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Gabon: tackling the resource curse

Gabon: tackling the resource curse

Gabon's huge oil reserves create a problem for the country

President Ali Bongo. (PA)

By the standards of its neighbours, Gabon is a relatively fortunate country. Since gaining independence from France in 1960, Gabon has avoided the civil wars, ethnic tension, and extreme poverty that have affected so many African countries. Indeed, Gabon has had a remarkable level of political stability, as only two presidents held power between 1960 and 2009: Léon M'ba (1960–1967) and Omar Bongo (1967–2009). Bongo’s ability to use Gabon’s substantial oil revenues ensured that he ruled the country uninterrupted for over 40 years. While these oil resources have afforded the country a level of prosperity and stability which may not otherwise have been possible, they also helped to create conditions in which endemic corruption, poor accountability, and a lack of economic diversification have thrived. This ‘resource curse’ is the challenge that Bongo’s son and successor, Ali Bongo, is attempting to address.

Gabon’s economy remains heavily reliant on oil. Oil accounts for over 80 percent of the country’s exports, 60 percent of government revenue, and almost half of its gross domestic product (GDP). Oil’s impact on the economy has given Gabon a per capita GDP of over $10,000, a figure ten times that of neighbouring Cameroon and over three times bigger than the Republic of Congo. However, oil production peaked in 1997 and has since declined by over a third, which is putting pressure on the government’s finances and the wider economy. Although higher oil prices during this period have somewhat mitigated the impact of this decline, Gabon’s continued oil dependency presents strong risks to the economy – and to Bongo’s presidency.

Observers could be forgiven for harbouring doubts that Ali Bongo’s accession to the presidency would bring about meaningful change, given that his father’s corrupt practices were so well documented. For instance, the US Senate uncovered a bank account with over $130m which was ‘sourced from Gabon’s public finances’ and the corruption watchdog Transparency International located over 30 properties owned by the Bongo family in France worth over $190m. Ali Bongo appears keen to break away from this legacy and was elected in 2009 on the promise of ensuring a more equitable distribution of economic growth and reducing the corruption that was so prevalent under his father, who died in office earlier that year.

Bongo’s reforms

President Bongo has set an ambitious target for Gabon to become an emerging economy by 2025 under his ‘Emerging Gabon’ reforms focused on economic diversification. In particular, Emerging Gabon’s pillars are aimed at fostering the growth of the country’s services and manufacturing sectors, and the sustainable development of the country’s natural resources for agriculture and tourism. Two special economic zones have been created near Libreville and Port-Gentil to provide incentive the establishment of facilities to process natural resources such as timber (President Bongo banned the export of raw timber in 2010). In addition, a sovereign wealth fund was set up in 2010 to channel ten percent of the government’s oil revenues into infrastructure projects, to be handled by a newly established national infrastructure agency.

Gabon’s oil industry has also been subject to reforms aimed at increasing accountability and local participation. President Bongo initiated a wide-ranging audit of the sector to ensure that existing agreements were adequately benefiting the country; ordered an update to the hydrocarbon code; and set out a code of ethics for government staff. More notably, a state-owned entity, Gabon Oil Company, was created in 2011 which is intended to become an active and fully integrated energy company.

While it is too soon to judge the success of these reforms, the early indications are encouraging. Gabon’s economy has grown over six percent a year under President Bongo, which an International Monetary Fund report attributes in part to the growth of the country’s forestry and mining sectors, and investments in infrastructure.

Obstacles to success

Rather paradoxically, the viability of the Emerging Gabon programme to diversify away from oil will depend to a great extent on oil revenues. These revenues are vulnerable due to declining oil production, and consequently the success of new discoveries resulting from October 2013’s offshore licensing round are of great importance to the government. Should new finds fail to materialise, the government will likely struggle to fund its ambitious reform agenda from external investment alone.

Another obstacle to President Bongo’s ambitions may come from within his own government. Investors active in Gabon have told us that dealing with the country’s bureaucracy is problematic and can delay a company’s activities. Although some improvements have been made, government corruption remains a problem at the lower levels of the civil service. The country ranks 106th out of 174 countries surveyed in Transparency International’s 2013 Corruption Perception Index.

Gabon was also delisted as an Extractives Industries Transparency Initiative (EITI) candidate country in 2013 for failing to submit required documentation on time. The EITI is an international standard which seeks to ensure transparency and accountability in the management of natural resource revenues. While we understand that Gabon’s de-listing was the result of an administrative error rather than any ill-intent, it is indicative of poor bureaucratic competence.

A viable opposition emerges?

From 1968 until 1990, Omar Bongo ruled Gabon as a one party state under the Parti Démocratique Gabonais (PDG), which still holds power today. Although a multi-party system was re-introduced in 1990, the country’s opposition has never been able to mount a credible challenge to the rule of the PDG and unseat the Bongo dynasty. When serious opposition unrest has occurred in the past, the French troops permanently stationed in Libreville were deployed to restore order. Indeed, the Gabonese opposition has long been regarded as fragmented, poorly organised, and lacking in resources.

That said, there appears to be growing disillusionment over the continued dominance of the PDG and the Bongo family. The legitimacy of Ali Bongo’s electoral victory in 2009 is still disputed by the opposition who alleged voter fraud. Sporadic protests and clashes broke out in Libreville and Port-Gentil after the results were announced in September 2009. Lack of confidence in the electoral process was in evidence in 2011 when the opposition parties boycotted legislative elections over their concerns that the outcome would not be representative of voters’ true wishes. Several high-profile PDG members have defected to the opposition, the most prominent of whom was Jean Ping, who has served as Gabon’s foreign minister and the head of the African Union in the past.

Ping has stated that he is considering running against President Bongo in the 2016 presidential elections. In order for him to seriously threaten Bongo’s hold on power, he will need the opposition parties to unite behind him. Indeed, vote splitting was a significant factor in the 2009 presidential elections, with the two main opposition parties alone accounting for over 50 percent support. Ping already has the backing of some opposition parties and civil society groups but lacks widespread support among the public.

Irrespective of who emerges triumphant in the 2016 elections, the next president will need to wrestle with the ever-present challenge posed by Gabon’s oil resources. Bongo’s ‘Emerging Gabon’ reforms appear to be a step in the right direction and may yet prove successful in reducing the country’s oil dependency in the long term. Yet, however committed Bongo may be, factors outside of his control could derail his ambitions. 

Published: 7th July 2014