GABON

COUNTRY OVERVIEW

LOCATION AND SIZE.

The Gabonese Republic lies along the equator on the west coast of Africa with a border length of 2,551 kilometers (1,585 miles) and a coastline of 885 kilometers (550 miles). Gabon is bounded to the west by the Atlantic Ocean, to the north by Equatorial Guinea (350 kilometers/218 miles) and Cameroon (298 kilometers/185 miles), and to the east and south by the Republic of the Congo (1,903 kilometers/1,183 miles). The drainage basin is comprised of the westward flowing Ogooue River, together with several smaller coastal rivers such as the Nyanga and the Como. Gabon covers an area of 267,667 square kilometers (103,346 square miles), of which land comprises 257,667 square kilometers (99,484 square miles) and water occupies 10,000 square kilometers (3,861 square miles). Comparatively, the area occupied by Gabon is slightly smaller than the state of Colorado. It has a tropical climate, which is always hot and humid. The terrain is comprised of a narrow coastal plain, savannah grassland in the east and south, and a hilly interior. The major rural areas are found in Woleu Ntem in the north, where coffee and cocoa are the main cash crops, and around Lambaréné, located inland from the central coastal belt, where palm oil and coffee are important. The highest point is Mount Iboundji, which stands at a height of 1,575 meters (5,168 feet). The capital city of Libreville is located on the country's northwestern coast.

POPULATION.

At the July 1993 census, the population of Gabon numbered 1,014,976 and in mid-1998 the United Nations (UN) estimated a total of 1,188,000, giving an average density of 4.4 inhabitants per square kilometer. The population estimate for 2000 was 1,208,436. The population growth rate was estimated at 1.08 percent in 2000, with a life expectancy at birth of 48.94 years for males and 51.26 years for females in the same year. The infant mortality rate was 96.3 deaths per 1,000 live births while the fertility rate was 3.73 births per woman. The birth rate (per 1,000 population) was 27.6 while the death rate was 16.83 in 2000. The slow population growth takes into account the effects of mortality due to AIDS. AIDS results in lower life expectancy, higher infant mortality and death rates, and a lower population growth rate than would be expected under normal conditions. The distribution of population by age and sex is also affected, with those in the sexually active age groups and women being more vulnerable to the disease.

The population is more urbanized than most of Africa, with 53 percent living in the towns in 1988. It is mostly a young population with only 6 percent above 65 years of age and over 33 percent below 15 years. The country's principal ethnic groups are the Fang (30 percent) and the Eshira (25 percent), who reside primarily in the north, followed by the Bapounou and Bateke. French is the official language.

OVERVIEW OF ECONOMY

The combination of a small population and plentiful petroleum resources has given Gabon one of the highest incomes per capita in sub-Saharan Africa. The 1999 per capita gross domestic product (GDP) was a comfortable US$6,500. It therefore ranks as an upper middle-income country, a rarity among African nations.

Gabon's economy depended on timber and manganese until oil began to be exploited in significant quantities offshore in the early 1970s. The oil sector now accounts for 50 percent of GDP. Gabon continues to face fluctuating prices for its oil, timber, manganese, and uranium exports. The dominance of the petroleum sector is reflected in the economy's vulnerability to changes in world prices for this commodity, and the rate of economic growth has fluctuated widely in recent decades. While growth in GDP averaged 9.5 percent per year between 1965 and 1980, the average growth rate declined to 0.8 percent from 1985 to 1990 following the collapse of the petroleum prices in 1986. When the Rabikonga oil fields were developed in the 1990s, however, there was some improvement, reaching an average growth rate of 3.2 percent per year from 1990 to 1997. But due to steeply falling petroleum prices and a downturn in Asian demand for timber, the economy contracted by approximately 4 percent in 1998 and only saw a modest recovery in 1999 with an estimated 2 percent rise in GDP.

The petroleum boom of the mid-1970s and the expectation that oil prices would remain high led to government investment spending and borrowing, which left the country with a heavy debt burden. Consequently, in the mid-1980s the government had to undertake a series of economic adjustment programs designed to reduce debt while promoting the development of non-petroleum activities. Programs of privatization, rationalization, and retrenchment (cutting expenses) of public sector enterprises were undertaken.

