoudou

Haut Ogooué

550 kms southeast

n.a.

Gold mining

n.a.

Managem (Morocco)

Ndjolé

Moyen Ogooué

210 kms east

n.a.

Manganese (raw and refined)

340

CITIC (China)

Doing Business in Gabon | 2013 EDITION

Special Economic Zones

Better tax advantages than Lichtenstein The Gabonese Special Economic Zones, as well as certain designated development poles, benefit from substantial fiscal concessions. Tax incentives • Tax holiday for ten years and 10% tax discount for the following five years • Complete waiver of customs duties for imported goods, and for export of finished products • Complete waiver of customs duties for imported equipment and spare parts • Complete waiver from value-added tax (TVA) Other advantages • 50% discount on power tariffs

million, of which already about $200 million has been spent in the preparatory infrastructure. Not included in this amount is the new four-lane road from Libreville, which will be completed in late 2013. Nkok has been planned from the outset as an ambitious project. The site includes all the basic infrastructure (access roads, rail link, water supply and used water treatment, fiber optic connection for high-speed communications), as well as shared facilities for the wood transformation plants (log storage pens and drying kilns). Tenants also tap into locally-produced electricity, from a 15 MW cogeneration plant burning unwanted wood trimmings. Nkok is a two-faced giant. About 40% of the site’s area will be devoted to wood industry companies. The SEZ will be Central and Western Africa’s largest wood Size (ha.)

• 100% allowance for fund repatriation • Lightened work legislation • Up to 5% of DTA sales allowed, with no tax implication Madeleine Berre Partner, Deloitte Gabon

transformation platform, with an annual capacity of one million m3. The other face is for a mixture of users, with mining being a strong second place contender, namely for the transformation of manganese. This would then open the door to the export of higher-value manganese products, as opposed to untreated ore. To promote this project, Olam and the government organized promotional road shows in thirteen

Name

Location (Province)

Distance from Libreville

Specialization

Expected Employment

Mabounie

Moyen Ogooué

250 kms southeast

n.a.

Mouila

Ngounié

350 kms southeast

42,500

Eteke

Ngounié

320 kms southeast

Belinga

Ogooué-Ivindo 420 kms east

Iron ore & smelting

6,850

CMEC (China)

Mandji Island

Ogooué Maritime

Port Gentil (150 kms southwest)

1,500

Urea production

2,000

Olam, Tata Chemicals, Gabon Fertilzer co.

Mandji Island

Ogooué Maritime

Port Gentil (150 kms southwest)

1,500

Oil downstream industries

350

Cyber City Ogooué Maritime

Port Gentil (150 kms southwest)

1,500

Information technology, mobile banking, incubator

1,000

Niobium (rare earth)

150

Palm oil

4,075

Gold mining 5,55,000

300

Anchor Tenant Maboumine/Comilog (France) Olam (Singapore) Managem (Morocco)

n.a. Petro-Gabon, BGFI, Ceca-Gadis

2013 EDITION | Doing Business in Gabon

countries, leading to 62 confirmed tenants. Overall the total foreign direct investment expected from the project is an estimated $1.7 billon, and an expected 1,400 people will be employed. What ensures the competitiveness of the Nkok Special Economic Zone? Several factors have convinced the 62 companies that have already signed up for space in the SEZ. Long term guaranteed access to natural resources at competitive price (timber, metals and mineral supplies for transformation, cheap power) is certainly a prime consideration. Then there is the appeal of lucrative markets: the domestic market for products which are currently not manufactured in Gabon, and the broader regional market for products currently not manufactured in CEMAC region. Finally, and see sidebar, there are attractive tax incentives. Regarding the timber appeal, Gabon offers forestry licenses to Nkok tenants. The concessions typically range from 50,000 to 200,000 hectares per tenant, the forest being granted under the ‘sustainable development’ license (see pages 24-25). Larger companies may request multiple licenses, but the total area may not exceed 600,000 hectares. SEZ Mandji Island (Port Gentil) Gabon’s second planned special economic zone will be near Port-Gentil, the country’s oil and gas capital. Called SEZ Mandji Island, this zone will be slightly smaller than Nkok, and will have a different focus. Mandji Island SEZ is in the process of being prepared, with civil engineering company Boskalis busy at work

grading the land and installing the basic operational infrastructure. One of the anchor tenants will be the Gabon Fertilizer Company, a joint venture between the Gabonese state (12%), Olam (63%), and Tata Chemicals of India (25%). SEZ Franceville A third special economic zone is on the drawing board for Franceville, Gabon’s third largest city, located about 650 kilometers southeast of Libreville. The SEZ Franceville is the government’s contribution to the Agricultural Program for Food Security, and aims to host agro-food companies that will help ensure the country’s food independence by transforming raw agricultural produce into finished foods for the supermarket shelves and Gabonese dining rooms. The objective of the government is to increase the share of agriculture from 5% to 20% of GDP. SEZ for tourism Lastly, the drawing boards contain plans for a tourism SEZ, to tentatively be located at Nyonié, a coastal town located about 50 kilometers southwest of Libreville, but across the wide Komo river estuary. Currently access to the site is via boat and then 4x4 land rover. The current plans call for a 300-room luxury hotel along with 70 beach and treehouse bungalows. The resort would also offer about 40 private lots for residential lots, and a marina for 80 to 300 boats, and a golf course suitable for international tournaments. • For more information: APIEX (Invest in Gabon agency) – www.apiex.com Emerging Gabon national site – www.gabonadvance.com

GSEZ NKOK

A gateway to invest in Gabon

The place for foreign investors in Gabon: Gabon Special Economic Zone at Nkok • The biggest integrated industrial park in the South Saharan region. • Plots with world class infrastructure • Single Window Clearance approach • Substantial tax and customs incentives

Special Economic Zones

MAmmOTH IRON ORE DEPOSiT

When Belinga gets started It has been almost 130 years since Gabon has known of fabulous underground wealth along its eastern border, near the village of Belinga. A gargantuan iron ore deposit could mean radical shifts in the economy, and perhaps a doubling of national wealth. Beneath the rich Gabonese soil, about 650 kilometers east of Libreville, close to the border with Congo and Cameroon, lies tremendous wealth, waiting to be exploited. The vast iron ore deposit of Belinga, estimated to hold over one billion tons of high grade iron ore (at 64% purity – unheard of elsewhere on the same scale anywhere in the world), is Gabon’s ace up the sleeve. Belinga was not unearthed yesterday. The deposit was first discovered in 1895, but its development has been hampered by the difficulty of access, since the deposit is distant from existing transport axes. The most recent proposal has been the construction of a 237-kilometer long railway spur, from Booué to the mining area. This represents an enormous investment (about $3.5 billion, according to some sources), which was enough to attract the attention of Chinese investors, and more recently the Australian giant BHP Billiton. Another obstacle to the mining exploitation are environmental concerns, since the deposit lies in the midst of one of Gabon’s most pristine forests, home to elephants, monkeys and other wildlife. Yet Belinga is not alone in the pantheon of unexploited iron ore deposits. Geologists have also identified three other jackpots, each with estimated reserves above 500 million tons: Tchibanga (near the southern coastal border with Congo); Lobi (central Gabon); and the Mbilan mountains deposit (ca. 40 kilometers east of Libreville). According to the National Strategic Plan, prepared by Bechtel in

2010, Belinga’s operation could have an enormous impact on national GDP. In fact, with Belinga operational at say 50 million tons/year, iron ore could substitute oil as the main national economic driver, accounting for about 33% of GNP, versus oil’s 32%. And that does not take secondary economic effects into account – those of metallurgical transformation and transport impacts Among the important infrastructure consequences could be the new rail spur to Booué, plus the doubling of the Transgabonais track from Booué to Owendo, plus a new deep water harbor for ships.

Further information: Ministry of Mines and Hydrocarbons – www.minesgabon.org Gabon industrialization program – www.gabon-industriel.com

Contacts: Olivier Ngoma: (+241) 06 00 56 08 | Jennifer Mvou : (+241) 06 00 56 14 www.gabonadvance.com | sales@gabonadvance.com

Sustainable forests Gabon has plenty of forest, and what with rail, road and waterways to get its logs out, the timber industry’s prospects should stand assured. However, the use of the forest is regulated.

rees love Gabon, and Gabon has duly reciprocated with protective legislation. This naturally affects the industry. But there is reassurance in the fact that the government has seen to it that legislation favors the growth of trees. has. Even without such help Gabon offers as much annual rainfall as the Amazon or Indonesia; sunshine and heat; plus, mostly undisturbed stretches of land, where trees can grow to a height of 30 meters in a mere 75 years. About 85% of national territory is forest. Twenty-two million hectares. While only representing one-tenth of the Amazon forest, Gabon’s forest is prolific enough

Breakdown of forests by type Protected or unavailable

Gabon is especially careful with its forest assets.

to contain about eight billion trees. To be sure, not all 22 million hectares are available for exploitation. Gabon’s thirteen national parks (see page 54) take up almost 5 million ha, or nearly one-quarter. Another 5.4 hectares million have been set aside – either as yet unlicensed, or unprepared for exploitation for lack of logistical infrastructure to get the logs out (see chart). The remaining 12.8 million ha are available under two license categories: 1) Long-term forestry licenses (CFAD or Concession Forestière sous Aménagement Durable) pertaining to 4.4 million ha; 2) Temporary agreements (CPAET or Conventions Provisoires d’Aménagement, d’Exploitation et de Transformation) covering 8.4 million ha

5.0

8.4

4.4

3.2 2.2 Licensed but not prepared

CPAET licensed

Not licensed

CFAD licensed

Total forest surface: 22 million ha. Note: CPAET: Convention provisoire d'aménagement, d'exploitation, et de transformation CFAD: Concession forestiere sous aménagement durable

Doing Business in Gabon | 2013 EDITION

The Gabonese rain forest is estimated to host more than 600 different tree species, according to the National Parks agency. Of this profusion, only about two dozen species are actively exploited, because they are known to correspond with industrial desiderata (concerning density, grain, homogeneity, trunk thickness). Some species – so-called rare woods – are barred from industrial exploitation, ebony being the best known among them.

Forestry - Upstream

near future. Proper forestry management means that the country culls only about 3% of it forest every year, while it takes thirty years to make up this loss. This ensures that Gabon's use of its forests is sustainable well into the future. So, what is holding production back? Mostly selfdiscipline and a strategic decision to climb the valueadded ladder by processing wood products at home instead of exporting raw logs to be processed abroad (see article on next page).

The Gabonese star tree is the okoumé, a medium wood that represents about 40% of the total forest, and can grow to heights of 35 meters, and thicknesses beyond one meter. The other important tree species is the Ozigo, which together with the Okoumé, represent an estimated 80% of the national wood production.

Although the mighty days of forestry are something of the past century, the sector still holds strong, stable potential. Two programs hold promise for future developments. Training forestry professionals is one area that needs reinforcement, and the government is busy adding curricula to the professional training schools. The Ecole Normale des Eaux et Forets is a leader in this sector. Research into the more efficient use of the key species and developing the use of secondary tree species is also important. The research carried out by the IRAF (Institut de Recherches Agronomiques et Forestières) is leading in these directions.

There is no denying that the 2010 code forestier (forestry decree) severely impacted the wood industry. The export volume of raw logs dropped from 1.3 million tons in 2008 to a mere 0.3 million tons in 2010 – a 77% decline – while the export of processed timber did not make up for the drop (see next article).

After all, one must not forget that the Gabonese forests give employ to around 30,000 people, but they also play a very important role for the planet, in absorbing carbon dioxide and producing oxygen. •

Future potential There is no risk of Gabon running out of trees in the

Ministry of water resources and forests – www.eaux-forets.gouv

For more information:

Chock a block Main wood companies Company

Country

Year Established

Hectares of concession ('000)

SNBG

Gabon

1944

229

Olam

Singapore

2002

886

Bordamur

Malaysia

n.a.

1000

FOBO

Malaysia

n.a.

Rougier

France

1952

880

CEB-Thanry (Precious Woods)

Switzerland

1947

600

Leroy-Sonae

France/Portugal

n.a.

654

n.a.

