It is hard to imagine that Nkok, a small town 27 kilometres outside Gabon’s capital, Libreville, will host sub-Saharan Africa’s biggest special economic zone. But with $200m of investments already committed to this joint venture between the Gabonese government and the Singaporean commodities firm Olam International, it has made a promising start.
The 1100-hectare zone, which will focus on timber processing, aims to attract $1.1bn a year in foreign investment by offering tax breaks, including tax exemptions on profits for 10 years. The partnership encapsulates the government’s determination to become a major emerging market by 2025.
‘Emerging Gabon’ has been a cornerstone of president Ali Bongo Ondimba’s policy to diversify and industrialise the country's economy since he came to power in 2009, succeeding his father who died after ruling for 42 years. Given the importance of the special zone towards achieving this, it was launched with much pomp on September 9, with American R&B artist R Kelly singing his hit The Storm Is Over.
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Need for diversification
Gabon relies heavily on oil, which accounts for half of gross domestic product (GDP). Its harsh experience of the drop in oil prices in 2008 and the depletion of fields in the south of the country has led it to realise this must change. “We are in a post-oil era, so we must shift from being an exporter of raw commodities to an internal manufacturer of materials,” says Mr Bongo at his palace in Franceville.
There are some encouraging signs of reform. Large-scale construction projects in and around Libreville are ubiquitous. The African Economic Outlook attributed the recovery of Gabon’s GDP growth from minus 1.4% in 2009 to 5.5% in 2010 not just to the resurgence of oil prices but to infrastructure developments, including the upgrade of roads, the building of low-cost housing, and local processing of timber. Higher spending on infrastructure means that the share of public investment in GDP growth will rise from 0.1% in 2010 to 0.2% in 2011.
Many of these developments, which are expected to create 50,000 jobs in the next three years, are possible thanks to funding from China, Singapore and India. “Although we did not specifically target any region, our Asian partners have been extremely responsive,” says Mr Bongo. “However, we ensure that we balance international companies’ investments with attracting local companies. We want the Gabonese to know [that] international investors are interested in working with them.”
Watch and wait
Yet Gabon still has far to go on its path of reform. It sits 156th out of 183 countries in the World Bank’s Ease of Doing Business rankings. And GDP expansion is forecast to slow to 4.2% this year.
We... cannot build a strong domestic economy with only 1.5 million people. We will always be a country of exports. Nevertheless, the reforms will tackle education and how we can process our commodities within Gabon
Mr Bongo acknowledges Gabon’s shortcomings, but is keen to stress that through his reforms the country can overcome them. “Our workforce lacks the requisite levels of technical training,” he says. “We also cannot build a strong domestic economy with only 1.5 million people. We will always be a country of exports. Nevertheless, the reforms will tackle education and how we can process our commodities within Gabon.
“Africa is the last frontier. It is the last continent with huge reserves. This means we will have several investors vying for our resources. We must negotiate what is in it for us, to be among the players, not the spectators.”
Perhaps, as R Kelly sings, the storm is over for Gabon, and life for the population of this small African country will improve as it finds itself increasingly on the map for international investors.
