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Public-Private Partnerships: Key to Stronger African Growth

Gabon's oil and has industry produces shipments of export cargo and import cargo in international trade.

Public-Private Partnerships: Key to Stronger African Growth

The Great Recession reinforced a rule of the modern world that international economies are deeply connected, and damage to one will cause financial tremors across the world. Since 2008, advanced nations have recovered much faster than developing nations, which were struck particularly hard.

However, the lesson to take from this experience isn’t for developing nations to isolate themselves, but to build stronger ties with other countries and a diversity of corporations that will reinforce their foundations and protect against market downturns.

The World Bank has highlighted how public-private partnerships are key to global development. This is especially true in Africa, which has vast untapped potential. The West African nation of Gabon, which I call home, has a rich rainforest covering 80 percent of the country and oil in its ground.

I have seen Gabon’s rising opportunity firsthand, through my position as country head for my firm Olam International. Olam began investing in Africa 27 years ago, when we began trading cashews from Nigeria to India. Our ventures grew with the continent, and in 1999 extended our projects into the Gabon, where we have now become an ambassador for foreign direct investment in the country.

Olam saw in Gabon a country with that is primed for private investment. Unlike some of its neighbors, Gabon has been blessed with decades of political stability, favorable geography and thriving economy. Perhaps most importantly, Olam found in Gabon a partner with a strong belief in its own potential and a plan aligned to succeed.

Gabon is in a favorable position to excel. The country’s per capita income is four times that of the average for sub-Saharan Africa. Global bank Standard Chartered analyzed Gabon and found that it has better development and governance indicators than its other oil producing peers in the region. Signs are good: the latest available data shows that Gabon’s GDP grew 5.1 percent in 2014.

Gabon has leveraged these signs of strength by implementing political and economic reforms to transform Gabon into an emerging market economy by 2025. The Emerging Gabon strategy is an ambitious public investment plan based around three pillars: Green Gabon, to sustainably develop the country’s natural resources, Industry Gabon, to develop local processing of primary materials and export high value-added products, and Services Gabon, to develop the Gabonese workforce to become a regional leader in financial services, information and communication technology, education and health.

By reforming the political landscape to be more receptive to business development and diversifying its economic cooperation with partner countries, Gabon is positioning itself to be a one of the twenty-first century’s success stories. Signs are positive, but Gabon faces many challenges. The country is under intense pressure to balance the preservation of its environment and fight global warming while developing industrially.

Gabon has also been dependent on oil and gas as its main source of revenue. The global fluctuation of oil prices and its limited lifespan as a resource have made reliance on oil untenable. For the sake of a sustainable and economically viable future, diversification away from oil is crucial to the future of Gabon, but the environment hasn’t always been friendly to business and employment. The Emerging Gabon policies under have begun to make the climate friendlier to investors and stimulating to job growth.

The government established a committee to strengthen Gabon’s economic activities on an international level and maximize Gabon’s potential for greater efficiency and to ensure Gabon is seeing a return on its investments.

A key piece of the growth strategy has been developing areas within Gabon where foreign investors can thrive. Olam partnered with Gabon in a unique public-private partnership to do four large scale projects. First, to build the Gabon Special Economic Zone (GSEZ) which keeps more jobs and value from the timber industry inside Gabon. Second, creating 124,000 acres of sustainable palm plantation, and 69,000 acres of rubber plantation. The GSEZ is an example of a successful public-private partnership that resulted from the shared vision of transition for the responsible and sustainable industrialization of Gabon.

The GSEZ provides Gabon with an industrial base that delivers investor value while creating local jobs. The government created tax incentives to draw investors to these zones. Infrastructural advantages like easy access to ports and railroads have helped Gabon become the gateway to central Africa. In the six years since the formation of GSEZ, 80 investors representing 18 countries, including the United States, France, China, Malyasia, Gabon , Cameroon, and India have built operations in Gabon. Over 1,500 jobs created.

Along with the GSEZ, Olam’s projects in Gabon include palm oil, rubber, and fertilizer. We expect our Gabonese projects to generate wealth via economic diversification by increasing agriculture’s share in the country’s GDP. These projects will create a considerable number of jobs—currently more than 8,000 employees work directly within the PPP and over 12,000 jobs created so far. Olam is also projected to lead to an approximately nine-percent increase in the average income per capita.

As Africa’s role grows on the world stage it will be impacted by the fluctuations of the global economy more and more. Public-private partnerships, such as the ones that are happening in Gabon, welcome investors while developing the human capital of its people. Africa, and the world at large, will benefit from the dividends.

Gagan Gupta is president and country head of Gabon for Olam International Ltd. (Singapore).