Gabon Business Overview
Gabon, a central African country, is rich in natural resources. Located on the Atlantic Ocean, it borders Cameroon, Equatorial Guinea, and the Republic of Congo. It is sparsely populated, with a population of 2 million (2017) and forests covering 85% of its territory.
Gabon nonetheless has one of the highest urbanisation rates in Africa; more than four in five Gabonese citizens live in cities. The capital, Libreville, and Port Gentil—the economic capital of the country—are home to 59% of the population. One in two Gabonese citizens is under the age of 20, with the fertility rate in urban areas at four children per woman against six in rural areas, according to the 2012 Second Demographic and Health Survey.
Gabon's Political Context
The Gabonese Democratic Party (Parti démocratique gabonais PDG) dominates the political landscape: Omar Bongo held the presidency for 41 years (1968–2009), and his son, Ali Bongo Ondimba, won the presidential elections in August 2009, against the backdrop of social crisis.
The opposition boycotted legislative elections in 2011, but later competed in municipal and departmental elections in December 2013 and in the Senate election in December 2014. Still, all these elections were won by the party in power. On August 31, 2016, the incumbent president, Ali Bongo, was re-elected in controversial elections marked by a fairly low voter turnout of 59%.
Legislative and municipal elections were held in October 2018. The ruling party—despite losing 15 seats—maintained its two-thirds majority in the National Assembly, winning 98 of 143 seats. The elections followed an April 2018 constitutional court ruling that dissolved parliament (because elections had been postponed for too long) and forced the government’s resignation in May. A caretaker government has taken measures (contained in the new 2018 Budget Law) to address slippage in Gabon’s macroeconomic performance and contain its bloated wage bill.
On January 7, 2019, taking advantage of a prolonged absence by the President of the Republic, who was convalescing in Morocco, several soldiers attempted to seize power. This attempted coup culminated in the arrest of its ringleaders.
A new government was sworn in on January 12, 2019, then reorganised by presidential decree on January 30 and June 10, 2019.
An Economic Overview
Gabon is an upper-middle-income country. The fifth largest oil producer in Africa, it has had strong economic growth over the past decade, driven by its production of oil and manganese. The oil sector has accounted for 80% of exports, 45% of GDP, and 60% of fiscal revenue on average over the past five years. However, as the country is facing a decline in its oil reserves, the Gabonese government has decided to diversify its economy.
Gabon’s fiscal position worsened in 2015, with the country recording a fiscal deficit for the first time since 1998. Despite the government’s attempts to rein in expenditure and offset the decline in oil revenue, Gabon’s economy stalled in 2017 and was projected to grow by 0.8% in 2018 compared to 0.5% in 2017.
This trend is attributable to limited expansion of the secondary and tertiary sectors, impacted by the decline in public expenditure. However, higher prices for crude oil, manganese, and rubber—exported by the country—contributed to growth in the primary sector. Growth could rebound to 2.9% in 2019, driven by non-extractive sectors like agribusiness and upgraded transport and communication networks.
The government has launched an audit of the public service payroll: its initial steps included the decision to pay civil servants with vouchers and to carry out physical-presence checks to identify ghost workers. The cabinets of the President and the Prime Minister have reduced their staff by 40%. The government also extended the hiring freeze for another three years—except for social sectors.
Development Challenges
The poor quality of Gabon’s business climate is a major barrier to the diversification of its economy. Gabon ranked 169 out of 190 countries in the 2018 Doing Business report. The government’s strategy for the promotion of non-oil sectors has so far been based on the granting of specific incentives to foreign investors. A recent World Bank policy note highlighted the importance of improving human capital, building a fair and transparent business environment, and improving the quality and cost of core infrastructure—three critical building blocks for economic and export diversification. Recent measures to improve the business climate include a one-stop shop for investors; a public-private partnership (PPP) framework; a domestic arbitration court; and codes for hydrocarbons and mining.
Gabon must also boost its social expenditure. A 2013 McKinsey report suggests that roughly 30% of the population faces vulnerability, surviving on monthly incomes below the guaranteed minimum wage of CFAF 80,000 (approximately $150). The study also notes that the social situation has deteriorated in terms of access to basic social services (health care, drinking water, and electricity) in 60% of the regions.
Following this report, Gabon decided to improve its social policy by focusing on three pillars:
- Establishing integrated social programs for the most vulnerable (the elderly, orphans, the disabled;
- Creating income-generating activities for the poorest population groups; and
- Reducing inequalities in access to basic public services. Although the net primary enrolment rate is one of the highest in Africa (96.4%), the completion rate in the Gabonese education system is low (37.2%).
Tapping into the Gabonese market
Africa HR Solutions offers a full range of reliable services to facilitate your workforce management on the African continent. Our PEO Services in Gabon enable you to:
- Hire people on the African continent without a registered entity
- Complete payroll rundown and management
- Central point of contact for all your queries
- Guaranteed compliance to local laws
- Professional indemnity and employer liability