Progress was limited in the areas under reform and the non-petroleum economy failed to expand as hoped. However, in January 1994 the government adopted a program for economic recovery supported by the International Monetary Fund (IMF). The objectives of this program were broadly achieved by the end of 1998. A number of major privatizations have taken place (the power utility and railway companies, for example), while others pending include the telecommunication services and the national airline. Some significant tax reforms have been introduced, notably the extension of the value-added tax (VAT) to forestry companies, removal of tax exemptions, and introduction of an investment code consistent with IMF recommendations.

POLITICS, GOVERNMENT, AND TAXATION

Formerly part of French West Africa, Gabon was granted internal autonomy in 1958 and became fully independent on 17 August 1960. Leon M'Ba, president of the new republic, established Gabon as a one-party state by inviting the opposition to join the government. There was a coup in 1964, but M'Ba was restored by French troops. Following his death in November 1967, M'Ba was succeeded by his vice-president, Albert Bernard (later Omar) Bongo. Bongo organized a new ruling party, the Parti Democratique Gabonais (PDG), which became the sole legal party in 1968. Gabon enjoyed relative stability in the 1970s and joined the Organization of Petroleum Exporting Countries (OPEC) after the discovery of oil deposits. But in the early 1980s, social and political strains began to emerge led by the Mouvement pour le Redressement National (MORENA), a moderate opposition group. This group accused Bongo of corruption and personal extravagance and demanded restoration of political pluralism. But Bongo resisted and maintained the single-party system.

A series of strikes and demonstrations by students and workers in the early 1990s culminated in a constitutional amendment that led to the creation of a multiparty system and formation of an interim government. Bongo was elected president in 1990 and reelected in 1993 and 1998. Elections for the National Assembly were held in December 1996, and the PDG gained 89 of the 120 seats. At the Senate elections in early 1997, the PDG won 53 of the 91 seats.

The 1991 constitution provides for an executive president directly elected for a 5-year term (renewable only once). The head of government is the prime minister, who appoints the Council of Ministers. The bicameral legislature consists of the 120-member National Assembly and the 91-member Senate. Both houses are directly elected for 5-year terms. Local governments exist in each of Gabon's 9 provinces, and are administered by a governor appointed by the president. There are also 37 smaller divisions, or departments, each administered under a prefect.

Total government revenue in 1997 was US__BODY__.565 billion. Of this, US$301 million was from international trade, with import duties contributing US$254 million. In addition, the government gains substantial royalties from the oil sector. Corporate and capital gains taxes are levied at 40 percent, but if companies make small profits or suffer losses, they are taxed at 1.1 percent of turnover. There is a withholding tax of 20 percent on dividends remitted overseas.

INFRASTRUCTURE, POWER, AND COMMUNICATIONS

Despite substantial investment in the Trans-Gabonais railway and foreign backing for road development in the 1990s, the surface transportation system is still inadequate and inconsistent with Gabon's high per capita income level. Until 1979, there were no railways except for the cableway link between the Congo border and the Moanda Manganese Mine. The main rivers are navigable for only the last 80 to 160 kilometers (50 to 100 miles) of their course to the Atlantic Ocean. The road network is poorly developed and much of it is unusable during the rainy seasons. In 1996 there were an estimated 7,670 kilometers (4,766 miles) of roads, of which only some 634 kilometers (394 miles) were paved. The government's aim is to surface some 1,400 kilometers (870 miles) of the road network in the next few years, with an eventual target of 3,580 kilometers (2,225 miles).

By 1989 the railway line linking Libreville and Franceville, which is located in the southeast area of the country, was fully operational. The main port for petroleum exports is Port Gentil, which also handles logs (floated down the Ogooue River). Owendo, the principal mineral port, also handles timber. A third deepwater port operates at Mayumba, in the south.

Air transport plays an important role in the economy, particularly because of the dense forest that covers much of the country and makes other modes of transport impracticable. There are international airports at Libreville and Port-Gentil and scheduled internal services link these to a number of domestic airfields. Gabon has a total of 61 airports within its borders, 11 of which have paved runways. The national carrier, Air Gabon, is 80 percent state owned.