300 Est

1990s

450

SHM-Interwood

France

Basso Timber Industries

Italy

Source: Mediaside analysis

2013 EDITION | Doing Business in Gabon

We no longer sell logs Gabon decided in 2001 to move up the woodvalue chain, by exporting fewer raw logs, while processing more of its wood locally. In 2010, a relevant decree was finally enacted, and the wood industry began changing.

few centuries back, logs were floated down the OgoouwĂŠ and Komo rivers, and then loaded onto ships anchored offshore. They were then chugged away to European ports and factories for their transformation into finished products. This remained the modus operandi for decades... until African timber-producing countries realized that local processing would bring benefits, among them additional employment, new skills, as well as higher-value exports. Two years ago, and heeding such considerations, Gabon forbid the further export of raw logs. In 2011, according to the African Development Bank, forestry and agriculture accounted for about 4% of the Gabonese GDP, or about $685 million. The Ministry of Economy explains that the wood sector accounted for about $179 million (26%) of this total, of which $92 from upstream wood activities (logging, log transport), and $87 from downstream transformation. The Ministry also points out that upstream activities have dwindled from their 2007 high of $162 million, whereas downstream is expected to continue its upward growth, reaching $105 million in 2012. Simplifying somewhat, the processing of raw logs entails three stages (see chart). Stage-1 consists of peeling and/or sawing the timber into lumber. Stage-2

The wood transformation industry has seen good growth.

renders semi-finished wood products, such as plywood, veneers, mouldings, and flooring. Stage-3 creates finished wood aggregates, notably furniture and other items of carpentry. There are of course very numerous Gabonese forestry companies active in the stages before Stage-1. These SMEs sell the raw logs to the processing companies, be it Gabonese ones such as SNBG (see sidebar), or foreign ones (see table). Until a recent change in the law allowed all this, the Gabon wood industry concentrated on producing raw logs. This meant work for lumberjacks, logging camp personnel and truckers â&#x20AC;&#x201C; plus other specialists needed to operate the log export pipeline. Seen as a whole, this made forestry one of the largest employers in Gabon, with a workforce of some 20,000 people. Under the changed law (2001), forestry companies were now required to either expand vertically, or else sell their raw logs to Gabonese processors. As expected, this caused a jump in the number of processors, from about seventy factories in 2008 to over a hundred in 2012. At the Stage-1 level, most of these companies are now sawmills, which simply

Moving up the value-added chain Stages of transformation in the wood sector Upstream Activities

Forest management Logging

Downstream Activities Stage 1 * Sawmills Approx. 110 units * Peeling mills Approx. 10 units

Log transport

Doing Business in Gabon | 2013 EDITION

Stage 2 * Mouldings * Flooring * Veneers * Plywood Approx. 6 players (SNBG, Rougier, Olam, Cora, Shengyou, etc.)

Stage 3 * Finished furniture Fragmented segment Many small players * Carpentry products Fragmented segment Many small players

Forestry - Downstream

National wood champion Created in 1944, the Société Nationale des Bois du Gabon (SNBG, National Gabon Wood Company) has long been one of the forestry sector leaders. SNBG has a share capital of $7.8 million, of which 51% belongs to the state, 43% to private shareholders, and 6% to employees. Like many other players, the ban of raw log exports had a profound impact on SNBG. The company made a conscious decision to remain active in both upstream and downstream activities. For its log supply, SNBG works with numerous small wood providers, yet also culls logs from its own concessions, which total about 299,000 hectares.

Overcoming the raw log export ban Annual production of transformed wood products 900 800

Annual production (m3)

700

On the downstream side, SNBG has invested heavily in transformation facilities, with most of its plants in the Owendo port area, where the wood export harbor is located. Owendo has good road and rail links, facilitating the arrival of the raw materials. SNBG transformation units include a sawmill with a capacity of 19,200 m3 per year, and a slicing plant with two units capable of processing 45,000 m3 per year. Later this year a rotary cutting plant for producing veneers with a capacity of 82,800 m3 will be inaugurated.

600

There is no lack of foreign investors in the Gabon forestry sector. Some of these are established French companies such as Rougier and SHM-Interwood. Swiss companies include Precious Woods. More recent arrivals include Asian producers Olam, FOBO and Bordamur. The main local company is SNBG (Societe Nationale des Bois du Gabon).

500 400 300 200 100 0

2008

2009

2010

2011

2012

Source: Schema Directeur, DDICB (Agency for Development of wood sector)

produce cut lumber (planks, sheets, boards, etc.). But in addition, Gabon currently operates some ten factories capable of producing veneer, the thin slices of wood that can then be further processed into products such as plywood. In all, this brought Gabon a surge in production of 66% in 2010 to reach almost 200,000 m3 in stage-2 work. However, straightforward sawing still represents about 92% of overall valueadded work. Most of the wood products from Gabon are for export. In 2012, only 78,826 m3 (about 9.2%) of the wood remained in Gabon, mostly for construction and for small scale furniture and carpentry uses. The exports go principally to Asia, with China absorbing a good 73% and France about 8%.

Market potential The wood sector in Gabon is still overcoming the turbulence of the enforced move up the value-added chain. Some traditional players are adopting the new rules, others are exiting the market. The 2010 Schéma Directeur National d’Infrastructure (the national strategic plan, so to speak) is optimistic on this score. In the optimistic scenario, it forecasts $595 million in wood sector earnings by 2015, an almost five-fold jump over the 2010 level. Gabon seems to have managed its transformation curve quite respectfully, and now hopes to increase its presence of even higher added value Stage-3 companies, namely at the Nkok SEZ. Window and door frame producers have signed on. • For more information: Ministry of water resources and forests – www.eaux-forets.gouv 2013 EDITION | Doing Business in Gabon

No sleeping on laurels Oil has a long history in Gabon, but production peaked in 1997, at about twice its current, stable level of about 250,000 barrels/day. The government wants to kick start new efforts, namely in deep offshore fields.

egun in the late 50s, oil exploitation in Gabon began a decline in production from 1998 and eventually stabilized at around 12 million tonnes per year, while its deep offshore potential in the Gulf of Guinea has not yet been assessed.

First deep offshore exploration results are expected this year.

new patches, and develop domestic production. Gabon is the sixth largest oil producer in sub-Saharan Africa, with 3.7 billion barrels of proven reserves. Its sedimentary basin covers an area of 247,000 km², of which 30% is onshore and 70% offshore. Oil has long been the most important natural resource of the country, and enables the government and economy to hum. Oil accounts for about 60% of government revenue and more than 40% of Gabon's GDP. In fact, without oil, Gabon would not be ranked among the middle-income countries of the world. Yet storm rumblings can be heard on the oil horizon. Onshore reserves seem to be dwindling. Offshore exploration is as yet unproven. Aware and worried, the government is taking measures to increase the sector’s profitability, promote further exploration of

The top 6 African oil producing countries, 2011 Gabon Congo Equatorial Guinea Angola Algeria

Production ('000 bbd/day)

Doing Business in Gabon | 2013 EDITION

Gabon seems to have had a lucky star. Every time a threat of depletion appeared, a new discovery was made, thus extending the oil supply, the lifeblood of economic growth. Thus, in the late 1980s, the discovery of the Rabi Kounga field boosted oil production to previously unknown levels, more than 18 million tons per year. The Rabi Kounga miracle lasted ten years, but then, as of 1997, production started a slow yet steady decline. From the historical high of 18.5 million tons, production dropped by about 5% per year for several years, and has now stabilized at a level of about 12.5 million tons annually. Current players According to UPEGA, the federation of oil producers, Gabon currently hosts eighteen oil companies. Seven of them are active in production and exploration. The eleven others are in the exploration phase.

00 25

00 20

0 15 0

00 10

Nigeria

Gabon’s oil adventure began in the 1930s, with the first substantiated geological findings. However it was not until 1956 that the Ozouri and Pointe Clairette deposits yielded their first barrels of black gold. The Gamba field hit the jackpot in 1963 and placed Gabon on the oil map. Double bingo occurred ten years later, with the major Grondin field. That enabled Gabon to produce over 10 million tons annually, and shifted the GDP tectonic plates: oil took over economic pole position, leaving long-time leader forestry in the dust. In a single year, Gabon's GDP leaped by 150%!

Source: IEA, OPEC

The first two producers, Shell Gabon (64,000 barrels/ day) and Total Gabon (57,000 bbd) together account

Oil & Gas – Upstream

first step was in March 2011, with the launch of a comprehensive, analytical audit of the oil sector, to improve overall management and governance. The audit took a 360 degree view: were concession contracts fair and being respected?; were the relevant government agencies (Direction des Hydrocarbures, tax collection) working effectively?; operational audit of the exploration, production and distribution activities of all the players in the Gabon oil sector.

for nearly 70% of Gabonese production. They are followed by Perenco (55,000 bbd), Vaalco (21,000 bbd) and Addax, whose production started as Panafrican Energy in 2004 with 6,000 bbd. See chart.

The government then auctioned as-yet-unexplored blocks for exploration in deep and ultra-deep water in the sedimentary basin. It just so happens that Gabon’s northern neighbor, Equatorial Guinea, has hit pay dirt in ultra-deep offshore off its coast. Gabon had been trying since the 1990s to sell 42 blocks for exploration, but the high cost of ultra-deep offshore research had hampered the sale. Recent advances in drilling technology and methods have now improved the bidding prospects. Companies including Total Gabon, have announced plans for the ultra deep plots, and the first results are anxiously awaited for October 2013.

Natural gas Proven reserves of natural gas were estimated at over 32 billion m3 in 2008, and more recently at 28 billion m3. One of the country’s goals is to start industrial processing of natural gas. Currently the only company that commercially exploits natural gas in Gabon is Perenco, which supplies combustible to the power plants producing electricity for Libreville and Port-Gentil.

Ultra-deep is only one of the promising prospects for Gabon. Two other potentialities need to be mentioned. The first is exploratory drilling in the dense inland forests, which until now had been relatively less explored. French mid-size junior company Maurel & Prom has had surprisingly good success at its Omoueyi field, located in the forest near Lambaréné. Another reason for hope is that Gabon’s 885 kilometers of coast have not been thoroughly surveyed.

Shaking things up Facing the downward trend in oil production, the government decided in March 2010 to launch a major offensive to attract new investors in this sector. The

As one oil specialist has explained, there is still not a single country in the world that has run out of oil after starting operations, including the United States (since 1859). Gabon has no plans to be the first on this list. •

International following Main upstream oil producers in Gabon Company

Country

Year Established

Production (B/d)

Shell

UK/NL

1962

64,000

Total

France

1949

57,000

1992

55,000

Sinopec/Addax

China

2004

23,000

Maurel & Prom

France

2004

22,000

USA

1995

21,000

UK/Ireland

2005

13,500

Perenco

Vaalco Tullow Oil

Sources: Ministere des Mines, Petrole

2013 EDITION | Doing Business in Gabon

Fresh start for refining Although an early actor in oil refining, Gabon lost its competitive edge as its sole refinery became outdated. The new refinery, planned for operation as of 2016, should help boost downstream businesses.

The Sogara refinery has an annual processing capacity of 1.2 million tons, and is supplied by a 17-kilometer pipeline from Total Gabon’s Cape Lopez terminal. The refinery can produce natural gas, gasoline, heavy fuel, diesel, jet fuel, tar/bitumen, as well as other heavy fuels. The domestic market absorbs 80% of its production, at an estimated at 550,000 tons (all products combined). In 2012, Sogara handled 784,682 metric tons of crude, about 20% less than the 983,484 tons of 2011. The sale of hydrocarbons, in turn, generated a turnover of $880 million, of which $615 million on the domestic market. As the country’s sole refinery, in recent years Sogara faced a number of problems, the main being the inability of its production assets to satisfy the needs of the local market. Another important complication is the high sulfur level in the diesel produced. This is not only a handicap for the international market competitiveness, but also infringes the standards set by the African Refiners Association. Those standards dictate a sulfur content not exceeding 50 ppm, whereas the Sogara diesel contains 1200 ppm. The net effect is that both diesel fuel and butane gas, 30

Doing Business in Gabon | 2013 EDITION

The old Sogara refinery will be replaced by a new Samsung unit in 2016.

the most popular products in the Gabonese market, are not produced in sufficient quantity to meet local demand. This means substantial imports to meet domestic demand: 50% for diesel, and up to 70% for butane gas in recent years. The government decided to tackle the refining bull by the horns, and confront the twin problems of lowerquality products, and below-par production assets, as compared to modern refineries. The solution? A new refinery to replace the old creaking Sogara one, implying an investment of $1.37 billion. South Korean

Stability is the name of the game Evolution of crude oil production since 2009 14,000 12,000 Production (Mill. tons)

abon has no lack of oil experience. For the upstream parts of the business, it has been active since the early 20th Century. Its downstream experience is also venerable, since the country’s refinery in Port Gentil was inaugurated in 1964, with the creation of the Equatorial Refining Company (SER), which then became the Gabonese Refining Company (Sogara). ‘Twas in 1967, thanks to the joint wills of Cameroon, Chad, Congo and the Central African Republic, that the Sogara refinery started transforming crude oil into a series of petroleum products, including natural gas for domestic use. In 1973, the refinery became 100% Gabonese as the other partner nations embarked on their own downstream activities.

