GABONFINANCIAL TIMES SPECIAL REPORT | Tuesday June 5 2012 Page 4

Skills gapEducation hasfailed to keepstudents up tothe jobs mark

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A bout 20 kilometres eastof Libreville, the capi-tal, Gabon is strivingto shape its economic

destiny on an unpromising-look-ing patch of equatorial forestand red earth.

At Nkok, the steamshovelsand cement mixers have beentoiling since last year, pausingduring the area’s frequent rains,to build a special economic zonewhere foreign investors willsmelt minerals, process woodand live on a large housingestate.

The $200m special economiczone is being built and is part-owned by Olam, a Singaporeanresources group.

It represents the vision prima-rily of one man: Ali BongoOndimba, who has led the coun-try on a prodigious modernisa-tion drive since taking over aspresident after the death of hislong-serving father, Omar, in2009.

On the palm-lined road thatleads into Nkok, the presidentgreets visitors in the form of astatue, standing alongside hisfather and Léon M’ba, Gabon’sfirst president, cradling a mapof the country in their hands.

Until now, Gabon’s economicdevelopment has been basedfirmly on oil, which generatesabout 51 per cent of grossdomestic product but generatesfew jobs for Gabonese.

Now, the younger Mr Bongo isleading a drive to diversify andbecome an emerging marketeconomy by 2025.

The president’s “EmergingGabon” strategy rests on threepillars, with which visitors willquickly become familiar: “Indus-trial Gabon”, or the push toprocess more raw materialslocally; “Green Gabon”, or sus-tainable stewardship of the

country’s rich natural endow-ment; and “Service Gabon”, itspush for higher-value jobs andbetter terms of trade.

After working for years as aminister in his father’s govern-ment, the president hasunleashed a barrage of pent-upenergy that is beginning totransform the quiescent country.

Where local skills are lacking,he is handing the task to for-eigners, allowing them to workthrough newly created agenciesthat circumvent entrenchedgovernment structures.

“We are taking our future intoour own hands, with the help of

like-minded international part-ners,” the president said on avisit to London in May.

Mr Bongo has handed Bechtel,the US engineering group,responsibility for overseeing thebuilding of billions of dollars ofroads, railways, schools andhigh-speed internet links tomake the central African nationa regional entrepot in whichforeign companies will want toinvest.

Management of its 13 nationalparks has been handed to aBriton.

Olam, which owns a 40 percent direct stake in the Nkok

special economic zone, will alsopart-own a second one plannedin the second city of Port-Gentil.

In so far as Gabon had aninternational profile before, itwas seen as a stable oil republicin which corruption was rifeand the extended Bongo familycontrolled much of politics, theeconomy and public life.

Now, the president is rebrand-ing the country as a dynamicplace to invest: business-friendly and well-connected,with a government willing toaccommodate investors atalmost any cost.

With a population of just 1.5m

and a per-capita gross domesticproduct on a par with Argentinaand Turkey, Gabon’s startingpoint is good, especially by thestandards of its benightedregion.

Because of conservation workbegun under Mr Bongo’s father,the country has preserved mostof its tropical forest, which itaims to exploit carefullythrough sustainable logging andeco-tourism.

“I am convinced we havethe potential and ability tomake Gabon into a role model,”says Lee White, head of thenational parks agency. For

foreign investors touchingdown in Libreville, there is asense that the country could bea new El Dorado where rulesand regulations are made tomeasure.

Executives speak glowingly ofministers who make themselvesavailable to business at shortnotice.

“We saw a willing govern-ment wanting to go thatextra mile,” says Gagan Gupta,head of Olam Gabon, whichalso plans investments in palmoil and a fertiliser plant.

Bid to transform an oil republicUnder President AliBongo, the country isrushing to modernise,report John Reed andPeggy Hollinger

Continued on Page 2

Modernisation drive: investors are being offered big tax breaks to offset the higher costs of doing business in a country where wages are high and skills low Reuters

Inside this issueOilBlack goldgenerates80 per centof exportincome butreservesaredwindling Page 2

Economy The country isbacking efforts to diversifyaway from dependence onoil with lavish amounts ofmoney Page 2

Mining Potential investorsare concerned at thegovernment’s decision toreview its mining codePage 2

Politics Gabon has been amulti-party democracy since1991, but the political partyfounded by the president’sfather remains dominantPage 3

InterviewPresidentBongo isdeterminedto make abreak withthe pastPage 3

Infrastructure Looking tojump-start development androot out corruption andinefficiency in publicspending, the president hascontracted out big publicworks to Bechtel Page 4

Agriculture and forestryBlessed with a benignclimate for growing cropsand 22m hectares of forest,the country pitches itself asa safe haven for investmentin a difficult neighbourhoodPage 4

On FT.Com● Foreign policy

● Tourism

● SpecialEconomic Zones

2 ★ FINANCIAL TIMES TUESDAY JUNE 5 2012

Gabon

ContributorsWilliam WallisAfrica Editor

John ReedFT Correspondent

Peggy HollingerFT Leader Writer

Stephanie GrayCommissioning Editor

Steven BirdDesigner

Andy MearsPicture Editor

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“What other country willallow you to meet the headof state at one day’snotice?”

