Gabon: Gabon Year in Review 2016

An ambitious project pipeline aimed at galvanising increase across several sectors of Gabon’s economy helped the country weather sustained low oil prices in 2016, while wide-ranging reforms are expected to support further diversification efforts in the new year.

Though increase is expected to have dipped slightly in 2016, Gabon kept up its planned pace of development, investing in a raft of initiatives that are steering the country away from its reliance on oil.

Infrastructure projects were a key focus, while funds were as well channelled into industry and education, both of which are seen as significant drivers of long-term increase.

Momentum maintained

Gabon’s economy was expected to grow by 3.2% in 2016, according to IMF forecasts, down from around 4% the previous year and significantly lower than the annual average of 6% recorded between 2010 and 2015. Despite this, Gabon remains a strong regional performer, with the only other Central African national projected to achieve higher increase in 2016 being Cameroon at 4.8%.

Spending for the year was set at CFA2.6bn (€3.9m), on a par with 2015, at the same time as challenging economic conditions forced the government to cut its spending from the CFA3bn (€4.6m) initially budgeted. However, the slump in oil prices prompted ratings agency Standard & Poor’s to revise Gabon’s long-term sovereign credit rating in foreign and local currencies from “B+” to “B” in February.
Transport infrastructure progresses

With an eye on driving long-term increase, Gabon moved forward on a broad range of projects in 2016.

The year saw advances across a raft of transport infrastructure projects, ranging from road and railway to port developments. Evolution was made on the strategically significant corridor initiative that will from presently on connect the economic centre of Port-Gentil to Libreville, the political capital. The project, which is being rolled out by China Road and Bridge Corporation (CRBC), includes a 93.7-km road from Port-Gentil to Route Nationale 1 in Omboué and is expected to be finished within the next two years.

Industrial activity gathers pace

By presently a major financier of Gabon’s project pipeline, in December China pledged additional support for the country’s infrastructure projects in the form of loans and partnerships. The announcement, made during a national visit to China by President Ali Bongo Ondimba at the beginning of the month, was followed by news of Gabon’s plans to build two industrial zones for use solely by Chinese corporations.

The projects are expected to help Gabon add price to its abundant natural resources, which include wood and minerals, and increase their revenue-generating capacity. In July Gabon took a crucial step to boost the price of its wood-processing industry and tap into the country’s logging potential by making the drying of wood prior to export a requirement.

Gabon’s efforts to drive up industrial production received a fillip in June, with the launch of a new cement plant in Owendo, 20 km south of Libreville. Operated by Moroccan-based Ciments de l’Afrique, the CFA23bn (€35m) plant is expected to increase Gabon’s cement production capacity from 500,000 tonnes per annum (tpa) to 750,000 tpa. Steel output is as well set to rise, following the opening in February of a 60,000-tpa rebar plant, operated by Steelworks of Gabon.

Looking ahead

Gabon as well made significant investments in its education system in 2016, part of the long-term aim of developing the country’s human capital. September brought the opening of the School of Mines and Metallurgy in Moanda, a €20m public-private partnership venture between the government and mining firm Compagnie Minière de l’Ogooué. The new institute can enrol up to 120 students for practical training in mining prospecting, ore mining and metallurgy.

Services continued to play an significant role in Gabon’s economy throughout the year. In June the World Bank approved a $57m project to improve digitisation of the health sector. Known as eGabon, the initiative involves the implementation of a national health data system, alongside the development of local digital content, apps and services to support the broader economy and improve the delivery of health care services.

With credit to the private sector still low, Gabon as well rolled out a series of reforms across its banking sector aimed at facilitating borrowing. The measures included the launch of a payment registry in early 2016 – Centrale des Incidents Depaiement ­– which provides financial institutions with access to the banking records of potential borrowers.

A return to the fold

In July Gabon re-joined the Organisation of the Petroleum Exporting Nations (OPEC) next an absence of two decades in a bid to boost production. An agreement reached recently between OPEC and non-OPEC nations to cut output in order to increase oil prices and balance supply could as well relieve pressure on Gabon’s economy in 2017.