10,000 8,000 6,000 4,000 2,000 0

2009

2010

2011

2012

Source: DGEPF, Ministry of Economy

Oil & Gas – Downstream

The Koreans get cracking Samsung is planning big things for Gabon, and the first is the new oil refinery, to be located in the Mandji Island SEZ, near Port Gentil, itself the oil capital of Gabon. Sam Youl Kim, the vice president of Samsung C&T who signed the MOU with the Gabonese government, has a vision for the downstream oil industry. For starters, the new refinery’s capacity, at 50,000 barrels/ day, is over twice that of the old Sogara asset (21,000 bbd). This means that two-thirds of the output can be exported to regional and European markets, with the remaining third used to meet the growing domestic demand. In addition, the new plant will produce liquefied petroleum gas (LPG), gasoline, diesel, jet fuel and other hydrocarbons.

conglomerate Samsung C & T Corporation will take on the investment. There are also strong hopes for further development of downstream industries, in the petro-chemical branches. The special economic zone of Mandji Island will host these ventures. Indeed, assuming an annual increase of 10% of the domestic market for petroleum products, construction of this new refinery should quell both domestic and export needs. Storage Currently, the storage of petroleum products is mainly provided by SGEPP (Gabon company for the storage of petroleum products), which has one storage depot in Owendo and another in Moanda. Two smaller companies also operate storage facilities: Libya Oil Marketing and Total Gabon. The first has two deposits (Port-Gentil and Ndjolé), while the second has one in Lambaréné. Lastly, two filling stations for butane gas canisters (largely for domestic cooking use) exist: SGEPP’s in Owendo, and Engen Gabon’s plant in Port Gentil. Distribution / Supply chain The various products are transported by road (160 tanker-trucks), by sea (two coastal ships belonging to Petromarine SA), by rail (16 rail tank cars), and by inland waterways (13 barges). Finally, the distribution of products to end users is handled by Total Gabon Marketing, Petro Gabon, Engen Gabon, and Libya Oil Gabon. Gabon counts

According to the government, the implementation of this project will create 3,300 jobs, including 300 direct ones, allowing the maintenance of this trade in the country. It will also contribute to industrial transformation and value creation. Delivery of the new plant is expected in 2015, for operational kick-off in 2016.

103 service stations as well as over 2,000 points of sale for butane gas. Natural gas futures It is hoped the new refinery will also open new energy horizons. Gabon has natural gas reserves estimated at 39 billion m3. Natural gas can be expected both in mature crude wells, as well as in yet to be discovered fields. Yet natural gas is currently only of use to a limited number of clients. Since 2009, the new government has shown interest in the better use of natural gas. The first step is not wasting it: a law now forbids the flaring of natural gas, a side product during crude oil extraction. Any gas product not essential for crude extraction requirements must be re-injected into the ground, pending the establishment of a full-scale natural gas production circuit. Although it is also developing a master plan, the government, well aware of the substantial reserves available, has identified three key projects: the supply of natural gas to thermal power plants; the construction of a petrochemical plant; and the construction of a nonconventional liquefied natural gas plant. • For more information Sogara – no website. See French wikipedia Ministry of Energy – www.minesgabon.org and www.energie.gouv.ga 2013 EDITION | Doing Business in Gabon

Powering up To support its aggressive industrialization program, Gabon needs more energy. The long-term plan is to increase energy production from 414 to 2,000 MW by 2020. For the immediate needs, 400 MW are needed.

or Gabon, electricity production comes from two sources: hydro-electricity and thermal plants. Hydropower accounts for 70%, of production, whereas fossil fuel-fired thermal plants cover the remaining 30%. The national grid is quite extensive, with about 80% of the population having access. Yet, about 90,000 people still remain unconnected. New dams and thermal plants are being built to quell ravenous demand.

Electricity production reached a level of 1,837 million kWh in 2011, an increase of 4.9% over 2010, due to investments for new power plants to cope with the strong market demand. In 2012, production improved yet further, by 6.8% to reach 1,961 million kWh. The government acknowledges that there is a supply vs. demand discrepancy, which accounts for the frequent brown-outs or patches of non-existent service. Part of the difficulty is that the current production capacity is a mere 414 MW, but experts at the Energy Information Administration (EIA) estimate that Gabon has the hydro-electric resources to produce 6,000 MW if desired. By certain estimates, Gabon needs to add a further 400 MW of capacity in order to fully satisfy immediate demand. To support its industrialization policy, the government has decided to boost energy production from 414 to 2,000 MW by 2020. Significant investments in hydropower generation and the promotion of renewable energies have been budgeted. In the 32

Doing Business in Gabon | 2013 EDITION

hydroelectric field, six new dams are planned by 2020. Three have already been started: a public-private partnership with the Chinese Sino Hydro Corporation for the new Grand Poubara dam to produce 240 MW; the FE2 dam (36 MW) on the Okano river in the Woleu-Ntem region; and the Empress dam (42 MW) at Ngounié near Fougamou in the South. The government has also set two natural gas thermal plants in construction. The first is Alénakiri plant, being built by the Israeli company Telemenia, with a capacity of 70 MW. Alénakiri will deliver further electricity to Libreville and the Nkok SEZ. The second

Free electrons Evolution of power production and consumption 2500

2000 Million kWh

The country’s power assets include: • Kinguélé dam, a power plant with a capacity of 56 MW, which supplies Libreville and its surroundings; • Tchimbélé dam, with a capacity of 68 MW, located upstream of the dam Kinguélé; • Owendo gas-fired thermal plant, with a capacity of 140 MW, which supplies Libreville and its surroundings; • Ntoum plant, with a capacity of 170,000 m3/ day, which supplies the city of Libreville and its surroundings, • Poubara hydroelectric plant, with a total capacity of 36 MW.

1500

1000

500

2010 Paid power

2011 2012 Power losses or unpaid Source: Minisitry of Economy, DGEPF

Power

difficulties to ensure access to electricity and to ensure proper distribution, as evidenced by recurring blackouts in major urban centers. This situation poses threats to economic growth, as pointed out in the World Bank’s Doing Business 2009 report: "The power cuts or rolling brown-outs caused by SEEG imply average operating losses of 2% of revenues for small and medium enterprises (SMEs). The lack of electricity, according to experts, is among the top three factors that hinder the development of SMEs in Gabon and in the world. These companies lose an average of 5 hours per month.”

thermal plant is in Port-Gentil, initiated in 2012 along with the development of the Mandji Island SEZ and agricultural zone. This plant will have a 105 MW capacity.

Future prospects On the positive side, the supply difficulties have meant the appearance of entrepreneurial companies wishing to exploit the potential for renewable off-grid energy production, namely solar and wind power. One striking example is certainly that of Toutelec EDF, a company that produces power generation equipment from solar and eolian sources. One of the company’s first investments is in Okolassi, about thirty kilometers from Libreville, where the first plant to manufacture electrical transformers in sub-Saharan Africa will open in August 2013. This project benefits from the expertise of the Agency for Enterprise Development in Africa (see www.adeafrance.org).

SEEG – the national utility Established in 1950, SEEG (Societe d’Energie du Gabon) is the electricity and water utility for the The construction of the new power plants also raises nation. specializing in the production and distribution the question of their operation, of electricity and drinking water all the more so given SEEG’s in Gabon. SEEG also operates Supply difficulties have current difficulties. SEEG is the power plants, or purchases operator of the Alénakiri power output from power generators. meant entrepreneurial plant, but what about the other projects? Exasperated by the In 1997, after bidding, the opportunities for some interruptions of electricity supply Gabonese government auctioned in Libreville since February 2007, off SEEG to Veolia Water, which innovative companies the government had threatened became majority shareholder in December 2009 to review the with 51% stake, the remaining SEEG agreement, which runs until 2017. A complete 49% being held by Gabonese investors. SEEG audit of SEEG activities was launched in April, 2010. handles power and water for most of the urban and In 2011, Veolia sold half of its shareholding to EDF semi-urban areas of Gabon. Granted for a period (Electricité de France), the massive French specialist of 20 years, the concession contract covers the in electricity supply. Even though this sale should production, transport and distribution of drinking bode well for both private and corporate users, the water and electricity in the country, particularly in the situation has changed very little so far. According to 3 main cities of Libreville, Port-Gentil and Franceville. local sources, the government is now considering The contract also stipulates that SEEG make the whether to open this sector to other operators, necessary investments in order to improve the quality thereby using the forces of competition to stimulate of service, to increase the access, and to lower the supply. • public rates for both water and power supply. Since gaining the concession in 1997, SEEG has managed For more information: to increase water and electricity connections by 50%. However, in recent years, SEEG has encountered

SEEG - no direct website. See www.veoliaeau.com Ministry of water resources - www.eaux-forets.gouv.ga 2013 EDITION | Doing Business in Gabon

Gabon top companies Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

Company Shell Oil Gabon Total Perenco Comilog Addax/Sinopec Maurel & Prom Vaalco Gabon Ceca Gadis Tullow Oil Gabon Gabon Oil Company GOC SEEG Total Marketing (distrib.) Compagnie du Komo Sobraga Airtel Gabon Gabon Telecom Petro Gabon (distrib) Groupe CFAO Socoba EDTPL Sodexo Gabon SNBG Engen Gabon Libertis Gabon SIAT Gabon Libya Oil Gabon SDV (Bollore) Colas Gabon Managem Satram-EGCA

30 31 32 33 34 35 36 37 38 39

Toyota Gabon EGCA Atlantique (Etisalat) Getma Gabon SMAG ETDE Gabon Precious Woods Rougier Tractafric Motors Gabon CimGabon

Revenues ($ Mill.) $1,611.8 $1,435.5 $1,385.2 $754.2 $579.3 $554.1 $528.9 $382.5 $340.0 n.a. $326.2 $251.9 $236.4 $220.9 $220.8 $212.5 $184.6 $131.6 $126.9 $118.3 $111.3 $89.3 $86.3 $85.3 $85.0 $84.5 $83.4 $70.7 $69.5 $69.3 $68.9 $63.9 $52.4 $52.3 $51.6 $49.6 $49.6 $49.6 $47.1

Note Sector Est. Oil & gas Oil & gas Est. Oil & gas Mining Est. Oil & gas Oil & gas Est. Oil & gas Retail Est. Oil & gas Oil & gas Utility JA Oil & gas JA Holding JA Brewing JA Telecoms/ICT JA Telecoms/ICT Oil & gas JA Retail JA Construction Est. Hospitality JA Forestry Oil & gas JA Telecoms/ICT Agro Est. Oil & gas JA Transport Construction Est. Mining Constr.Transport Auto. (import) Construction Est. Telecoms/ICT Est. Transport JA Agro-food Construction Forestry Forestry Auto. (import) Est. Construction

CEO Adrian Drewett Benoit Chagne Denis Chatelan Claude Villain Xian Yong Dong Patrice Tauzia Rodney Macalister Michel Essonghe Jean-Médard Madama Serge Toulekima Francois Ombanda Felix Boni Christian Kerangall Fabrice Bonatti Louis Lubala Noureddine Boulmene Jean-Baptiste Bikalou Denis Zappula M Baloche Philippe Bossoutrot Serge Okana Adama Dogatiene Soro Noureddine Boulmene Gert Vandersmissen Joseph Denis Antchouey Yves Debiesme Stephane Muth n.a. Lahcen Jakhoukh

Website shell.com total-gabon.com perenco.com eramet-comilog.com addaxpetroleum.com maureletprom.fr vaalco.com cecagadis.com tullowoil.com gabonoil.com seeg-gabon.com total-gabon.com compagniedukomo.com n.a. africa.airtel.com gabontelecom.ga petrogabon.com cfaogroup.com socoba-edtpl.com sodexo.com snbg-gabon.com engen.com gabontelecom.ga siatgabon.com n.a. bollore-africa-logistics.com colasgab.com managemgroup.com satram-egca.com

Eric Roumengas Mohamed Ait Ben Ali Frederic Feraille Bertrand Rose Alexandre Vilgrain Christophe Roques Marus Decourtins M Lachevre Claude Pardon Jean-Marc Junon

groupesogafric.com (check) satram-egca.com moov.ga getma.fr somdiaa.com etde.ga preciouswoods.com groupe-rougier.com tractafric.com heidelbergcement.com

Revenue information is indicative only, and gathered from various sources. Publisher not held responsible for errors Notes: JA refers to Jeune Afrique; Est. means estimate; ; Sources: Mediaside Analysis, Jeune Afrique Les 75 premieres entreprises d'Afrique Centrale, Répertoire des Industries et Activités du Gabon 2013, various Gabon press articles

Doing Business in Gabon | 2013 EDITION

Top Companies

at a glance Rank 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60

Company GSS Global Sourcing & Supply Soc Gabonaise Services Bernabe Prix Import Cora Wood Sucaf Gabon Sogafric Services Conseil General Chargeurs CGC Usan (Azur) Pizolub Aeroport de Libreville SNEF Gabon Acciona SNI Societe Nationale Immobiliere Air Liquide MDO Services CGPR Geofor Solsi Trans-services Gabon MEP Mandji Electricite

Revenues ($ Mill.) $44.2 $40.4 $38.9 $37.3 $35.7 $34.7 $31.8 $29.5 $28.7 $18.5 $15.9 $13.9 $11.9 $10.0 $10.0 $9.1 $6.9 $6.0 $4.9 $4.0 $2.1

Note Sector Hospitality JA Security JA Retail Retail Forestry Agro (sugar) Construction Est. Transport Est. Telecoms/ICT Oil & gas Transport Construction Construction Construction Est. Chemicals Hospitality Construction Construction Telecoms/ICT Transport Construction

CEO Iheb Tlili Ernest Mpouoh n.a. Bernard Azzi Cesare Zancolo Michel Palu Laurent Barrere Liliane Ngari Aziz Assad Lucian Ozouaki Francois Omouala Nicolas Fauvergue Eduardo Cejuela Juste Okologo Luc Gaffet Alfonso Damas Claude Cano Jean-Remy Martin Arthur Bongo Jean-Bernard Saulneron Frederic Arcaz

Website bmmigroup.com n.a. bernabeafrique.com priximport.com corawood.com somdiaa.com sogafricservices.com cgcworld.com azur-gabon.com pizolub.com adlgabon.com snef.fr acciona.es snigabon.ga ga.airliquide.com n.a. n.a. geofor.org solsigabon.com n.a. n.a.