Investors are offered bigtax breaks, and incentivesranging from a guaranteed25-year supply of manga-nese being offered to Abhi-jeet, the Indian mineralsprocessor, to the 10-year fulltax holiday extended toinvestors in the Nkok SEZ.

The aim is to offset thehigher costs of doing busi-ness in a country wherewages are high and skillslow.

The sweeteners seem tobe working: Olam saysthree-quarters of the free-hold sites in the Nkokzone’s first phase have beenspoken for, and it is plan-ning a second phase.

Yet there are some rea-sons to be sceptical that MrBongo will succeed in allaspects of his modernisa-tion programme. Some for-eign businesspeople note adisconnect between thecountry’s driven executiveand lower echelons of gov-ernment where, they say,corruption and torpor per-sist.

“The ministers want tosurge ahead, but then youhave 100,000 people behindwho are walking slowly,”says one industry execu-tive, who asks not to benamed. “For them, tomor-row is another day.”

Mr Bongo’s parcelling outof economic concessions toforeigners has created someresentment in Gabon’sbureaucracy and dividedpolitical opposition.

“He has created parallelagencies, but they are con-nected directly to the presi-dent,” says Marc Ona, anenvironmental activist.“They cannot be controlledby the government, theycannot be controlled by theparliament – yet theseagencies have the biggestbudgets.”

Another concern for busi-nesses, and foreign donors,is whether Gabon’s smallpopulation, about a third ofwhom are foreigners, willbe able to deliver the skillsneeded for all those pro-spective jobs.

In a heavily forestedcountry with few roads,dominated by its capitalcity, incumbent investorssay they are already strug-gling to attract unskilledworkers for resourceprojects.

“If you spend $10m on aproject, one-third of it or$3m will be for social infra-structure – housing, roads,electricity,” says GertVandersmissen, director-general of Siat Gabon,which produces palm oil,rubber, and cattle in far-flung parts of the country.

One thing observers arenot faulting Mr Bongo’sadministration for is itsambition.

“Everything you see hereis what you have after 48years of nothing happening,followed by everythinghappening at once,” saysEric Benjaminson, the USambassador.

Bid todiversifyan oilrepublicContinued from Page 1

Bélinga, deep in the heartof the Gabon rainforest,contains one of the world’slast great unexploited irondeposits.

The site, with an esti-mated 1bn tonnes of high-grade ore, was to have beenthe flagship that movedGabon’s economy from itsreliance on oil. Instead, ithas become a symbol of thedifficulties the countryfaces in exploiting its vastmineral resources.

For two years, Bélingahas lain idle while thegovernment wrangles withChina National Machinery& Equipment, the site’soperator, over the slow paceof development.

Chinese managers, how-ever, complain in localmedia about last-minutechanges to terms and condi-tions.

Meanwhile, public hostil-ity is growing, as environ-mental campaigners chal-lenge the mine’s impact onnearby national parks.

Nonetheless, the sheervolume of ore at Bélingameans that the governmentcannot afford to keep theproject suspended forever.

President Ali BongoOndimba has made revivingthe mining industry a prior-ity in the drive to developnon-oil revenues. Bélinga

would go a long way tomeeting his ambition.Developing remote sitessuch as this would alsobring much-needed invest-ment to areas deprived ofroads, power, water andjobs.

“We have oil, but this isnot enough to support ourdevelopment,” he said on arecent visit to Australia.“We believe that miningcould be the driving forcebehind Gabon’s growth.That is why we are here.We are looking for strong,long-term partners to workwith us on mining andprocessing projects.”

Mining companies haveheard the message and aremoving in, attracted by thegovernment’s promise ofbig tax breaks to get invest-ment going. BHP Billitonalready has a manganesemine in Gabon, and is citedas a possible contender totake over Bélinga.

“This country is blessedwith resources,” says theexecutive of one big mininggroup that hopes to invest.“There is huge potential.”

Gabon is already theworld’s second-largest pro-ducer of manganese dioxideand aims to overtake SouthAfrica as the largest by2015.

It has reserves of gold,uranium, diamonds and thecapacity to produce 15 percent of the world’s niobium,a rare earth used in steelalloys. Some 900 sites havebeen identified for potentialexploitation.

Comilog, the mining com-pany jointly owned byFrance’s Eramet and theGabon government, has

long enjoyed a privilegedposition as the country’slargest and oldest manga-nese producer.

It is now weighing up aninvestment in rare earthsthat “could run into bil-lions” over many years,assuming that tests provesuccessful, says PhilippeVecten, managing directorof Eramet’s manganese divi-sion and chief executive ofEramet Comilog Manga-nese.

But the enthusiasm ofboth old and new miningcompanies is tempered bythe realities of operating inGabon. Skilled labour isscarce, infrastructure ispoor, while wages are com-paratively high.

“Gabon is not a low costcountry for investors,” saysMr Vecten.

The government is alsoimposing new conditions onmining projects in its effortto ensure that operators donot simply strip the earth ofminerals and ship themelsewhere for processing,where most of the value isadded.

Companies are increas-ingly under pressure tohelp develop local process-ing capabilities.