In 1997 there were 37,300 telephone lines, 4,000 cellular phone subscribers, 6,000 PCs, and 400 fax machines. The domestic telephone system combines the use of cable, microwave radio relay, radiotelephone communication stations, and a domestic satellite system with 12 earth stations. For international links it operates 3 Intelsat satellite earth stations. There were also 4 television broadcast stations in 1997. In 1998 there were approximately 400 Internet users and 1 Internet service provider.

There was a range of radio broadcast stations, with 6 AM, 7 FM, and 6 shortwave stations in 1998.

The installed capacity for electricity production was 1.02 billion kilowatt hours (kWh) in 1995. Power generation is both hydroelectric and thermal (gas fired), with 72 percent of total capacity hydroelectric. There are proven crude petroleum reserves estimated in 1997 at 1.34 billion barrels. Production in 1996 was 135 million barrels. Natural gas production in 1995 was 102 million cubic meters.

ECONOMIC SECTORS

Agriculture (including forestry and fishing) contributed an estimated 10 percent of GDP in 1999, and employed about 41 percent of the labor force. The forestry sector alone accounted for an estimated 3 percent of GDP in 1997 and engaged an estimated 15 percent of the working population in 1991. The exploitation of Gabon's forests (which covers about 75 percent of the land area) is a principal economic activity. Although Gabon's territorial waters contain important fishing resources, their commercial exploitation is minimal.

Industry (including mining, manufacturing, construction, electricity, and water) contributed an estimated 60 percent of GDP in 1999, and about 12 percent of the working population were employed in the sector. Industrial GDP increased at an average annual rate of 2.7 percent from 1990 to 1997. Mining alone (including oil) accounted for an estimated 46 percent of GDP in 1997. Gabon is among the world's foremost producers and exporters of manganese. Gabon's manufacturing sector is relatively small, accounting for an estimated 6 percent of GDP in 1997. A substantial part of this is represented by oil refining and timber-processing. Electricity and water are produced and distributed by the Societe d'Energie et d'Eau du Gabon (SEEG).

Services engaged 47 percent of the economically active population and provided an estimated 30 percent of GDP in 1999. The GDP of the service sector increased at an average annual rate of 3.3 percent over the period from 1990 to 1997.

AGRICULTURE

Owing to the density of the tropical rain forest, only a small proportion of land area is suitable for agricultural activity and only 2 percent is estimated to be under cultivation. With over 50 percent of the population living in towns and with a poor road infrastructure, the contribution to GDP of the agriculture, forestry, and fishing sector is very modest by African standards at approximately 10 percent in the 1990s. The country lacks self-sufficiency in staple crops and over half of food requirements must be imported. Cocoa, coffee, palm oil, and rubber are cultivated for export. The principal subsistence crops are plantains, cassava, and maize. Coffee and cocoa were once relatively significant cash crops with a small amount available for export, but outputs for both have been falling since the 1980s.

Animal husbandry was for many decades hindered by the prevalence of the tsetse fly (a bloodsucking fly that causes disease in cattle), until the first tsetse-resistant cattle were imported in 1980. Livestock numbers have since risen, with 1998 estimates standing at 39,000 head of cattle, 208,000 pigs, 259,000 sheep, and 24,000 goats. The Societe Gabonaise de Developpement d'Ellevage (an offshoot of AgroGabon) manages 3 cattle ranches covering 14,000 hectares (34,595 acres). Poultry farming is mainly on a smallholder basis. The fishing catch, at 45,000 metric tons, falls well below total demand. Industrial fleets account for about 25 percent of the catch, and about half of the total catch comes from marine waters.

FORESTRY.

The exploitation of Gabon's forests (which cover some 85 percent of the land area) is a principal economic activity and the second leading source of exports, with 14 percent, behind petroleum. According to the U.S. State Department, commercial wood reserves cover 50 million acres and contain 400 million cubic meters of wood. Production levels reached 2.77 million cubic meters of lumber in 1997, declined in 1998 thanks to the Asian financial crisis, and rebounded again in 1999. The sector is the second largest employer, behind the government, and there is some potential for further growth. The major problem facing the industry is the fact that most forestry exports are in raw lumber. Value-added processing occurs abroad. Should foreign investment allow for more milling and processing of logs at home, the industrial sector would be boosted substantially.