Ranking of top banks Rank 1 2 3 4 5 6 7 8

Company BGFI Bank BICIG Banque Int'l Commerce Industrie UGB Banque Gabonaise Developpement Ecobank Orabank Citibank BICIG Bail

No. of employees 532 488 397 338 70 68 37 6

CEO Brice Laccruche Claude Ayo-Iguendha Redouane Bennis Roger Owono Mba Jean Baptiste Siate Mamoudou Kane n.a. Claude Ayo-Iguendha

Website bgfi.com bicig-gabon.com ugb-banque.com bgd-gabon.com ecobank.com orabank.net citicorp.com bicig-gabon.com

Ranking of top insurance companies Rank 1 2 3 4 5 6 7 8

Company Ogar NSIA Gabon Colina Gabon Assinco Axa Gabon SCG Reassurances UAG Vie Ascoma Gabon

Revenues ($ Mill.) $68.9 $25.8 $24.3 $20.1 $19.9 $13.3 $10.4 $7.9

CEO Bernard Bartoszek Cesar Ekomie-Afene Alain Varre Eugenie Ndende Joel Muller Crepin Gwodock Apollinaire Eva-Essangone Michel Valette

Website ogarogarvie.com (check) nsiagabon.com groupecolina.com assinco-sa.com axa-gabon.ga scg-reass.com sunu-group.com ascoma.com

2013 EDITION | Doing Business in Gabon

Plenty of room to grow Gabon’s banking has undergone rapid development since 2009, with new licenses granted to foreign banks, and an accelerated spread of banking services to the larger public.

abon offers a small but active financial platform, with a variety of financial actors already present, and several new ones lined up in the wings to make their entry. Banking has seen phenomenal growth but penetration is still low.

Gabon is a member country of the BEAC (Banque des Etats de l’Afrique Centrale; the central bank for six Central African countries), and as such uses the Central African CFA Franc (code XOF), a legacy of the French post-colonial day. The CFA Franc is used by eight West African countries and by six Central African Countries, and although the currencies are at parity, they are issued by two different central banks. The fixed rate is 1 Euro for 656 XOF. The XOF money supply is strictly controlled by the two Central Banks (BCEAO and BEAC). Countries using the common currency are prohibited from printing money of their own. The Gabon financial scene has two sets of players. There are two state-owned banks, who share the objective of developmental investment. There are also eight private banks licensed to operate in Gabon. The country also has several leasing companies and a wealth of insurance companies. The state-owned entities include the Gabon Development Bank, which is fully covered in an article on pages 40-41. The second entity is the Gabon

Housing Bank (Banque de l’Habitat du Gabon). Private banks Gabon`s eight privately-licensed banks, of which the largest three (BGFI, BICIG and UGB) account for almost 80% of total deposits. Ecobank, Orabank, UBA and Poste Bank make up the remainder, while Citibank acts as an investment bank. Over the 2010 to 2012 period, total bank assets grew by 45%, to reach $4.4 billion. Over the same period, bank deposits grew 53% to attain $3.8 billion. Bank lending followed suit, growing by 79% from 2010 to 2012, and reaching $2.9 billion. Loans kept approximate pace with deposits. Bad debt dropped from 6.3% to 3.8% in 2012, or about $110 million. The Ministry of Finance sees no reason for the trend to falter, since underlying economic growth remains strong. Banking penetration is expected to continue its stellar take-off, from an estimated 5% of

Gabon's top 5 banks by assets Rank Name

Founded

Share Total Deposits

CEO/Chairperson

Web site

BGFI Bank

1971

47.3%

Henri-Claude Oyima

www.bgfi.com

BICIG

1973

18.4%

Claude Ayo-Iguendha

www.bicig-gabon.com

UGB (Union Gabonaise de Banque)

1973

13.9%

Redouane Bennis

www.ugb-banque.com

Ecobank

1985

5.4%

Jean-Baptiste Siaté

www.ecobank.com

Citibank

1976

4.5%

Funmi Ade-Ajayi

www.citicorp.com Source: APEC, March 2012

Doing Business in Gabon | 2013 EDITION

Banking

government is also pushing the growth of the mortgage financing, via the creation of a guarantee fund that will provide easier access to home loans, and extend mortgage duration. Trends to watch Finally, any survey must draw attention to three government measures that need to be kept in mind for the future.

the population in 2005 to a current estimated 15%. Forecasters expect Gabon to reach 40% banking penetration in 2025. The government encourages the arrival of new banks in the country, so as to encourage competition that brings about better service to the public. The arrival of new entrants in the past years stimulated a frenzy of bank agency openings, passing from a dozen agencies in 2008 to almost thirty in 2012. A proliferation of automatic teller machines (ATMs), now reaching about 300 units nation-wide, has also made banking services more handy. In parallel to the promotion of retail banking, the

Mostly private deposits Evolution of total banking deposits 4000 3500 3000 $ Mill.

4% Other 2% Nonresidents

6% State co's 6% Gov't

2500 2000 82% Private

1500 1000 500

Firstly, the Gabonese government decided to professionalize the management of state funds via a sovereign wealth fund, called FSRG, but managed by a mixed-ownership company called FGIS (Fonds Gabonais d’Investissement Stratégique). The purpose of the FGIS is two-fold : to guarantee the country’s financial independence; and, to this end, to re-invest part of Gabon’s oil surpluses into diversified projects of potential value to the economy, which require capital. On the performance of this program will hang the outlook for Gabon’s striving to use its oil revenue to build up other sources of sustenance of the economy as oil reserves dwindle. Secondly, also in 2012, the government decreed the creation of Poste Bank, a postal bank modelled somewhat on similar entities in France (Banque Postale) or Germany (Postbank). These are simple banking outlets doing business inside the post offices around the country. This results in a kind of piggyback neighborhood banking. The roll-out of postal banking will be progressive, both in terms of geographic location, as well as in terms of service provided. In the first phase, Poste Bank will run savings and checking accounts. It will also install a network of ATMs at selected post offices. Poste Bank expects to widen banking penetration by setting lower minimum deposits. Thirdly, Gabonese banking is dipping a toe into the onward flow of micro-finance, the branch of semiformal lending of small amounts (typically a few hundred dollars) for short periods, to finance microentrepreneurs (shopkeepers, farmers, etc.). For the full story, see next page. Gabonese banking as a whole? Well, Albert Schweitzer would surely have been surprised. • For more information:

0 2010

2011

2012 Note: DGEPF, Ministry of Economy

Ministry of Finance – www.finances.gouv.ga BEAC – www.beac.int COBAC – www.izf.net (then search for COBAC) 2013 EDITION | Doing Business in Gabon

MICRO-FINANCE

Small streams make big rivers Micro-finance is still small in Gabon, but its good recent results make it set for further growth.

There are ten registered microfinance institutions licensed in Gabon. Two of them are associative, whilst eight have adopted the structured corporation status. These micro-financiers operate via 30 agencies, of which 19 are located in Libreville. Sources of funds Micro-finance has encountered good success, both in terms of financial resources available, and in terms of employment. Indeed, for the latter, the funds available for lending have increased by 58.3% in 2011, both from capital increases and additional deposits. Despite still slender lending margins, microfinanciers have increased their capital funds to $7.1 million (+4% over 2010). Deposits into micro-finance savings accounts have also boomed, to reach $29.2 million, in large part due to active promotional campaigns by the ten operating companies. In 2012, micro-finance institutions also fared well, with an 18.2% increase in savings deposits from, in the face of declining capital stock (-36.2%). Uses of funds For the most part, the micro-finance loans are provided for a short-term cash needs of clients, predominantly in the retail and service sectors. In 2011 the aggregate loans amounted to $16.3 million, almost double the volume of 2010. The jump in lending was to the benefit of SMEs, associations, as well as “economically weak individuals”. 2012 was also productive for micro-finance, with an 81.6% jump in lending, due to sustained demand and the extension of loan periods. Lending rates for short-term credits are between 1.5% and 7% per month, or 14% annually for civil servants. Savings accounts reap between 3.5% and 5% per annum. Loan recovery rates stand at about 80%, due to flexibility in reimbursement plans, and the tight connections between the micro-financiers and their clients or association members. The players Micro-finance in Gabon is dominated by two large companies:

Doing Business in Gabon | 2013 EDITION

The appeal of micro-finance Evolution of micro-finance - Sources and uses of funds 50 45 Funds available ($ M)

In Gabon, there are three types of micro-finance institutes. Firstly, associative entities that regroup funds from their members to then lend out to association members. Secondly, structured corporations (“société anonyme” legal status) that collect funds from individuals and then make loans. Thirdly, dedicated microfinance companies that lend on a micro-credit basis, without offering savings services.

40 35 30 25 20 15 10 5 0

2007

2008

2009

Deposits

2010 Capital

2011

2012

Loans

Note: All values in USD using a 510 CFD/USD exchange rate.; Source: BVMAC

Loxia and Finam (Financière Africaine de Micro-projets). Between them, they accounted for about 84% of the client base in 2012. Overall the ten existing micro-finance institutions employed almost 340 staff in 2012, although this number is in slight decline. Prospects/outlook Although micro-finance has seen double-digit explosion over the past years, there is still plenty of room for further growth. When benchmarked against other countries in the CEMAC economic area, Gabon only places fifth (out of ten countries). The government is aware of the unexploited potential, and the first steps are being taken to provide a better legal and institutional framework so as to promote further growth. More specifically, the issues of the tax status of micro-finance institutions, and laws surrounding savings associations (MEC, or Mutuelles d’Epargne et de Crédit in French) are being addressed by government panels. After all, micro-finance is often the first step in formal banking penetration nation-wide.

For more information COBAC – Commission Bancaire de l’Afrique Centrale – www.izf.net (search for COBAC) Comité National de la Micro-finance (part of the Agency of Economy and Fiscal Policy).

Capital Markets

Financing diversification Gabon is slowly developing its exchange BVMAC, so as to enable local institutions and companies to issue bonds and stocks.

s a financial platform, the six countries that make up Central Africa carry little individual weight. That is why, in November 2003, the BVMAC (Bourse des Valeurs Mobilières de l’Afrique Centrale, or Central African Exchange) was created, with its headquarters in Libreville. The primary objective of the BVMAC is to facilitate financing for the CEMAC* area, be it for governments, or for private enterprise. Another purpose of the exchange is to encourage good governance by replacing traditional practices with transparency and full information. BVMAC has not had easy beginnings. Cameroon has its own active exchange (DSX Douala Stock Exchange), which provides competition to BVMAC. So BVMAC actually started its operational activities five years ago, in August 2008, after setting up the required back office systems and the trading platform.

bonds were issued for governmental institutions, whilst two were for private companies (retailer Prix Import and gas station network Petro Gabon). The BVMAC is relying on the SIAT (Société d’Investissement pour l’Agriculture Tropicale) public listing to propel the exchange into broader public trading. Overall SIAT is planning to open 30% of its share capital to investors, thus raising about $65 million (1,17 million shares priced at about $56 apiece). The operation is just as important for SIAT, subsidairy of a Belgian agro-food company that has been operating in Gabon since 2003, when it purchased previously state-owned companies. The funds will enable SIAT to increase hevea plantations for rubber production, palm oil production, as well as cattle ranching. Part of SIAT’s development strategy is to strengthen its transformative capacities, thus helping Gabon reduce its reliance on food imports. “One of our challenges is to enlarge and diversify our trading base,” explains Pascal Houangni Ambouroue, head of the BVMAC. “Our past issues have been largely taken up by banks and financial institutions, and these investors are not very active traders. They tend to hold onto titles until maturity. With the new equity issues, we hope to liven up trading.” BVMAC currently offers weekly price fixings, but the volume of trades is low. About 98% of transactions are from institutional investors, and only 2% from individuals.