But potential investorsare most concerned by thegovernment’s decision toreview its mining code,which will set out the legal

and fiscal framework fornew projects. The first draftraised hackles in the indus-try by including a supertaxon profits, abolishing cer-tain fiscal incentives, anddemanding new environ-mental guarantees.

It also sought to set instone the tax breaks thatcould be given to industry,in a move to reduce thechances of graft in thenegotiation of contracts.

“The draft made it theleast attractive of big min-ing countries,” says onemining industry executive.“They were adding thingsthat were not there beforeand that made the total billheavier.”

The mining industry lob-bied hard for the proposalsto be revised.

Hervé Montégu, financedirector of Eramet Manga-nese, says: “The principlehas to be inscribed in thecode that the duration andlevel of these incentiveswill not be fixed by law, butsubject to negotiation whenprojects demand it.”

The government seems tohave taken on board thecomplaints and has agreedto have another look at itsdraft.

A new version of the codeis expected shortly, whichsome industry executivessay will be the milestone indetermining Gabon’s attrac-tiveness for investment.

Comilog is confident. “Weare in an industry that isimportant to Gabon’s devel-opment,” comments MrVecten. “The authoritieswant to create the rightframework. It will turn outfavourably.”

Enthusiasm tempered by realityMiningInvestors fret abouta new legalframework, writesPeggy Hollinger

‘This countryis blessedwithresources.There is hugepotential’

At dusk during Gabon’s rainyseason, the elephants of Gambastroll out of the forest andacross Shell Gabon’s residentialcompound at Yenzi. Woe betideany household that is preparinga particularly aromatic dinner.

The elephants have a habit ofloitering outside the kitchens ashouseholds prepare the eveningmeal in the hope of snatching ataste.

Pumping oil in the spectacularnatural landscape of Gabon hasalways been an adventure.

But in the more than 50 yearssince the country’s first wellswere drilled, enough western oilcompanies have been willing tobrave the crocodiles, snakes,panthers and gorillas to generateroughly 80 per cent of Gabon’sexport revenues and 50 per centof the country’s wealth.

Gabon enjoys a per-capitaincome four times higher thanmost sub-saharan Africannations, thanks to its reserves ofblack gold that have made it thecontinent’s seventh biggest pro-ducer. But they are dwindlingfast.

Oil production is set to peakthis year, and experts predictthat, without new discoveries, adecline will set in from 2014.Luckily, technology has openedup possibilities offshore and thegovernment is confident its econ-omy will not run out of fuel justyet.

In the meantime, the biggestoperators such as Shell and Totalhave been persuaded with gener-ous incentives and high oilprices to invest significant sumsin updating their existingmature wells to improve flows.

“We will stabilise Gabon’s pro-duction and we will increase it,”says Etienne Ngoubou, the oilminister. “Geology has beenrecently identified similar to thatin the Gulf of Mexico. I see aflourishing era for petrol inGabon.”

Prospects in the Bay of Guineacould be sizeable. All the majoroil companies have expressedinterest in taking explorationblocs when the tender islaunched.

Final bids will be decided notjust on technological expertiseand financial returns, but on theextent to which operators areprepared to provide local infra-structure, investment, trainingand jobs.

However, the auction has beenput on hold while the govern-ment reviews its oil code.

As in the mining industry,Gabon is determined to redefinethe terms and conditions forexploiting its natural resources.

Mr Ngoubou insists that environ-mental guarantees – barelypresent on the list in the past –will be given prominence.

The government also intendsto set up a state-owned companyto take stakes in joint ventureswith operators, to enhance itsknowledge of the industry.

Oil companies are impatient atthe delay. They express concernthat the new code will be toorigid, and worry about the gov-ernment’s desire to standardisetax breaks and revenue sharing.

Total, the country’s oldest oilproducer, says there is strongcompetition from other countriesfor deep offshore explorationinvestment.

The tender needs to belaunched this year if Gabonwants a share of oil investment,says Philippe Le Taro, vice-presi-dent of Total Gabon & Côted’Ivoire. “There is a windowright now,” he says. “The gov-ernment should not wait aroundtoo long.”

Despite this, Total and otheroperators remain confidentabout Gabon’s business climate.“It has a reputation of stabilityfor the investor,” says AdrianDrewett, chairman of ShellGabon. “The government hasmade clear that the new codewill not be applied retrospec-tively.”

However, some operators inthe oil and mining industries arebeginning to raise the alarm oversetbacks in Gabon’s attempt towin accreditation with theExtractive Industries Transpar-ency Initiative (EITI).

One of the first countries tosign up for what is rapidlybecoming a benchmark in thebattle against corruption, Gaboncould be rejected this year. It hasnot delivered the required infor-mation about revenues and taxesin the oil and mining industriesfor certain years.

Government critics claim thisis because the information couldreveal the extent to which theruling elite profited personally inthe past from Gabon’s oil boom.The government strongly deniesthis.

But ejection “would be a seri-ous drawback”, said one industryexecutive. “It would not rule outworking in Gabon, but it wouldraise questions about how openthe framework is.”

Mr Ngoubou insists the coun-try will meet the deadline. Theproblem, he says, is that Gabon’sunder-developed information sys-tems mean data are hard to comeby, even for government.

