Gabon: Forestry processing potential

Already a significant contributor to GDP,Gabon’s forestry sector has been going through a lengthy and challenging process to transform itself from an exporter of raw material into a processor of timber products. Moving up the price chain is not without its growing pains, but the sector has made some evolution branching into added-price activities.

Additional than 400 kinds of wood can be found in Gabon’s forests, which spread over 22m ha of land and cover additional than 85% of the national territory. Forestry is a major contributor to the local economy, accounting for 6% of non-hydrocarbons GDP. It is the second-major employer in the country after the public sector, and the first and most significant employer in the private sector, generating some 20,000 direct and indirect jobs. The industry is as well the second-major source of foreign revenue in Gabon. The price of wood exports in 2008, prior to the launch of the government’s reforms, reached CFA165bn (€251m), accounting for 12% of total exports.

As a result, the government has been active in introducing various initiatives to help the increase price-added activities in the sector. In November 2009 President Ali Bongo Ondimba announced a ban on unprocessed wood exports, which came into effect in January 2010. The purpose of the ban was to attract investment into the sector, bringing in processing facilities and expertise to develop sector infrastructure, create jobs and train the workforce.

Before this year, after the ban was imposed, the Société Nationale des Bois du Gabon (SNBG), a semi-public company 51% owned by the national and 49% by forestry companies, which is responsible for forest development and production announced plans to build three new wood processing plants. These are set to increase its current production capacity of 250,000 cu metres garnered on activities covering some 300,000 ha of forest.

Because of the ban, no logs were exported after a-month derogation period between February and May 2010, which was instituted to sell 2009 production. Instead, the government is encouraging a switch to the local processing of wood into added-price “Made in Gabon” products. In-country processing capacity was expected to reach 60% in 2010, followed by 75% in 2011 and 80% in 2012.

The number of factories processing wood increased from 82 in 2009 to 93 in 2010, spurred no doubt in part by the new government policy. In general processing capacity registered a slight increase of 1.5%, from 1.6m cu metres in 2009 to 1.625m cu metres in 2010, while forest production reached 3m cu metres in 2009 and 1.6m cu metres in 2010. Wood exports dropped by 71.6% in 2010.

Despite the drop in exports in 2010, the SNBG recorded a 47% increase in its turnover, reaching CFA54.8bn (€83.6m), and now that the has company has shifted its activities towards local processing, it recently announced the need to upgrade workers’ skills to adapt to the changes brought on by the new work environment.

A drop in production can be explained by a fall in external request for logs and the fact that a lot of companies in the timber industry that relied heavily on export revenues before the ban was introduced have had to put production on hold while they await investment in the necessary equipment for wood processing. This may mean Gabon can catch up to the later targets once the necessary infrastructure is in place and plants begin processing.

The government is doing its part to speed up development. In December 2010 it put in place a fund of CFA20bn (€30.5m) to assist the timber industry in its transition. The government as well signed a debt conversion programme with France to inject CFA970m (€1.5m) into the sector and establish the Bureau Industrie Bois, an administrative body to support the industrialisation of forestry, inclunding provide and improve training for workers.

These moves followed quick on the heels of an agreement signed in October 2010 between the Gabonese minister of technical education and vocational training, Leon Nzouba and Christophe Haring, the CEO of Swiss wood factory Haring to establish a timber processing plant. Inclunding the bricks and mortar facility, the move is as well expected to improve training of workers and promote the industrialisation of forestry by boosting local research and development.

Meanwhile, some 40% of the 1146 ha of the Special Economic Zone (SEZ) of Nkok will be devoted to timber processing. The zone, which is located 27 km east of Libreville, is expected to become the majority significant economic zone in Central and West Africa. The project is expected to boost the sector’s development and reinforce local industry, creating some 9000 jobs. The project is slated for completion in March 2013,

Elsewhere of the plants the SNBG is helping to establish will be located in Owendo and dedicated to cutting wood. The plant, established in partnership with Italian firm Angelo Cremona, a producer of wood processing equipment, is expected to be completed by the end of 2011 and will employ around 400 new workers.

Ghana-based John Bitar & Company, after acquiring Leroy Gabon and Pogab from Chinese firm Guohua Zhang, plans to invest up to CFA16.3bn (€25m) to restructure the Pogab subsidiary, which will be dedicated to transforming okoume, Gabon’s most precious wood, into plywood. This activity had historically been carried out in France before the log export ban. The number of Pogab employees is expected to increase from 275 to 1000. Leroy Gabon’s activities cover around 600,000 ha of okoume and will help improve infrastructure by building roads and bridges.

With these projects under way, the sector is in good stead to make evolution on its targets and see additional “Made in Gabon” timber products exported and put to use in domestic infrastructure projects. The transition may not be out of the woods just from now on, but it is making steady evolution in bringing its intended benefits to the country.