As shown in the table, the exchange has to date issued six bonds, and is in the process of listing its first stock, for SIAT, the Gabonese agro-food group. Four of the

The future emphasis of BVMAC will be on the development of capillarity by organizing road shows and convincing companies to list debt instruments. •

*CEMAC refers to Communauté Economique et Monétaire de l’Afrique Centrale, and includes Tchad, Centrafrique, Cameroon, Equatorial Guinea, Gabon and Congo-Brazzaville.

For more information: BVMAC – www.bvm-ac.com

First bonds, then stocks Synopsis of offerings since 2008 Year

Issuer

Nature

2008

State of Gabon

Bond

Coupon and term 5.5% - 6-year

Value ($ Mill.)

2009

Prix Import

Bond

7% - 5-year

$0.8

IFC (World Bank)

Bond

4.25% - 5-year

$24.4

2010

Petro Gabon

Bond

6% - 7-year

$13.7

BDEAC

Bond

5.5% - 7-year

$58.6

2011

State of Tachad

Bond

6% - 5-year

$195.5

2013

SIAT

Stocks

n.a.

$159.3

Est. $65.0

Note: All values in USD using a 510 CFD/USD exchange rate.; Source: BVMAC

2013 EDITION | Doing Business in Gabon

At the service of SMEs Priority at the Gabon Development Bank is given to lending to mid-size companies that process domestic raw materials and thereby serve the National Plan in building a modern economy.

abon Development Bank (GDB) has a long history, as an indirect offspring of the colonial Credit de l’Afrique Equatoriale, founded in 1948. GDB itself was created in 1960. GDB is a so-called national interest company, structured as a public limited company with a board of directors. The company’s shareholders include the government (51%), the Caisse des Depots et Consignations (18%), the French Development Agency AFD ( 11.4%), the BEAC bank of Central African States (8%), the German development agency (DEG at 7.8%), and others. The bank’s total shareholder capital in 2012 was about $49.4 million. GDB holds substantial shares in two financial institutions that are actively involved in the Gabonese housing projects, namely mortgage lending and social housing. One of these is the BHG (Banque de l’Habitat du Gabon, or Gabon Housing Bank), in which GDB holds 37.5%. GDB also owns 20.7% of SNI (Societe Nationale Immobiliere), which finances social housing projects. GDB serves the public through a network of ten agencies and one representative office at various locations in the land. Although its name would imply a remit as elsewhere (e.g. that of the African Development Bank), in actual fact GDB offers some retail bank services. “Our mission is to provide financial or technical support for any project likely to promote economic or social growth in Gabon,” explains Roger Owono Mba, the managing director. Although the bank can support work of both the national and local governments, its 2012 portfolio of lending (see chart) predominantly addresses private concerns. “Our typical loan reflects our commitment to grass-roots development of Gabon,” says Owono Mba. “We encourage entrepreneurs, small businessmen, SMEs {small and medium enterprises)

Doing Business in Gabon | 2013 EDITION

Assisting SMEs in their growth is key to Gabon Development Bank.

and others. GDB’s recent emphasis has been on the financing of SMEs, in order to facilitate the transformation of the Gabonese economy from a primary-sector based one, to secondary- and tertiary-sector. The loan portfolio has seen an explosive growth over the past years, with a doubling from 2011 to 2012, when it reached a level of about $140 million. The bulk of the loans (almost 60%) are to the private sector, followed by loans to service-based SMEs, but also to civil engineering and construction companies.

Fast lending growth Evolution of sources and uses of funds 300

250

200

150

100

2010

Total assets

Short Term Loans

2011 Mid Term Loans

2012 Long Term Loans

Note: All values in USD using a 510 CFD/USD exchange rate; Source: BVMAC

Development Bank

Setting priorities based on economics, not politics. “One of our first tasks for the Gabon master plan was to analyze where infrastructure existed, where demand was predicted to increase, and what investments should therefore be made in order to have supply meet demand,” explains Jim Dutton, the head of the Bechtel team that is setting up and coordinating the ANGT (Agence Nationale des Grands Travaux, or the national agency for large infrastructure works). The analysis concluded that Gabon should focus its limited resources on three key corridors. Corridor 1 is the current Libreville to Franceville axis, which the Transgabonais rail link follows. Two extensions will be added to this corridor: a new road to Port Gentil; and another to the the Belinga iron ore deposit (see page 25 and 52).

Emphasizing its current mission of aiding private enterprise, GDB provided no money to public-sector or government institutions. In 2012, about 58% of its loans were to individuals, whereas 42% were to private companies. This reflects the institution's goal to shift from public lending to stimulus of the private sector, namely home-grown entrepreneurs. As for funding, GDB seems to be doing fine, at least by the current African standard. In 2012, the bank tallied a total of $290 million in assets, up 57% over

Development bank or retail bank? Distribution of loans per sector, 2012 Forestry industry Housing Other industries 2% 0% 2% Agriculture, Trade, retail livestock, fishing 0% 2%

Civil engineering 12%

Services 23%

Private individuals 59%

Corridor 2 is a northern axis linking Cameroun to Corridor 1 (at Ndjolé). Corridor 3 is the southern axis which links Congo to Corridor 1. Thus, corridors 2 and 3 help create part of a larger pan-African north-south highway link, in addition to helping Gabon in its economic development by opening up access to as yet untapped natural resources (forestry and mining). The financial estimates for the infrastructure plan (SDNI for Schéma Directeur National d'Infrastructure) tally up to about $14.5 billion over the 2011-2025 period. This figure includes both one-time capital expenditures (CAPEX, about $14.2 billion), as well as recurring operational or maintenance expenditures, but does not include investments linked to education or health care. Translated on an annualized basis, the SDNI plan implies annual investments of $970 million. In 2010, according to the Ministry of Budget, Gabon allocated $1,435 million to infrastructure investments, or almost 50% more than the SDNI budget.

2011. Shareholder capital represents about 17% of the asset base. Although GDB’s aims somewhere between social significance and realistic investment, it is wed to a clean balance sheet. That echoes in Owono Mba’s considered response to a question concerning all of this: “Our net banking product almost doubled from 2011 to 2012, when it reached a level of $18.2 million.” • For more information: Gabon Development Bank – www.bgd-gabon.com Gabon Housing Bank (BHG) – no web site – information available via www.beac.int 2013 EDITION | Doing Business in Gabon

Planning clean corridors After the 2009 elections, it fell due to conceive, organize and implement a national infrastructure program. American firm Bechtel helped with the planning, and is now busy coordinating the ANGT government agency that oversees the work.

n Africa soccer is a passion. In 2011 for Gabon it served as a wake-up call. With barely a year left before the CAN 2012 African football tournament, the two planned stadiums (in Libreville and Franceville) as well as the requisite roads leading to them stood far from completion. With its honor at stake, the government decided to banish the old ways, and bring in some new blood. That is when it was decided to hand the job to Bechtel, an giant American engineering firm. This is how; initially Bechtel was merely asked to help coordinate work on CAN 2012. But as things progressed, it was then called to think bigger and to work out a master plan for the development of Gabon’s infrastructure: the Schéma Directeur National d’Infrastructure. Gabon has plenty of lush equatorial forest ringing vast stretches of gleaming Atlantic beach, composing

Transport infrastructure is a key recipient of government funding.

a paragon of natural beauty. It is only on closer inspection that it is revealed to be both seething hot as well as water-logged. The endless growth of trees and the soggy ground underfoot bedevil the work of civil engineers and the passage of their heavy equipment. To compound matters, the main economic centers (Libreville and Port Gentil) are both on the waterfront. This may explain why the development of roadways to access the hinterland has been tardy and partial. Currently, Gabon possesses a network of 940 kms of paved roads, and an additional 8,300 kms of laterite (dirt) tracks. Most of the interurban road use is for commercial purpose, about 67% of it light commercial and about 31% of it heavy. The remaining 2% are logging trucks (“grumiers” in French) that cannot cope

Working overtime Partial list of main infrastructure projects planned Transport Mode

Project & details

Roads

Corridor 1

Airports

Corridor 2 Corridor 3 New Libreville airport

Transgabonais Belinga Port Gentil Northbound Southbound Andeme

Airport renovations

Port Gentil + Makokou + Tchibanga + Mouila + Lambaréné

5 road sections; 474 kms 4 road sections; 226 kms 2 road sections; 267 kms 2 road sections; 67 kms 3 road sections; 228 kms

Rail

Rehabilitation of Transgabonais (track and engineering works) Doubling track capacity on western stretch (for Belinga iron ore transport) New rail link to Belinga iron ore deposit (320 kms)

Ports

New deepwater harbour for mineral shipments Owendo harbour: enlargement + rehabilitation + modernization Lambaréné harbour improvements & dredging Ogooué River

Doing Business in Gabon | 2013 EDITION

Transport Infrastructure

operated under licence by Comilog/Eramet, the mining company that operates the Moanda manganese mine, and is the biggest user of the railway. Safe harbors Owendo and Port Gentil harbors are the lungs of the Gabonese economy. Most of Gabon`s trade transits through them. Owendo port, located about 20 kms south of downtown Libreville, has dual roles. On the export side it handles the bulk of the wood and manganese shipments, and has a dedicated loading terminal. On the import side it receives the container ships bringing manufactured goods and food. Port Gentil is mostly used for petroleum export – both crude oil and refined fuels from the nearby refinery and for local consumption. with roadway that are too sharply curved. The most important commercial axes are on the outskirts of Libreville and Franceville. The road link to the port of Owendo, near Libreville, is the most heavily trafficked. Most of the passenger road traffic stays off the road network servicing the forest. It afflicts, instead, the capital, Libreville. The traffic jams there rival those of Mumbai or Los Angeles. Since roads carry about 45% of Gabon’s cargo and about 65% of its passenger-miles, the government is therefore mainly investing right there. With the African Development vBank financing for an amount of Euros 280 million, an additional 250 kms of roads will be paved in the north and south of the country (PR1 program). The Bechtel plan (see sidebar) calls for the establishment of three key infrastructure corridors, and an investment of $14.5 billion over the 2011-2015 period. Jungle ties The Libreville establishment likes to style its Transgabonais rail line as Gabon’s Labor of Hercules. Its 650-kilometer main trunk links Libreville/Owendo with Franceville, in the nation’s southeastern corner. Work on the line began in 1978, and was completed in segments in 1986. A further 240-km connection to iron ore in Belinga is under study, but would be costly to build given some daunting terrain. The bulk of rail traffic cargo consists of the two key export commodities, manganese and wood. Passenger traffic is limited to twice-daily trains between Owendo and Franceville, making 23 stops during the ten-hour journey. The Transgabonais is

Both harbors are operated by GPM, which is busy adding capacity to the ports, both by increasing the efficiency of existing assets, and by new investment. Air support Because overland links are quite recent, Gabon developed, even before that, a number of domestic airports. In all there are thirteen airports, of which three are important: Libreville, Port Gentil, and Franceville. There are also about twenty private airstrips, belonging to oil, mining or forestry companies. There is hope that they may also prove useful for future ecotourism safaris for which Gabon provides ideal siting. Gabon airports have seen gradually rising traffic, with a total of about 820,000 passengers in 2012, of which 60% international ones. Over the past two years average growth has been about 3% per annum. These numbers would have been greater had successive plans for a national airline succeeded. The most recent attempt, Gabon Airlines, struck out as a commercial failure in 2012. There is current talk of a new airline, Air Cemac, and plans for a new airport, about 70 kilometers northeast of Libreville, at Andeme. Port Gentil has no road connection to Libreville yet, so that an air shuttle, of sorts, stands in its stead. The flight takes 20 minutes and mainly transports oil workers. There are numerous movements daily. As for Franceville, the hour-long flight to Libreville is far shorter and usually less bumpy than the road or Transgabonais rail link. • For more information: Copies of the Bechtel infrastructure master plan can be obtained from APIEX. 2013 EDITION | Doing Business in Gabon

For the good of the country Although a good part of the infrastructure plan aims at economic development, some of it is social, dealing with schools, hospitals and public housing. It is, one might say, Gabon’s way of leaving no one behind.

he government has decided that, for Gabon to grow into a vibrant diversified economy, it needs a skilled workforce. The ground work to achieve this has been laid. School is mandatory between the ages of 6 and 16. Literacy rates have reached 88% overall, and 98% for the youngest third of the population (aged 15 to 24). Yet only 6% of students graduate from high school, and there is complaint about the lack of qualified workers. Gabonese schools are still largely private, with 47% of primary school students being so enrolled. At kindergarten level, the proportion rises to 70%, whereas in secondary school it drops to 26%. This explains why, within Gabon households, expenditure on education is relatively high. Yet education was never short-changed in the budget. Plans are in place to reinforce various areas in the educational system (see chart). Among the priorities: the renovation of many schools currently in disrepair, reduction of classroom size to 35 students; reinforcement of technical educational curricula pitched to areas of development that are accented under the plan; strengthening of university-level education, both at home, and by providing scholarships for qualified Gabonese to study abroad. Of particular importance is the development of specialized training in the wood and oil transformation industries, to supply manpower to newly created companies. Social housing The construction of housing for the working class is another high aim. An estimated 200,000 housing units are missing, and the immediate consequence is the presence of housing ghettoes on the fringes of Gabon’s main townships. The government has shown mettle in tackling this longstanding problem. As a first measure in 2011, most of