“We are not used to communi-cating. That comes perhaps fromour Bantu culture. We give infor-mation only to those we considerworthy of receiving it,” he sayswith a smile.

But Gabon “wants to stay in”the EITI. “We have always metour obligations. The biggest riskfor Gabon today is to develop theoil sector outside internationalnorms.”

Offshore depositsare big hope tofuel developmentOil industryOnshore productionhas peaked and newreserves are needed,says Peggy Hollinger

Oil-dependent Gabon,like many of its neigh-bours on the Gulf ofGuinea, sees the bulk

of what becomes its nationalincome pumped out of the earthor the seabed and shipped over-seas. Oil accounts for about51 per cent of gross domesticproduct.

The industry has liftednational income per head toabout $11,000, on a par withcountries such as Argentina andTurkey. However, as elsewherein Africa, oil has sapped policymakers’ and investors’ will todevelop other sectors and cre-ated few direct local jobs.

So Gabon is pursuing a policyof diversification into otherindustries, including agricultureand mining, and wants to processmore of its natural resourceslocally to create more skilledjobs. “Today we export our min-eral resources, [but] minerals canplay an enormous role in ourtransformation,” says RegisImmongault, minister of industry.

The goal of adding value toraw materials is not new inAfrica, where several othercountries are encouraging orforcing foreign investors to proc-

ess what they extract at home.But Gabon is backing up the

goal with lavish amounts ofspending on the infrastructure,energy and public servicesneeded to grease the wheels ofcommerce.

Investors are being offeredgenerous tax breaks to processtimber, minerals or other prod-ucts in the Nkok special eco-nomic zone (SEZ) near Libreville,which is being developed in part-nership with Olam, the Singapo-rean group. The first phase ofthe $200m project was inaugu-rated last year.

A second SEZ at Mandji, anisland off the country’s secondcity, Port-Gentil, is in the prepa-ration phase.

To ensure a flow of cheap andrelatively clean power to indus-try, Gabon is investing heavilyin new plants, with the aim ofdoubling energy production bythe end of 2013 to 1,000MW.Investments at two hydroelectricplants are under way, and athird is planned.

Last year, President Ali BongoOndimba opened the first, 35MWphase of a €100m gas-fired powerplant near Libreville, built byTelemenia, an Israeli company,Another 35MW of capacity willbe added in a second phase.

The company is building a sec-ond, €120m plant, in Port-Gentilwith initial capacity of 105MW toserve the new SEZ there.

The government has alsoemployed Bechtel, the US engi-neering giant, to supervise bil-

lions of dollars of road, railway,port, and telecoms infrastructureover the next five years.

“We are an almost emptycountry,” says Hamidou Okaba,director-general of the economyand fiscal legislation in thefinance ministry. “We want peo-ple to come in and transformwhat they want.”

Gabon’s foreign diplomatic andbusiness partners mostlyapplaud the country’s ambition.The criticisms they level tend tobe on the focus, rather than thethrust of Mr Bongo’s industrialpolicy.

“They have an awful lot ofthings they want to do, andthey’re trying to do everythingat once,” says Eric Benjaminson,the US ambassador. “If you askme personally – this is not theofficial US view – he could priori-tise a little bit more.”

While the development goalsare “well-chosen and necessary”,Mr Benjaminson says, the coun-try also faces limitations ofhuman capacity. With a popula-tion of only 1.5m, there are ques-tions about whether there will beenough skilled and educated peo-

ple to fill all those projected newjobs.

The World Bank, which isadvising the government onstrategies for agribusiness, tour-ism, forestry and financial serv-ices, says it also needs to concen-trate on primary education andbasic healthcare alongside thebig-ticket projects.

Zouera Youssoufou, the bank’scountry manager, says: “There’sa huge focus on infrastructure,which is correct; they are behindin terms of roads and energy andclassrooms. However, it’s notjust about building roads andpower systems; you also have tothink about what people aregoing to do.”

Foreign companies give thebusiness environment mixedreviews too. While many praisethe government’s accessibility toinvestors and openness to newideas, their complaints includemilitant unions and persistentcorruption.

Mr Bongo has made big effortsto improve governance, dismiss-ing some ministers seen as cor-rupt, and farming out swathes ofeconomic power to foreigncompanies such as Olam andBechtel.

Gabon also makes much ofwhat it sees as another asset in avolatile region: political stability.

“We guarantee security andpolitical stability,” says MrOkaba. “Other countries are veryrisky; we have justice withoutcorruption, and we have goodpublic governance.”

Better wealth distributionat the heart of state policyEconomyJohn Reed reports onthe lavish spendingaimed at diversification

Trucking: investors will receive tax breaks to process timber, minerals and other products at a special economic zone near Libreville Alamy

‘We are an almostempty country.We want people tocome in and transformwhat they want’

FINANCIAL TIMES TUESDAY JUNE 5 2012 ★ 3

Gabon

As the son of Africa’s longestserving autocrat it wasalways going to be a toughact playing the incarnation

of something new.Yet, in the three years since Ali

Bongo Ondimba fought his own wayto the top in bitterly controversialpolls, the 53-year-old President ofGabon has been making headwaybuilding a new brand for the oil-richforest state his father ran as apotentate.