INDUSTRY

Industry is the largest of the 3 major sectors in terms of GDP, but the smallest in terms of employment. This sector provides its employees with the highest average incomes.

OIL AND MINING.

Oil and its related industries has been the main source of Gabon's economic growth since the 1970s. In 1997, the petroleum industry was still the dominant sector of the economy, contributing 42.5 percent of GDP when all subsidiary industries are factored in. Petroleum and petroleum products accounted for an estimated 77 percent of total export earnings. Oil reserves are declining, however, and there have been no major new discoveries in recent years.

Mining holds great potential for further economic growth. Gabon is one of the largest producers and exporters of manganese in the world. Gabon holds 25 percent of the world's manganese reserves, and the main manganese mining operation, COMILOG, produces about 2.5 million metric tons a year of finished ore. Uranium has also been a major source of export income, though uranium reserves are nearly depleted. There is potential for the mining of phosphates, niobium, iron, gold, and diamonds; foreign investment is needed for these mineral deposits to prove profitable.

MANUFACTURING.

The manufacturing sector contributed an estimated 6 percent of GDP in 1997. The principal activities are the refining of petroleum and processing of other minerals, the preparation of timber, and other agro-industrial processes. The chemical industry is also significant. Electric energy is derived principally from hydroelectric installations. Imports of fuel and energy comprised an estimated 21 percent of the total value of imports.

SERVICES

The services sector is the biggest employer in Gabon, with the government being the single largest employer in the nation, and incomes earned in this sector are significantly higher than average. The mineral and forestry sectors drive the economy, and services expand to support these activities. The production of the service sector increased at an average annual rate of 3.3 percent from 1990 to 1997. Due to the poor infrastructure and the dense forests, tourism is limited.

The telecommunications sector has been identified by the U.S. State Department as a prime area for growth. The parastatal Office des Postes et Telecommunications du Gabon (OPT), which has a monopoly on telecommunications services in the country, is slated for privatization. This development is expected to encourage foreign investment and create jobs as the country is opened to modern telecommunications networks and cellular services.

INTERNATIONAL TRADE

Gabon has sustained a considerable surplus in its foreign trade, even through periods of quite marked fluctuations in petroleum prices, because the import demand of its small population has remained relatively modest. Exports are normally 2 to 3 times the value of imports and most investment spending is directed toward generating increased earnings from the export of petroleum, timber, and manganese. In 1999, exports stood at US$2.4 billion, while imports were US__BODY__.2 billion.

The main export markets in 1998 were the United States (68 percent), China (9 percent), France (8 percent),

and Japan (3 percent). Imports come mostly from France (39 percent), the United States (6 percent), and the Netherlands (5 percent). Despite high per capita income levels and the foreign investments its petroleum sector attracts, Gabon receives a significant amount of aid (US$38 per capita in 1998). This has helped to support both the budget and balance of payments.

While Gabon has traditionally enjoyed a trade surplus, it has also tended to have a balance of payments deficit. This deficit is a result of high outflows on interest payments on the foreign debt and on remittances on profits and dividends by the petroleum industry. Foreign debt was US$4.213 billion in 1996. However, high per capita GDP and a poor record of compliance with commitments to the IMF mean that Gabon is not a priority candidate for debt relief.

MONEY

Gabon is part of the Central African Monetary and Economic Union (Communaute Economiquareue et Monetaire de l'Afrique Centrale, or CEMAC), a group of 5 francophone countries that use the same currency, the CFA franc. The CFA franc is tied to the French franc and can be readily exchanged at 50 CFA francs to 1

French franc. Gabon, like all members of the CFA franc communities, has benefitted from this stable currency.

As a member of the CFA zone, Gabon was profoundly affected by the 50 percent devaluation of the CFA franc in 1994. The devaluation caused a temporary rise in inflation. The average annual inflation rate during the period from 1990 to 1996 was 9.8 percent. However, inflation declined through the late 1990s, reaching a rate of 2.9 percent in 1999. The country's economy appears to have benefitted from this devaluation, which made its traditional exports more competitive on world markets. In the short term, however, devaluation lowered living standards and probably increased poverty by raising prices while most salaries remained static.