Doing Business in Gabon | 2013 EDITION

The CAN 2012 soccer tournament was an important catalyst.

the staff of the Ministry of Housing was dismissed. The procedures for land purchase, registry and transfer were streamlined by the introduction of new, simplified and expeditious procedure. Financing of social housing was delegated to three institutions: Banque de l’Habitat, the ANGT, and the SNI, thereby bringing some order to what previously had been chaotic. Addressing this issue, the plan includes pioneering projects in Libreville and Lambaréné, of which the most important is that at a northern suburb of Libreville, Angondjé. A project there will include up to 30,000 low-cost housing units. Another roughly 12,000 units are planned in three other developments around Libreville, while Lambaréné will get a 1,000unit project. It is currently on the drawing board for 2016 completion. The 2011 budget includes an amount of Euros 10.6 million for social housing, namely land preparation. Healthcare Gabon’s healthcare is predominantly public-sector, with the private sector shouldering only about 17.5% of annual outlay. The program is three-tiered in its organization, with central coordination in Libreville, namely via the Ministry of Health. Ten regional-level structures make up the second tier, whereas the local level runs about 700 medical centers and infirmaries (or dispensaries). This system has yielded mixed results. There are important areas where Gabon stands out from neighboring nations (e.g. average life expectancy stands at 62 years vs. 54; age-under-five mortality is at 74 vs. 119); yet on Africa’s greatly bandied

Social Infrastructure

increasing its healthcare budget, which stood at an estimated Euros 400 million in 2011, or just short of 7% of the total government spending. The additional money is being spent on both hard assets (buildings and equipment), but just as importantly on soft assets, in particular professional training and public awareness programs. Where Gabon is among the leaders is the effort to provide universal healthcare via its CNAMGS program. The target date is 2025. Readers will have noted the mention, above, of a Gabonese town named Lambaréné. It is, of course, the erstwhile location of Albert Schweitzer’s Jungle Hospital, celebrated by global journalism, academe, and the international medical profession. So much so much so, that Gabon`s escutcheon might deservedly be legended with the motto, Schweitzer Obliges! • For more information: diseases, HIV/AIDS, tuberculosis and malaria Gabon is only average. To improve national health, the government is

Ministry of Health – www.sante.gouv.ga World Health Organization www.who.int/countries/gab/en/ Albert Schweitzer Foundation – www.schweitzer.org

Building for society's needs Synopsis of main projects in social infrastructure Education

Housing

Health

Main targets

* Reduce class size to 35 students (primary) * Increase number of universities and capacities * Increase specialized, technical education (e.g. forestry, construction)

*P rofound re-design of the national * Increase R&D in specific areas (malaria, tuberculosis, mother & cadaster to simplify and expedite child diseases,…) real estate transactions * Centralize purchasing of *A ttract foreign investors into the pharmaceuticals (OPN) for all 640 real estate sector medical centers * Extend universal medical coverage via CNAMGS.

Current assets

* 41,600 Kindergarten students * 281,750 primary level students * Strong private sector presence (47% of primary school students)

* 2 011 budget of Euros 10.6 M to prepare land for social housing

* ca. 700 local medical centers or infirmaries, nationwide * ca. 2,000 hospital beds * 3 major hospitals (Libreville, Port Gentil, Owendo) * 1 major military hospital * 9 important medical and social centers

New projects

* 3 new universities (Oyem, Mouila, Port Gentil) * 2 new socialized training centers (Mouila, Lambarené) * Progressive renovation of rundown schools * Construction of new schools

*C reation of Social Housing Lending Agency (FGL) to provide loans * L ate 2011: beginning of Angondje housing project (up to 30,000 units) *P ort Mole and Boulevard Triomphal urban area in Libreville waterfront

* Renovation of central hospital Libreville * Transformation of Ebori Hospital into facility for mother and infants * Creation of 4 teaching hospitals (CHU) in the Libreville area * Creation of a 5th CHU in Lambarené

Source: Schema Directeur Nartional d'Infrastructure, Mediaside analysis

2013 EDITION | Doing Business in Gabon

Digging vs. drilling Gabon has minted money from manganese, for which it is the second largest exporter worldwide. Now comes the turn for other underground riches: gold, iron ore, uranium, rare earths.

xploited since independence, Gabon’s underground still holds considerable resources, such as iron, where untapped reserves are deemed the world's largest. Gold, diamonds, phosphates, mercury, niobium, manganese, uranium, potash and others complement the considerable mineral potential, with nearly 900 geological findings so far.

Mining is therefore bound to further drive the Gabonese economy. Mining currently accounts for 4.3% of GDP and 7.8% of exports, employs over 2,000 people, not including the informal mining sector. Manganese reaps silver in the natural resource race (after oil), with an estimated 200 million tons of reserves. History Although geological exploration dates back to the 19th century, industrial mining began in 1962 with the operation by Comilog (Compagnie Minière de l’Ogooué) of manganese veins in the Southeast. Getting the manganese out was no easy task. A 70-kilometer long cable transport to Congo – Brazzaville was built, where a railway took over until

Loading manganese onto trains in Moanda.

the port of Pointe-Noire. To avoid dependence on its neighbor, Gabon then built the Transgabonais railway in the 1980s. Now manganese ore is shipped to Owendo port, south of Libreville. The main manganese deposit, located in Moanda in the Southeast, is operated by Comilog, a subsidiary of French metals group Eramet and the Gabonese government. Since 2012, the Chinese CITIC group also exploits a manganese vein in the N'djolé region (at the center of the country), where reserves are estimated at 30 million tons. By 1964, annual production approached one million tons, and by 1989 had reached 2.5 M tons. Today, production is around 3.5 M tons. Currently, Gabon

Iron ore will make a difference Overview of mining actors in Gabon Product

Companies active

Countries

Since

Notes

Manganese

Comilog (Eramet & Gabon gov't)

France & Gabon

1957

Largest vein - Moanda

CITIC Dameng (Resources Holding)

China

2012

30 Mill tons -Ndjole

Iron Ore

CMEC

China

2005

Belinga reserves (1 billion tons)

Gold

Managem (ONA)

Morocco

2012

Small production (5 tons)

Diamonds

De Beers & Southern Era & Motapa South Africa, Diamonds Canada

Not active

Exploration was not promising

Niobium & rare earths

Comilog (Maboumine)

France & Gabon

Not active

Exploration and testing

Uranium

Areva

France

Was active In 2009 new exploration was 1961-1999 carried out Sources: Mediaside analysis, Minister des Mines

Doing Business in Gabon | 2013 EDITION

Mining

Then again, an estimated $10 billion are required, no small change, even for China Eximbank, which has committed to funding. Furthermore, a specialized consulting contract has been granted to a British firm, so to assess the exact potential of the Belinga site, by 2014. Gold and rare earths Gabon also has potential for primary gold deposits. Managem, a Moroccan subsidiary of the ONA group, began producing small quantities (about 5 tons) of gold in 2012 in the small gold deposit at Bakoudou, in the south of Moanda state. Total gold exports in 2012 amounted to 680 kg, which also includes the production of small-scale producers. Exploration work continues in the area as well as at Bakoudou Etéké in the Mouila region. As for diamonds, the South African companies De Beers and SouthernEra, as well as Canadian Motapa Diamonds, conducted research on the potential, but the results were not encouraging, and further exploration is on hold. is the second largest producer of high-content manganese ore (45 to 50% density), after South Africa. But Gabon aims to be world leader by 2015, with 5.7 M tons. Next to manganese, uranium is Gabon’s second mining asset. From 1961 to 1999, the Comuf (Compagnie des Mines d’Uranium de Franceville) dug out a total of 26,600 tons of uranium. French company Areva owns 68.4% of Comuf. After a 15-year hiatus, and thanks to the recovery in uranium’s price, Areva resumed exploration in late 2006. Two years later, after an investment of about $4.5 million, Areva created a 100%-owned subsidiary in Franceville. Aside from manganese and uranium, Gabonese mining has witnessed slow development. There are both political and economic reasons for this. On the political side, there was a conscious decision not to exploit all resources at the same time. On the economic side, oil revenues were abundant and sufficient, and the export of iron ore from the untapped Belinga deposit was not profitable due to low prices and demand. Iron ore The Belinga iron ore deposit is a geologist’s dream. With reserves of about one billion tons and 64% richness, Belinga is the future of mining in Gabon. The exploitation of this deposit contract was awarded in 2005 to a second Chinese company: CMEC (China Machinery Equipment Corporation). Yet economic and legal obstacles have prevented the investment from becoming operational as yet.

Comilog’s subsidiary Maboumine appears luckier. The complex mineral-rich zone at Mabounié, near Lambaréné, contains niobium, rare earths, phosphate and uranium, and the company is now carrying out metallurgical tests in order to develop an economical method for the extraction of these minerals. Future prospects Today, the government intends to make mining one of the levers of diversification of the Gabonese economy, too heavily dependent on oil in the past. Just as it is doing for the wood sector, Gabon wishes to promote downstream mineral processing (transformation of ore into semi-processed products). This explains Comliog’s recent expansion of the Moanda metallurgical complex, consisting of a hydrometallurgical manganese plant, as well as a pyrometallurgical plant silico-manganese. The complex is expected to be completed by the summer of 2013, and will create 400 direct jobs, for an investment of $265 million. The country also wants to develop skilled local labor in mining specialities. To achieve this goal, in October 2012 the government started the construction of the Moanda School of Mines and Metallurgy. This new facility with a regional scope is intended to train senior technicians and engineers. Mining should also benefit from the revision of the mining code. The new version should provide a more attractive environment for investors. • 2013 EDITION | Doing Business in Gabon

Moving to digital Like many African countries, Gabon has a hyperactive mobile telephony sector. Fixed line telephony and Internet access lag somewhat, but are the focus of public and private attentions.

ong considered of secondary interest, new technologies are now gaining strong interest in Gabon. These changes are making Gabon one of the leading figures in equatorial Africa for new technologies. Progress has been astounding. Five years back, in 2008, barely 39.5% of Gabonese had a mobile phone. Last year, penetration reached almost 147%, with over 2.2 million mobile subscribers – a fact that can be explained by users having multiple cell phones instead of fixed lines. Access to Internet has been just as explosive, but the current penetration rate remains somewhat low, with only 12% Internet penetration rate, representing 232,555 subscribers. Telecoms The turn of the century was a new dawn for Gabonese telecommunications. In 1999 the government decided to open up the market to competition by auctioning three new mobile licenses. Further privatization struck in 2007 when Gabon Telecom, the historical state monopoly, was sold. Maroc Telecom took the majority shareholding. Even though the incumbent Gabon Telecom has long been the major player in this segment, the entry of new competitors has meant a significant upheaval of the telecoms segment. As regards fixed lines, Gabon Telecom retains its monopoly, controlling more than 18,000 subscribers,

Very high mobile penetration rates, but in need of better Internet access.

a very low penetration rate for a country of 1.5 million people, or about 0.3 million households. Mobile telephony is another story. A hypercompetitive market pits four operators against one another, using 2G networks. Market leader is relative newcomer Airtel, subsidiary of the Indian mobile giant Bharti Airtel. Airtel claims 60% market share (see table), and has been active since 2006. Second in the market is Libertis, a 100% subsidiary of Gabon Telecom, with about 34% market share. Libertis deploys a dynamic strategy for covering urban centers within the country. So far Libertis covers 30 locations in nine provinces. The smaller mobile players include Moov Gabon, which started operations in September 2000. It currently has more than 100,000 subscribers, representing 8% share of the market. Moov is the first operator to offer “post paid” subscriptions in Gabon, where the majority of subscribers pre-pay for minutes or usage. The fourth player operates the brand ‘Azur’,

Overview of Gabon mobile phone players Company/Brand

Ownership

Founded

Number Subscribers*

Airtel

CEO

Website

Bharti Airetl (India)

1999

1,297,000

Antoine Pamboro

www.africa.airtel.com

Libertis

Maroc Telecom

1999

532,000

Lhoussaine Oussalah

www.gabontelecom.ga

Moov

Etisalat (UAE)

1999

374,000

Frederic Feraille

www.moov.ga

Azur

Bintel (Bahrain)

2009

168,000

Roger Kwama

www.azur-gabon.com

Note: Subscribers for 2011 from ARCEP; Source: ARCEP, Mediaside analysis

Doing Business in Gabon | 2013 EDITION

Telecoms & IT

drops in rates for fixed and mobile telephony, as well as Internet access. Gabon’s access to fiber has been via the SAT3 backbone that connects Africa to Europe, and dates back to 2002. With Gabon Telecom holding the monopoly of access, the distribution (“last mile”) is in need of updating and expansion. This year will see improvements in the area, with the installation of the submarine fiber optic cable ACE (Africa Coast to Europe). ACE is expected to permit a threefold increase in Gabon’s international connectivity, jumping from an average of 1.2 to 4.9 GB/second. and belongs to a Bahrain company that already operates in the Central African Republic. With all these companies fighting for a small but wealthy market, the focus for customers is on interconnections between the four operators, so as to avoid roaming or cross-network charges. Internet access By contrast to a booming mobile segment, the Internet is still struggling to take off. Most experts agree on the good potential of the market. Gabon has a dozen Internet access providers, either via wifi-wimax or via satellite. The market is more fragmented than telephony, and the companies focus mostly on IT and commercial services. The most important players are: IG Telecom (formerly Internet Gabon), Solsi, Wifly Gabon, TLDC and iPi9.