Omar Bongo, who ruled Gabonfrom 1967 to 2009, was a pillar of theoccult commercial and politicalnetworks, known as “Françafrique”,that entwined elite cliques in Parisand African capitals throughclientelism, Freemasonry andpersonal relations. By swimmingmasterfully in these murky waterswhile harnessing Gabon’s oil income,the late Bongo was able to give hiscountry diplomatic clout well beyondits weight.

No doubt his son, who is also aFreemason, draws advantage fromthe networks his father cultivated.But the pressure to staunch thepatronage flows that underpinnedthem has grown much stronger asGabon’s young population hasexpanded and, with it, demand foropportunity.

Urbane and well travelled, he is anaccomplished pianist who listens toJohn Coltrane and composes music.Although educated mostly in France,he appears as at home in the US andChina and has chosen to send hisown sons to Eton College, the eliteBritish school, – a strong indicationof a desire to straddle the Englishand French-speaking worlds.

The diplomatic foundations hisfather laid, he said in an interviewrecently in London, are proving vitalin what he calls “the next phase”:securing a future for Gabon as amore diversified economy andregional entrepot less reliant on oil.“He [Omar Bongo] had friendseverywhere and those friends arewilling now to come and help. Westill have a very good diplomaticrelationship with a lot of countries,”he said.

The focus of attention is shifting,

however, as the government seekscoherent policies to propel Gabon toemerging market status by 2025.

“We think the phase of buildinggood diplomatic relationships with alot of countries is over. That issecure. What I want to do is to makesure that we enjoy the same on theeconomy,” he says.

Mr Bongo maintained strong tieswith Paris during ex-PresidentNicolas Sarkozy’s tenure. But in linewith a broader transformation inAfrica’s relations with the outsideworld of the past decade, the countrynow has multiple suitors. A trip lastyear to Singapore yielded a deal fora fertiliser plant worth $1.3bn. Indianand Singaporean companies havesigned billions of dollars in contractsfor an export processing zone, socialhousing and roads and Chinese andKorean companies have both pitchedadvice on the setting up of a newnational oil company.

In May, Mr Bongo popped up inLondon to see David Cameron,Britain’s prime minister, with whomhe shared ideas on how to pursueforestry and mining while

prioritising conservation. “I wanteverybody to come. I want theAmericans. I want Europeans. I wantChinese. I want the Indians. I justwant everyone who has the desire towork closely with us, because wewant to establish a long partnershipwith strong companies that are goingto be very solid partners,” he says.

A strong believer in the benefits ofregional integration, he says Africancountries should be working moreclosely with each other to drawadvantage from the flourishingglobal interest in Africa’s resources.“We want to develop our countries,we have resources, we should talkand not let one play us against theother, because this is what is beingdone right now.”

Meanwhile, the government isworking to put the environment atthe centre of development. A billbefore parliament will, for example,make it compulsory for mining andforestry companies to secure equalamounts of land for conservation asfor exploitation, he says. “We wantto put the environment at the heartof our plan for economic growth

Mission to build a new brandInterviewAli Bongo OndimbaWilliam Wallis talksto a president eagerto break with the past

President Ali Bongo Ondimba: under pressure to staunch patronage flows that underpinned his father’s networks Reuters

Politics President begins to win grudging respect

The shopkeeper in the crowdedmarket of Mombette has strongopinions about politics in his country.He is doubtful that democracy ispractised in Gabon.“Democracy means change. The

Bongos have been in power since the1960s,” he says as customers siftthrough the yards of colourful cottonslining his small shop. But, like manyGabonese, he is prepared to givePresident Ali Bongo Ondimba thechance to prove himself.“The president is neither good nor

bad. We will have to wait and see.”Riots broke out after President

Bongo was elected with just 40 percent of the vote in 2009. Two peopledied in the oil town of Port-Gentil, abastion of opposition to his father,Omar Bongo, Africa’s longest-servingleader before he died of a heart attack.But in the three years since his

election, the younger Mr Bongo hasbegun to win grudging respect – evenfrom opponents – for his efforts tomodernise the country. “Even if [he]was not elected with enthusiasm, hisdiscourse was well received,” saysSéraphin Ndaot, who ran against MrBongo in the 2009 election.The president has tackled head-on

the questions of corruption andcomplacency that permeated hisfather’s government. “People used tobe drunk or not turn up to work,”says Francis, a ranger in the nationalpark service. “Now they know thatthey have to be in at a certain timeand if they don’t work they will befired.”There is still a degree of suspicion,

however. Though Gabon introduced amulti-party system in 1991, thepolitical party founded by his father –and still a Bongo family fiefdom –remains dominant. The GaboneseDemocratic Party won 114 of 120seats in parliamentary elections lastDecember. But that was largely downto record abstentions, after oppositionparties called for a boycott to protestagainst the Bongos’ control of stateinstitutions.Critics point to multiple conflicts of

interest. “The constitutional court isled by a woman who had two childrenwith Omar Bongo,” says Marc Ona,an environmental activistand vocal political critic.The National

Assembly, Audit Officeand Senate are all runby those linked to theBongos, he says. “To be

independent, institutions have to be inthe hands of the people. Here, theyare in the hands of a family. Youcannot speak of democracy if it hasbeen appropriated by a family,” hesays.There has also been an outcry over

