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  August 3rd, 2016 | Written by

Gabon’s Mission: Create Jobs, Train Workers

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  • Crashing oil prices is writing a new chapter in Gabon's economic history.
  • The Gabonese government foresaw the need to diversify the economy.
  • Gabon's industries contracted by eight percent in 2015.

Gabon’s is an economy dependent upon exports of its rich array natural resources. Until the 1970s, manganese and timber were its mainstays. In recent decades, Gabon’s economy has become dependent upon oil.

The discovery of oil enriched the country, resulting in a per capita GDP in 2014 of a remarkable $11,484, four times that of other sub-Saharan Africa countries. But that figure, it must be noted, is somewhat misleading: 90 percent of income goes to the upper 20 percent of the population and one-third of the people live in poverty.

Between 2010 and 2014, oil accounted for 80 percent of Gabon’s exports and 50 percent of government revenues. But crashing oil prices in recent years is writing a new chapter in Gabon’s economic history.

As recently as 2014, the International Monetary Fund was congratulating Gabon on its strong growth prospects. Back then, the IMF expected Gabon’ gross domestic product to grow at a 5.4-percent rate in 2015. But the fall in oil prices has put downward pressure on growth: it turned out the Gabonese economy grew by only 2.5 percent in 2015. This year’s growth rate is forecast at 3.8 percent.

The Gabonese government foresaw the need to diversify the economy and earlier this decade promulgated a plan to transform Gabon into an emerging market by 2025. By encouraging the growth of agriculture, manufacturing, and services with public investments, the government planned to modernize the economy and provide employment to the many Gabonese who still rely on a subsistence economy involving fishing, gathering, and small-scale farming.

But the fall in oil prices and the consequent drop in government receipts and investments has led to a scaling back of that program. Gabon’s industries contracted by eight percent in 2015, according to the CIA World Factbook.

One of the keys to Gabon’s economic program has been to encourage industries that would transform and add value to the country’s natural resources, thereby creating manufacturing jobs and boosting GDP.

The government’s policies target specific industries, noted Regis Immongault, Gabon’s Minister of Economics, in an exclusive interview with Global Trade Daily.

“We want to develop industries in the sectors we have identified and that we deem essential to our desire to become an emerging country by 2025,” he said. “The goal is to process some natural resources on site.” In the mining sector, the goal is to process manganese into ferromanganese, a carbon alloy used in the production of steel.

With its 500 miles of Atlantic coastline, fishing is a potential growth area, and here, again, the government is moving towards a policy of requiring processing to take place domestically before exporting. “We want there to be operators who come to invest in landing halls and in fish conservation,” said Immongault. “And, maybe, once we have all these elements in place, we can require that fish caught along the Gabonese coast undergo initial processing before being exported.”

In 2010, the government prohibited the export of raw timber so as to encourage the first, second, and third stages of processing in Gabon. About 80 percent of the Gabon’s territory is covered by rain forest and 30 or more species of hardwoods have been commercialized.

Some forest land is being dedicated to agriculture, with significant acreage being exploited in public-private partnerships with companies like Olam International, an agribusiness and supply-chain company, to develop rubber and palm oil plantations.

The government and Olam are also partners in the Nkok Special Economic Zone near Libreville, Gabon’s capital. “This zone was created to encourage transformation in the sector of the wood industry,” said Immongault. “Today we have companies that are in the first and second stages of processing and we are encouraging the third stage of processing.”

Several companies manufacturing veneers and plywood currently operate in Nkok and a furniture-manufacturing cluster in now emerging. These developments fulfill the government’s policy of enabling “the climb up the value chain,” as Immongault put it. “And this zone should be able to attract SMEs and SMIs to manufacture products at the first stage of processing, which we can export to African countries and beyond,” he added.

There are also other activities in the Nkok zone: iron manufacturing, metals recycling, and battery production, “which are products we definitely want to export,” said Immongault. “We also want to open some services in the zone. Nkok is a reflection of this diversified Gabon we want in terms of activities.”

The enterprises currently located in the zone are small businesses, some run by entrepreneurs who relocated to Gabon for economic opportunities offered by the special economic zone. Although at least some of these companies have embarked on aggressive growth plans, the number of jobs they are each generating can be measured in the dozens. Many of the more skilled labor are recruited from abroad, often from India and Indonesia.

The same situation prevails in the agribusiness sector. The Mouila and Awala palm plantations, operated by Olam International, employ close to 5,000 employees, the vast majority Gabonese, and inject $1.5 million per month into the local economy by way of payroll.

At the Awala plantation, a crude palm oil production facility has been established which currently employs 37 workers, 23 of them Gabonese. The more skilled operators, 14 workers, come from Indonesia. The plant is not operating at full capacity just yet. But even when that day comes, it will employ fewer than 200 people.

The greatest potential to add Gabonese to employment appears to be in the agricultural sector. There is much less potential to create jobs in processing and manufacturing, despite the governments policies.

To the extent that manufacturing jobs are being created, there is a need for technical skills that are rare among the Gabonese. The government has invested in training centers for different sectors such as mining, metallurgy, and woodworking as well as an the oil institute in Port-Gentil south of Libreville.

“This was done,” explained Minister Immongault, “to provide the necessary expertise to enable the Gabonese to respond to those needs in these different sectors.”