Government plans For the government, improvement of network access is an important priority. Targets have been set to progressively digitize the Gabonese economy by 2016. Six projects spearhead this effort: • More reliable access to high-speed bandwidth • Extension of optical fiber • Roll-out of 3G mobile telephony • Installation of multimedia classrooms with Internet access in every school • Establishment of a government agency for digital and e-government initiatives • Introduction of specialized technology training centers

The minister's road trips are designed to find the foreign investors for Gabon's digital future

These suppliers compete with the telephony companies that offer GPRS Internet access via mobile phones or via plug-in USB keys for laptops. As for access via cable, Gabon Telecom is the sole high-speed ADSL provider, but there are only 7,827 subscribers to broadband Internet. One cause of the relative slowness of Internet take-off has been the high costs. Thankfully, this trend is now reversing, with Gabon Telecom leading by example, having cut its monthly fee by half. Pressure to lower rates came from the 2010 General Assembly of Telecommunications (Etats Généraux), which recommended significant

Cloud Gabon, Cybercity or the IT Park at Nkok SEZ are further concrete examples of Gabon’s plans for digital development.

Blaise Louembé, the Gabonese Minister for Digital Economy, makes it part of his mission to travel abroad and present the various digital offerings to international investors. The National Agency for Digital Infrastructure and Frequencies (ANINF) has coordinated many of the projects, and sought the expertise of Dutch company Open TLD, namely for Internet development issues. These efforts portend a bright future for the telecommunications sector as a new growth driver for the Gabonese economy. • For more information: Ministry of Telecommunications – www.mincom.ga ANINF (Gabon on line project) – www.aninf.ga 2013 EDITION | Doing Business in Gabon

Missed opportunities Despite a potential of 15 million hectares of arable land, agriculture contributes little to GDP. Programs are underway to develop both industrial crops for export, and for smaller scale farming to reduce imports.

griculture sometimes seems the poor stepchild of Gabon. Yet the country offers so many advantages. Vast expanses of land. Excellent growing tropical climate. Access to the vast CEMAC market of 120 million customers. Government support, both financial and educational. Despite all this, agriculture remains under-developed. Or could it be that Gabonese have better things to do with their time? Has agriculture fallen victim to the ‘Dutch disease’ of easy oil money? Despite its long tradition, Gabonese agriculture covers only 40% of the population’s needs, the remaining 60% being met by imports. Yet, even so, the country does not have too drastic a food import-export imbalance. In 2010, it imported almost $470 million worth of agricultural products, but it exported just slightly less ($425 million). By comparison, Cameroon imported $940 million but exported only $520 million, according to the WTO. Using a different yardstick, Gabon’s agriculture is not doing so well. According to the African Development Bank, it represented only 4.1% of GDP in 2011, down from 4.9% in 2006. Cameroon had a stronger agricultural sector, at 23.4% of GDP, and with a positive trend (up from 21% in 2006). But Gabon can take some solace from the fact that in Congo-Brazzaville, agriculture is only 3.3% of GDP, down from 4%. Within Gabon, one commonly distinguishes between three types of agricultural practice: subsistence farming, market farming, and finally cash crops (or industrial farming). Subsistence and market farming are intended primarily for individual or local market needs. They include the production of cassava, plantain, taro, yam, sweet potato, corn and groundnuts. However, the market farming branch is experiencing significant growth, thanks to various 50

Doing Business in Gabon | 2013 EDITION

Two-speed agriculture: the industrial type has seen big investors arrive.

support programs. For example, the Igad agency of the government specializes in vegetable production for sale in local markets, and provides technical support and training to farm entrepreneurs. In terms of cash crops, the Caistab (a price stabilization organization set up by the Ministry of Agriculture) holds the monopoly on the purchase of coffee and cocoa, and their subsequent sale. Despite this, coffee production has declined sharply, falling to a miserly 200 tons per year (Brazil produces 3.3 million tons, and Ethiopia 500,000 tons). It is the same for cocoa production which is currently between 300 and 500 tons per year, its lowest ever level. The production of

Rubber and fish Breakdown of agricultural production, 2011 Tobacco 9% Sugar 12%

Rubber 25%

Oils 6%

Cocoa 0% Coﬀee 0% Flour & eggs 20%

Fisheries 28%

Total = $295 million Source: Ministry of Economy

Agriculture

Gabon targets to produce 250,000 tons of palm oil in 2020, against 50,000 currently. Some big players are already present. SIAT Gabon is active in the palm oil, rubber plantation, and cattle ranching areas (see page 45 regarding their recent flotation on the stock exchange). Sucaf (Sucrière d’Afrique) is active in the production of sugar from cane. Smag covers flour milling and chicken farming. And of course Olam is a recent major investor, in both palm oil and rubber production, as well as other nonagricultural sectors.

these two commodities had peaked in Gabon in 1975, with 17,000 tons. In contrast, the monopoly for rubber purchasing and marketing lies with Siat Gabon, which floated its shares in May 2013. What potential there is! With nearly 15 million hectares of uncultivated farmland, and the benefit of its equatorial climate, Gabon has the same exceptional agricultural potential as a Brazil or Malaysia. Yet coffee and cocoa are currently less than 1% of agricultural production each, and oils stand at only 6%, compared to 25% of rubber (see pie chart).

And small farms too The other government tactic focuses on the multiplication of small farm holders, to re-inforce sustainable farming, food security, and import reduction. Although the country counts some 600 agricultural cooperatives, these structures are mainly designed to meet the needs of their members. In early 2011, a farmer’s guarantee fund of $1.8 million was set up. The government also launched Pasac, the program for food security and growth, which enjoyed a 2010 budget of $75 million. Pasac’s objectives are to increase the agriculture contribution to 20% of GDP by pushing market farming, whilst simultaneously reducing reliance on imports by 5% annually, namely for basic foodstuffs such as cassava, rice, bananas, meat and vegetables, among others.

An example of practical Gabon wishes to attract implementation? In April 2011, the There was no lack of effort on the signed an agreement government’s part. Back in the large agro-food investors, government with LR Group Development of 1970s, four projects are worth Israel, to create six agro farms. remembering: Agripog in the Port and develop local This investment of $18.6 million, Gentil area developed innovative vegetable and fruit production, production for its markets fully backed by the Gabonese government, will fulfill poultry and namely using hydroponic vegetable demand with local products, at prices far techniques; Agrogabon- Palmier was a nation-wide lower than imports. effort to boost palm oil production; in the Boumango region, SIAEB focused on both crops and cattle One last preoccupation for the authorities is the ranching. Alas, all these enterprises failed to meet training of the new generation of farmers. To this expectations and were then privatized over the past avail, six new farm schools have been opened. Thus, 15 years. the hope is to attain the dual aim of ensuring food security and exporting to regional and international How best to develop? markets. • Has the government learned from its past errors? Its role seems to have morphed from active daily For more information: manager to that of strategic planner, and its emphasis lies on twin tactics. On the one hand, Gabon wishes Ministry of agriculture – www.agriculture.gouv.ga to attract large agro-food industrial investors, for SIAT Gabon – www.siat.ga sectors such as palm oil, coffee, cocoa, ranching, Igad – Institut Gabonais d’Appui au Développement – chicken farming, and other cash crops. For example, www.igadgabon.com 2013 EDITION | Doing Business in Gabon

Can do better Gabon should have a flourishing fishing sector, yet the reality is that much of the business is outsourced via licenses granted to foreign actors. Things may change progressively.

espite about 885 kms of coastline, about 213,000 km2 of exclusive economic zone ocean, and 10,000 km2 of lakes, lagoons and rivers, Gabon imports about 7,000 tons of fish per year to meet domestic demand. Fishing remains a modest activity, both in terms of national wealth and employment.

Sales have seen some growth, but nothing spectacular: barely $1 million growth per year since 2010. Fishing statistics are harder to catch than tuna. In 2006 the African Development Bank estimated that the sector contributed about 1.5% to the country's GDP. A 2011 study by the ACP Fish Program reconfirmed this. Current fleet Gabon has a fishing fleet of 34 industrial vessels and about 3,000 other boats, of which 28% were motorized, according to the ACP study. The study also examined the investments from three sources during the 2000 to 2010 period: the government contributed a total of $90 million, whereas international aid amounted to $65 million, and finally private sector investments were estimated at $73 million. Per year this means that only $20 to $25 million was invested, a small sum given the extensive shoreline and good potential. Agreements with foreign countries For numerous years, Gabon neglected its ocean potential, and the easy solution was to “outsource” the fishing business by granting fishing licenses to foreigners. Thus, an agreement signed in 2005 with the European Union granted authorization for European vessels to fish in the Gabon exclusive economic zone. In return, the EU made an annual payment of Euros 715,000 for a haul of 11,000 tons, and a second payment of Euros 145,000 to help 52

Doing Business in Gabon | 2013 EDITION

Small scale fishing co-habits with industrial catches, namely of tuna.

support government programs for the development of the fishing sector in Gabon. In all the EU deployed a fleet of 40 ships, including 24 large freezer purseseiners for tuna and 16 long-line trawlers. The EU extended its agreement last April 24, giving the possibility for 27 tuna purse-seiners and 8 tuna clippers to fish for tuna and other migratory species in the territorial waters of Gabon, on the basis of a reference yearly catch of 20,000 tons. In return, the annual fee rose to Euros 1.35 million, of which Euros 450,000 for the support of the fisheries policy of Gabon. The EU financial contribution was significantly increased compared to the previous protocol, so as to

Scaling new heights Evolution of pelagic catch since 1989 25000

20000

Catch (Tons)

According to the latest edition of the "Key statistics of the Gabonese economy", published by the Ministry of Economy, about 37,900 tons of fish products were caught in 2012 against 34,200 tons in 2011, representing an increase of 10.7%. Revenues amounted to $80 million, or an increase of about 7.4%.

15000

10000

5000

1989

1994

1999

2004

2009

Source: FAO (United Nations)

Fisheries

Learning from the fishing experts If Gabon has done well in its oil and mining experiences, fishing has proven more slippery. Yet the country’s president Ali Bongo has stressed the strategic importance: “We need to build sustainable agriculture, fishing and modern aquaculture, to ensure our food security." Created in 2005, and 90% state-owned, Sifrigab has always been a pillar of the Gabonese fishing industry. Yet also a disappointment, including to Technasa, the Spanish firm that holds 10%. Sifrigab has two main businesses. In Owendo harbour, about 20 kilometers south of Libreville, it operates a tuna fish canning plant. At Port Gentil it operates a fleet of ten fishing boats.

provide support the “Gabon Blue” fishing component within the overall national strategic plan. The Japanese are also able to satisfy their taste for tuna sushi via agreements with Gabon. These accords allow Japan to deploy 15 vessels in Gabonese waters. In exchange, Japan finances many projects related to the promotion and development of small-scale fisheries in Gabon. The most prominent is the construction of community centers to promote small-scale fishing in communities such as Port Gentil, Owendo and Omboué. For example, in 2010 alone, Japan invested $12 million on various projects: the renovation of fish farms; the analysis for the construction of fishing ports in Libreville and PortGentil; the feasibility study for the development of fish farms; the development of production systems for African catfish; the analysis of inland, sweet water fish farming; the implementation of a domestic production control system, just to name a few. Future prospects Gabon has not yet given up on its domestic fishing industry. The first step in solving a problem is recognizing its causes, and Gabon realizes that the most important barriers to fishing development are the absence of a sufficient number of domestic fishing entrepreneurs, the difficulty for them to access funding, the lack of tax incentives, and the declining state of both docking structures and ship repair facilities. Public investment in the sector has contributed significantly to its economic performance, and there is the recognition that fishing plays multiple roles in the economy: it contributes to economic growth through exports and license fees; and the branch

Under the terms of the joint venture between Ireland Blyth Limited (IBL) and Sifrigab, amounting to a possible Euros 100 million, the Mauritius conglomerate will take over the management of Sifrigab, create other industrial structures, develop the deep-sea fishing sector, and build a shipyard in Gabon. IBL is expected to invest 60% of the initial needs, estimated at Euros 25 million, with the remainder to be financed by the Gabonese Strategic Investment Fund (FGIS). With better management, Sifrigab is expected to catch up to 25 tons/day, well above Owendo’s current canning capacity. The surplus fish will supply the local market, and thus reduce the dependence on fish imports. Perhaps Sifrigab’s turnaround will also serve as a model for APG (Armement de Pêche Gabonaise), the last surviving fishing company in Libreville’s traditional PortMôle harbor.