Mr Bongo’s decision to allocate bigpublic spending programmes toagencies run by foreigners. Thesereport directly to him.The president has argued that this

is necessary to ensure that money isnot siphoned away in the journey fromministry to works.But, says Mr Ndaot, “this is a false

solution. The thieves are still there.The solution is to find those whoembezzle.” Some of the agencies havealready been tainted by claims ofcorruption, leading some to argue thatone system of abuse is merely beingreplaced by another.This may not be “a democracy as

we know it,” says one Frenchdiplomat. However, “political rules arerespected”. It is not a dictatorship.Opposition parties are legal and thereis a free press, although criticism ismuted in a country where, one civilservant admits, “we don’t likejournalists very much”.The real problem is that the

opposition is divided and lackscredibility, say political observers. Manyparties are run by former ministersfrom Omar Bongo’s government, whoare suspected of having profitedpersonally from their time in power.In fact one diplomat, who preferred

to remain anonymous, suggested thatthe sweeping victory of Mr Bongo’sparty in the parliamentary vote was adisadvantage to a president anxious toshow the world that his small countrycould be a strategic hub for centraland west Africa.“He is well aware that this victory

gives a bad image. It was an excessivemajority,” he says.Mr Bongo has attempted to address

concerns with a reshuffle that hasejected the last of the ministers fromhis father’s era.Ultimately, however, Mr Bongo will

be judged on whether he can deliverresults to his 1.5m people, 30 per centof whom still live below the poverty

line.“This is where social unrestwill come from,” says ZoueraYoussoufou, the World Bank’scountry manager. “People needto see that their future isbeing thought of. A lot has tobe put in place. But the viewis more positive than it was

two years ago.”

Peggy Hollinger

Omar Bongowas Africa’slongest-servingleader AFP

because we want to reconcile theidea that you can develop yourcountry, but at the same time youcan preserve. So it’s not developmentat all costs.”

To change society will also require,he says, sustained investment inproviding suitable skills within aworkforce – he says metaphorically –better prepared in the past “todevelop a desert” than to manageGabon’s jungle terrain.

Does it bother him that he owes somuch to his father, for whom heserved as both foreign and defenceminister? “Let’s stop beinghypocrites,” he said in anotherinterview with the FT last year,“because in life, children are goingto be influenced by what theirparents do. How many doctors’ sonsbecome doctors? How many lawyer’ssons become a lawyer? It happens allthe time and people do not find aanything strange about that.

“But one should not be blamed forwanting or trying, you see? Nowwhether you succeed or not, that’s adifferent story. You have to put yourcase to the people.”

4 ★ FINANCIAL TIMES TUESDAY JUNE 5 2012

Gabon

Agriculture/Forestry Oil sector crowds out farmingGabon is blessed with a benignclimate for growing crops and worldcommodity prices are soaring, yet itgrows and exports very little. Indeed,the country imports many foods,including maize, vegetables and meat.As in other oil-rich African states,

concentration on petroleum hascrowded out other economic sectors,including farming.With 22m hectares of forest on its

territory, the country has itself beenambivalent about the ecological andeconomic impact of agro-industry.In an effort to prevent unregulated

exploitation of its forests and capturemore downstream jobs in the industryfor Gabonese, President Ali BongoOndimba, in 2010, banned the exportof unprocessed logs.Now the country is inviting investors

in on its own terms, with a reassuringpitch. Gabriel Ntchango, the ministerof forestry, says: “Gabon has theadvantage among Congo Basin statesof being a tranquil country.“This allows investors to secure their

investment, to benefit from a stablefiscal policy and stable regulations.”Gabon is looking to funnel some of

the investment through its specialeconomic zone in Nkok, east ofLibreville, which is managed and 40per cent owned by Olam, aSingaporean resources group.At the SEZ, companies are being

promised long-term supply contractsfor logs, along with the zone’s cheapelectricity and tax breaks.Early investors include Timberwolf

Tropical Hardwoods of the US.Separately, Olam is itself investing in

a joint venture a 50,000 hectare palm-oil plantation, which the company sayswill grow to 100,000 hectares in asecond phase. According to GaganGupta, the company’s country head,the operation will eventually employ6,000 people.The project includes an outgrower

programme under which Olam willhelp Gabonese develop their own palmplantations and buy from them.Gabon’s biggest investor in

agriculture at present is the SiatGroup, which has 4,400 people on itspayroll and describes itself as thecountry’s biggest private employer.The company is 35 per cent owned

by Singapore-based GMG, which inturn has China’s Sinochem has a 51per cent shareholder.Demand for commodities in China in

particular has prompted a scrambleinto farming across the region.Siat, which was founded in Nigeria

and also has operations in Ghana andIvory Coast, produces rubber andpalm oil and raises cattle in Gabon.The company claims about 20 per

cent of the local market for beef – agood market in a country where muchmeat is flown in from elsewhere at ahigh cost.The group’s business plan calls for

CFA315bn ($600m) investment in thecountry over the next 20 years.Its rubber crop goes primarily to

tyre companies, which are enjoyingrecord global vehicle sales.“I’m convinced that rubber could be

a huge crop for Gabon,” says GertVandersmissen, Siat Gabon’s generalmanager.Despite buoyant markets for its

goods, the company has by its ownaccount faced difficulty in securingstaff and supporting infrastructure inthe rural areas where it works.Siat has had to build housing,

electricity, roads, and water systems,on its own in some cases, and hashad to import workers from otherAfrican countries to help its operationsduring the planting season.“With our 20-year development plan,

we will need about 6,000 unskilledworkers in addition, and we haven’tbeen able to find them,” says MrVandersmissen.Many of Gabon’s unskilled workers

live in Libreville, he says, and preferlower-paid jobs in the city to better-paid but harder work in the field.While investors in agriculture grapple

with the means of production,government officials and watchdoggroups are keeping a mindful eye onthe sector’s impact on theenvironment.“We’ve got a good chance of

managing forests. We maintain forestcover and guarantee arelatively stable offtake of timber,”says Lee White, who manages Gabon’snational parks agency.However, he acknowledges, logging

will inevitably bring “some changes inspecies”.Notwithstanding the country’s ample

forest cover, most of it is now spokenfor, he says, between loggingconcessions and Gabon’s network ofnational parks.With most of the population

concentrated in Libreville, informationon what goes on in the country’sinterior is limited, non-governmentalorganisations say.“The extractive sector is growing

very quickly now in Gabon,” saysRomain Calaque, programme directorat the Wildlife Conservation Society inLibreville.“It will need a lot of training, a lot of

guidelines, and a lot of tools formonitoring what’s going on in thiscountry.”

John Reed

Didier DeFreshman could becounted as one of Gabon’sfrustrated youth. Butinstead of joining the scores

of his peers searching for scarce jobsafter university, he decided to put hisfrustration to work.

Along with a few friends, he set up104.5 Urban FM, a radio station dedi-cated to the hip-hop tastes of thecountry’s largely young population.

“People say that Gabon’s youth is

lost. It is not lost. It just lacks themeans to realise its ambitions,” hesays, sitting in the cramped basementstudio of the station, which is listenedto by 60 per cent of Libreville’s 14 to35 year olds.

Mr DeFreshman and his friendshave been lucky. They had family andcontacts willing to back a start-up.Most of Gabon’s young people do nothave that option. Finding ways tohelp them realise their dreams is oneof the biggest difficulties facing thegovernment of Ali Bongo Ondimba.

More than 50 per cent of the popula-tion is under the age of 19, and 42 percent is younger than 14 years old. Yetmany face an unattractive future. Athird of those under 30 are unem-ployed and the number is rising.

Foreigners may be pouring billionsof dollars into the country in invest-ment. But many companies complainabout a lack of suitable candidates forthe jobs they are offering.

“The reality is that there are stillnot enough Gabonese coming out ofthe education system with the rightprofessional grounding for the oil andgas industry,” says Adrian Drewett,chairman of Shell Gabon.

It is one of the biggest handicaps todoing business in Gabon, says SanjayDey, director of Abhijeet, an Indianmanganese processing group planninga $1bn investment. Mr Dey says hewill have to import 40 to 50 per cent ofhis workers for most of the next dec-ade because of a lack of technicalcompetence in the labour market.

“Children here don’t have access tothe right education,” he says. “Theydon’t have technical colleges.”

The National Employment Officerecently found that, of the jobs onoffer, 54 per cent required technicalskills. One of the biggest shortages isqualified handlers of heavy machin-ery, such as trucks and diggers tocarry out the government’s ambitiousinfrastructure programme. But 64 percent of those applying had no voca-tional training. Thanks to its French-inspired education system, Gabonesestudents focus on academic disci-plines.

President Bongo’s government hasbegun to take steps to address theproblem. Technical colleges areplanned, along with extra primaryand secondary schools, and a growingnumber of teachers will be required tohold scientific and mathematical qual-ifications.

Nonetheless, the World Bank hasnoted that, while the government hasdone much to improve the environ-ment for business, with fiscal reformsand the promise of $11bn of invest-ment in infrastructure, spending oneducation has been slower thanplanned and even lower than in neigh-bouring countries.

But Olivier Mengné-Mintsa, head ofa new government-sponsored onlinerecruitment agency, JobGabon, saysthat foreign companies have to under-stand the specifics of the country’slabour force.

The average Gabonese student is 22years old at the end of secondaryschool. Many are forced to repeatyears several times in order to keep aplace in a system desperately short ofteachers. Yet many companies requirethat workers be under 30 years old,

have higher diplomas and five years’experience, he says.

“By the time you get a third levelqualification, you might be 27. If youneed five years’ experience you willbe 32 and not eligible for the post. Weknow companies are here to makemoney, but ... they have to take intoaccount certain parameters.”

Every year, between 10,000 and15,000 young people enter the labourmarket. The fact that they struggle tofind work while foreign workers arestill being flown in has begun to fuelgrassroots resentment.

Unions won widespread support lastyear for their strikes to demand agreater share of jobs for local work-ers. The government responded bymaking it harder to bring in expatri-ates. But some companies warn thatthis is making it virtually impossibleto do business in Gabon.

“I have a lot of sympathy for theunions,” says one oil industry execu-tive. “But Gabon does not yet havethe resources to ensure the decree canbe followed through.”