of artisanal fishing plays an important role in food security, poverty reduction and employment. So the February 2013 tactic makes full sense. That is when the Gabonese government decided to shake up its moribund fishing company Sifrigab (Société Industrielle Frigorifique du Gabon, the main fish canning plant in Gabon) by setting up a joint venture with Ireland Blyth Limited, a Mauritius-based group (see sidebar). What future prospects? As is the case for many other sectors of its economy, Gabon is trying to gain better control of its fishing assets. A recent crossministerial committee and study group is assessing the options and defining its tactical plan. In any case, environmental priorities remain key: sustainable fisheries management, eradication of illegal and unregulated fishing, and the combat against marine pollution are the backbone of the fishing sector’s evolution. • 2013 EDITION | Doing Business in Gabon

Country of surfing hippos From a mere speck on the tourism radar, Gabon wishes to broaden its reach, by developing a selective, upscale eco-tourism exploiting the country’s amazing fauna and flora assets.

abon’s natural beauty has been a rather wellkept secret until now. Although the government intends to change that, it knows full well to steer clear of mass market tourism, the kind that can destroy a coast beneath layers of concrete, glass and disco balls. Gabon’s vision is to slowly mature a following of upmarket eco-tourists, interested in the pristine landscapes, the botanical treasures and the wildlife, without upsetting the ecosystem. The current president’s father, Omar Bongo, already had this vision, when in September 2002, he announced the creation of thirteen national parks at

Fauna and flora provide opportunities for luxury safari resorts.

the Earth Summit in Johannesburg. For late president Bongo, “Gabon has the potential to become the Mecca of Nature, where pilgrims will hasten from all corners of the globe to enjoy some of the last remaining natural treasures of the world.” The thirteen parks are to become one of the

Breathtaking sights Overview of the national parks Name Akanda Ivindo

Area (km2)

Location

537 About 50 kms northeast of Libreville 3,000 East of Libreville in the center of the country

Eco-system characteristics

Attractions

Access

Forests, mangrove, beaches, orchids

Bird-watching, sea turtles, sea kayaking

Car, then boat

Primeval forest, swamps, rivers

Waterfalls, gorillas, Car or plane, then elephants, research stations. dugout canoe or by foot

Loango

1,550 Along the coast, halfway to Congo.

Forests, lagoons, beaches

Gorillas, elephants, whales, fishing

Plane, then land rover

La Lope

5,400 Exact center of Gabon

Forests, savannah, rivers

Gorillas, 400 bird species, cultural interests

Land rover or Transgabonais train

White sand beaches

Sea turtles, whales

Plane then land rover

Mayumba

80 Extreme southern coast

Monts de Cristal

1,190 East of Libreville, along Eq. Guinea border

Rough mountainous Botanical profusion terrain

Car

Moukalaba - Doudou

4,500 Along the coast and inland, between Loango and Mayumba

Savannah, rivers, hills, lakes, waterfalls, rivers

Car

Lowland gorillas, jackals, large monkeys, elephants

Pongara

870 Across the estuary, west of Libreville

Beaches, mangrove, Turtle nests, dolphins, forests whales

Boat then land rover

Bateke plateau

780 Extreme southeast corner of Gabon, near Congo

Canyons, savannah

Land rover

Gorillas, amazing landscapes, large mammals

Source: ANPN National Parl Agency

Doing Business in Gabon | 2013 EDITION

Tourism

Luxury chooses Gabon Aman Resorts Group, the leading Singapore-based luxury hotel and resort group, has chosen Gabon as its first foray into Africa. Gabon feels rightfully proud of having landed Aman as one of the anchor investors for its budding eco-tourism strategy. All the more so that Aman’s plans are not small. Phase 1 of the five-year development plan includes three resorts in Libreville (40 rooms), Pointe Ngombe (30 rooms) and Missala (20 luxury tents). Aside from rooms, restaurants and spas, the resorts sometimes require infrastructure investment for jetties, access roads or airstrips. Phase 2 includes up to six additional resorts in national parks, of which three have already been identified: 30 suites in Lopé national park, 30 suites at Kongou Falls in Ivindo park, and 10 luxury tents at Lengué in the Batéké plateau park.

groundstones for the development of tourism in Gabon, along with the already existing conference and event business. Gabon’s Agency for National Parks (ANPN) is both the guardian of the environment and the spearhead of responsible developemnt, as explains its head, Prof. Lee White: “We wish for Gabon to become one of the top ten African destinations, but in a selective way. Our goal is only 100,000 ecotourists per annum as of 2025. Reaching this target is feasible but requires improving the quality of our tourism services and offer.” Under-developed past tourism To date, Gabon has not placed much emphasis on visitors. Visas are expensive and complex to obtain. A 70% majority of the annual visitors arrive for business meetings or conferences. In 2009, that represented 89,300 visitors, or only about 1% of both South Africa’s and Egypt’s (about nine million annual visitors for both countries). Alas, visitor numbers have not been constant either. The disapperance of the national carrier Air Gabon in 2003 had a dramatic impact, with international visitors dropping by about 27% to a level of about 160,000 in 2008. In fact, the number of international visitors peaked in 2003 at about 220,000 people, of which about one quarter from neighboring CEMAC lands. Adopting the safari model “What we want to avoid above all is the mass market ‘sea, sex and sun’ business model that gave the Mediterranean gems such as Antalya, Costa Brava or Hammamet,” explains Prof. White. “We are thinking more along the lines of the South African

To back up the upscale eco-tourism offer, in 2012 Gabon also signed on South African group SFM Africa, which will focus on ocean front locations. SFM Africa will build two beachfront lodges in Loango and Pongara parks, and also a floating lodge capable of reaching the Akaka wetlands. In all, SFM Africa is planning an investment of about $15 million, with the first lodges opening in 2014. Once established, SFM is expecting about 2,000 visitors per year, some of whom will see leopards frolicking on the beach and hippos surfing, two amazing sights recently captured in National Geographic and BBC documentaries. The second phase of development with SFM Africa will include lodges in the national parks at Mayumba and Lopé.

safari model.” Gabon boasts of elephants, gorillas, chimpanzees, buffalo, hippos, antelopes, as well as whales, dolphins, leatherback turtles, manatees, and oodles of sea and river fish, evolving in the most beautiful landscapes of forests, savannas, white sandy beaches and waters. Given the country's potential, the positioning of ‘Destination Gabon’ is best as a low-volume, upscale destination, of appeal to the same exacting clientele who flock to South African safaris. Money is not an object, but a unique experience is a must. The thirteen national parks offer an array of holiday options, from coast to mountain, from equatorial jungle forest to grassy savanna. See chart. Some of the parks are almost a stone’s throw from the main cities of Libreville, Port Gentil or Franceville. Others require patience on bumpy tracks. Haste makes waste The key for ANPN is not ro rush into hasty decisions 2013 EDITION | Doing Business in Gabon

Practical Info

that might be regretted later. The development strategy calls for three stages. The first five years will see the completion of the necessary studies to position and establish Gabon as a sustainable tourism destination that respects the environment, whilst also improving the standard of service. Stages 2 and 3 will then consist of building, and then operating the resorts and their services. More specifically, ANPN has identified two reputable private partners (Aman Resorts and SFM, see sidebars) with whom to commence development of the first lodges. Offering luxury and intermediary accommodation, the lodges at Loango, Lope and Ivindo will be the first to be developed. A second priority has been to define the services on offer – both in terms of hospitality, and in terms of recreational options (wildlife viewing, sports, etc.). “We are at the beginning of our eco-tourism adventure,” concludes Linsey Embinga of ANPN, “but

we are confident given Gabon’s strong assets. Our thirteen national parks include the full biodiversity of the Congo basin, with its rich fauna and flora. We are one of the last refuges for gorillas and endangered apes. And do not forget our pygmy heritage: dances, rituals, masks, sculpture, cave paintings. Picasso would have found inspiration here.” Last but not least, Gabon is offering attractive incentives to tourism investors, including both fiscal and customs advantages. Flight times from Europe are almost half of those to South Africa, and Southern African markets can reach Libreville in two to four hours. Given the country’s good business environment (telecoms, banking, infrastructure, skilled labor), Gabon is hoping to attract more investors in the tourism sector. • For more information: National Parks Agency – www.gabonparcs.ga Ministry of Tourism – no website, contact APIEX

Practical information

for Visitors to Gabon

Official languages • French and English. Climate Gabon is located on the equator and as such enjoys a tropical climate, with temperatures of 27 C yearround, and high humidity. The seasons are not as marked as in continental climates, but one can distinguish between: • December and January: short dry season 56

Doing Business in Gabon | 2013 EDITION

• February to April: long wet season • May to September: long dry season • October and November: short wet season Gabon witnesses many hyper-local weather patterns, with cloudbursts that may affect small areas and leave neighboring ones dry. Time zone • Gabon Standard Time is the same as continental Europe (GMT + 1). Gabon does not use daylight

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Practical Info

savings, so there is a one-hour time difference during that period. Telephone prefix • The international country code for Gabon is 241. • Fixed phone lines all start with the (area code) prefix 01. Note that many websites and publications still use the old numbering system, which did not include the 01 prefix. You will need to add that when making a call. • Mobile phones start with the prefixes 04 or 05 or 06 or 07, depending on the mobile carrier. Currency • The national currency is the CFA Franc. • Exchange rate: $1 = ca. 520 CFA (as at June 2013) Electricity Electrical current is 220 volts, 50Hz. Taxis • Hotels usually have their own private cars available. Otherwise taxis can be hailed in the street, but are “multi-tasking”, i.e. they pick up other passengers along the way. Taxis do not have meters, so you need to agree on a price before embarking. A typical fifteen minute ride will cost about CFA 2,000. Visas • All foreign nationalities need a visa including evidence of sufficient funds for the duration of stay and a current vaccination certificates. This must be done prior to arrival. Citizens of ECOWAS states are allowed to enter Gabon without a visa, subject to their stay not exceeding three months. Airport transfer • Libreville airport is located very centrally, along the coast, barely 10 kms north of downtown Libreville This publication was produced by Mediaside Austria for APIEX (Agence de Promotion des Investissements et des Exportations). The publishers thank various Gabonese government agencies and the African Development Bank for their input. Publisher: Mediaside Austria Editor in Chief: Christopher Fodor Editorial coordinator: Rob Goldsmith Art director: Rohit Juneja Contributors: Francois Ndjimbi, Linsey Embinga, Madeleine Berre Photos: Agence Nationale des Parcs Nationaux, Olam Gabon, Agence Nationale des Grands Travaux, GabonReview

Doing Business in Gabon | 2013 EDITION

(Presidential Palace). Taxis are freely available outside the airport terminal and will whisk you downtown for about CFA 10,000. • Major hotels have shuttle buses. Drinks • Coffee/tea ca. 2,000 CFA • Sandwich ca. 4,000 CFA • Bottle of water ca. 500 CFA • Beer ca. 2,500 CFA Shopping • Libreville has an arts & crafts market that offers African items such as masks, wooden sculptures, jewelry, leather goods and cloth. • Gabon offers informal and formal retail. Informal retail includes open air markets (usually mornings) and street vendors. Every day except Sunday. Opening hours • Office hours: 9 a.m. to 6 p.m. Monday to Friday • Government offices: 8:30 a.m. to 4:30 p.m., Monday to Friday • Post offices: 8:00 a.m. to 6 p.m. M to F, Saturday mornings. • Stores: Monday to Saturday, usually 9:00 am to 19:00 pm. • Restaurants: Lunch from 12:30 to 15:00; dinner from 19:00 to 23:00 • Night clubs open at 21:00 Further reference material • For further reference we recommend the guide “Le Pratique du Gabon”, edited annually by Pole Sud Editions. An online version is available at www.lepratiquedugabon.com • A good listing of Gabon companies is available: Repertoire des Entreprises du Gabon (RIAG).

Mediaside Austria Bärengässchen 10, A-5020 Salzburg, Austria, Tel +43 676 708 5066 chris.fodor@dbi-web.com APIEX CEO: Nina Abouna Project coordinators: Joannick Ngomo, Janick Ossibidja B.P. 3403, Libreville, Gabon Tel: +241 04 58 24 24 and +241 04 58 25 25 www.apiex.ga contact@apiex.ga

Copyright 2013 Mediaside Austria Printed in India The trademark DBI Doing Business In is deposited by Christopher Fodor and is his intellectual property. All efforts have been made to insure accuracy of information provided. The publishers are not held responsible for mistakes. The opinions expressed in the articles are those of the authors and interviewees and do not necessarily represent the opinion of APIEX or the government of Gabon. Unless otherwise specified, all currencies are in US dollars. A standard exchange rate of 510 CFA/USD was used throughout.

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