Investors argue that the govern-ment’s desire to attract investmentwill fail unless it has more to offerthan just contracts for roads andbridges. So too will its credibility withthose who make up the largest shareof Gabon’s population – its ambitiousand restless youth.

“The state today is doing what itcan,” says Mr De Freshman.

“Young people are not in oppositionto the government. But they are impa-tient. They want to see concreteaction for the development of theirambitions.”

School system could do betterYouthPeggy Hollinger reportson the frustrationsfacing young people

School’s out: one of the biggest handicaps to doing business in Gabon is a lack of technical competence Reuters

A good place to take themeasure of Gabon’s ambi-tion is the National Infra-structure Agency, knownmore grandly in French asthe Agence Nationale desGrands Travaux.

The government body,responsible for developingthe country’s roads, rail,ports, communications, andhousing stock, is based in amodern six-storey officeblock on Libreville’s mainseafront road.

Inside, the staff poringover documents or prepar-ing PowerPoint presenta-tions, are mostly foreign.Many are direct employeesof Bechtel, the US engineer-ing and construction giant,and are on secondment.

President Ali BongoOndimba, looking to jump-start development and rootout graft and inefficiency inpublic spending, has sub-contracted responsibilityfor Gabon’s big public workprojects to the US groupuntil 2016.

Henri Ohayon, theagency’s director-general, isresponsible for implement-ing one of Africa’s mostsweeping infrastructureprogrammes.

The plans include 30,000new units of social housing,hundreds of kilometres ofroads and railways to bebuilt or upgraded, and anew port and marina facil-ity in the capital.

Mr Ohayon says: “Youhave an extremely dynamicpresident who wants tomake sure the country isdeveloping in the rightdirection, that projects arebuilt within internationalnorms, to a high quality,within budget and on time.”

For anyone with a grip onGabon’s current reality, theplans might sound implau-sible.

Outside Libreville’s im-pressive city centre, goodroads are scarce, and manyare impassable in the rainyseason. Visitors sometimesstruggle with poor mobilephone reception.

Traffic on the main north-south road has beenimpeded since February,when a barge damaged abridge at Kango, east ofLibreville. Export compa-nies have to contend with aport in Libreville thatcloses on weekends andsees frequent strikes.

Mr Bongo is trying tochange that. After takingoffice in 2010, the president,who got to know Bechtelwhen it conducted studiesfor his father’s governmentin the 1980s, contacted thecompany with an offer todevelop and manage a newinfrastructure agency for afee.

Gabon and Bechtel nego-tiated a three-part contractto develop a master plan,set up the agency and sup-port the government inmanaging the projects. TheUS group will not discloseterms of the deal, which itsays lasts five years andcan be extended.

Bechtel’s first mandatewas to build hotels, stadi-ums, and roads, and trainstaff for the Africa Cup of

Nations football tourna-ment, which was held thisyear.

The two sides then identi-fied a further 114 projects,mostly in education, hous-ing, and transport.

Over the next five years,Gabon is to spendCFA300bn ($450m) on edu-cation: new schools, univer-sities, and colleges, andcommunications links. Theaim is to improve localservices to the point thatfewer young Gabonese needto study overseas.

Bechtel recently alsoissued a first wave of con-tracts to build public hous-

ing, for which Gabon isbudgeting about CFA396bnover five years.

In transport, Bechtel andthe government are study-ing the building or upgrad-ing of more than 1,700km ofroads and more than 800kmof rail, mostly for the trans-port of minerals.

A design and feasibilitystudy is in progress for thenew port, marina and con-ference centre that could beworth $3bn to $4bn, includ-ing outside investors.

Separately, the govern-ment is planning largeinvestments in fibre net-works to develop interneteducation and medical serv-

ices, and bring broadbandto the isolated interior.

“Currently, Gabon iswalking at two speeds.There’s Libreville, which ismore developed; and othercities that are less so,” saysBlaise Louembe, the infor-mation technology minister.“We want to bring to theinterior of the country thesame technological advan-tages there are in Libre-ville.”

Given the large amount ofpublic money in play, offi-cials say they are makingtransparency and integritya priority.

Bechtel, says Mr Ohayon,is in Gabon to ensure thatthere are “no deviations orconcessions” from ethicalpractice on the awarding ofbig contracts.

The US group has alreadydismissed one employeeover ethical concerns.Gabonese criminal authori-ties are investigating, inconnection with an $8mcontract for 20 buses,ordered from a UK com-pany for the Africa Cup ofNations, an ex-Bechtelstaffer who was seconded tothe infrastructure agency.

Another concern is thatGabon’s president, with bigoil revenues at his disposal,will splash out too much onundertakings that make lit-tle economic sense.

Many other resource-richAfrican countries are lit-tered with prestige projectscommissioned in decadespast. Mr Ohayon dismissesthe concern. “The presidentdoesn’t want white ele-phants – projects that startand don’t finish – orprojects that have beenbuilt and no one knowswhy,” he says.

Projects all in hands of BechtelInfrastructureThe US engineeringgroup has beenput in charge,says John Reed

‘You have anextremely dynamicpresident whowants to make surethe country isdeveloping in theright direction’