CEMAC planned to open a regional stock exchange in Libreville, Gabon, in 2001.

POVERTY AND WEALTH

The population of Gabon earns a per capita income 4 times that of most other sub-Saharan African nations. Although the relative strength of Gabon's economy has led to a decline in the sharp poverty that is familiar to these other African nations, much of the population remains poor and income inequality is high. The portion of the population that does suffer from poverty is almost all in the 40 percent of the population that relies on agriculture for its income.

Social security, based on the French system, was introduced in 1956. Under this program, family allowances are paid to all salaried workers. There is a national fund for state insurance, which provides medical care.

The UN's Human Development Index (HDI), which attempts to measure the quality of life on the basis of real GDP per capita, the adult literacy rate, and life expectancy at birth, placed Gabon at 123 out of 174 countries in 1999, in the medium human development category.

WORKING CONDITIONS

The workforce in 1996 numbered 519,000, 56 percent of which are males. The unemployment rate in 1997 was estimated at 21 percent. There is a standard 40-hour working week. However, around 40 percent of the economically active population engages in agriculture, which is poorly regulated. Due to the small population, much of the labor is imported from the neighboring countries.

COUNTRY HISTORY AND ECONOMIC DEVELOPMENT

1470. The Portuguese, French, Dutch, and English begin trading along Gabon's coast.

1839. First French settlement established.

1910. Gabon becomes part of French Equatorial Africa.

1958. Gabon granted internal autonomy by the French.

1960. Gabon is formally proclaimed an independent nation, with Leon M'Ba as prime minister.

1961. M'Ba is elected president and heads a government of National Unity with his opponent, Jean Hilaire Aubame, serving as foreign minister.

1963. Aubame is fired from his position in the Department of Foreign Affairs.

1964. Aubame leads a successful coup; French troops respond to M'Ba's appeal, intervene, and restore him to office. Aubame is sentenced to 10 years in prison.

1967. M'Ba is reelected president but dies a few months later. Vice-President Albert Bernard (later Omar) Bongo succeeds M'Ba as president.

1968. Parti Democratique Gabonais (PDG) is proclaimed as the sole legal political party in the country.

1973. Bongo is reelected president.

1979. As the only candidate in the national presidential elections, Bongo is reelected for a second 7-year term.

1980. In national, municipal, and legislative elections, independents are permitted to run against official candidates.

1981. Over 10,000 Cameroonians are expelled from Gabon following a riot against a Gabonese soccer team at Douala, Cameroon.

1982. Members of the opposition Mouvement pour le Redressement National (MORENA) are arrested for insulting the president and are sentenced to harsh prison terms.

1983. The Owendo-to-Booue section of the Trans-Gabonais Railway is opened by French and Gabonese presidents.

1984. France agrees to supply Gabon with a 9,300-megawatt nuclear power plant, the first in an African nation under black rule.

1986. The Chernobyl accident in the Soviet Union results in the cancellation of the nuclear power plant. MORENA political prisoners are freed.

1990. After much social unrest, President Bongo legalizes opposition to his government. In the country's first multiparty election, Bongo's PDG wins 65 seats in the legislature while opposition parties take the remaining 55 seats.

1993. Multiparty elections are held in December, and Bongo wins with slightly more than 50 percent of the vote. The main opposition leader, Paul Mba Abbesole, claims the process was flawed.

1994. Devaluation of the CFA franc by 50 percent.

1995. The National Assembly election held in December results in a seat distribution of PDG 89, opposition parties 31.

1996. Senate elections are held in January and result in a seat distribution of PDG 53, opposition parties 38.

1998. Bongo is reelected president with 67 percent of the vote.

FUTURE TRENDS

Despite the abundance of natural wealth, the Gabonese economy is hobbled by poor economic management. In 1992, the fiscal deficit widened to 2.4 percent of GDP, and Gabon failed to settle arrears on its debt, leading to a cancellation of rescheduling agreements with official and private creditors. Devaluation of the currency by 50 percent in January 1994 sparked a one-time inflationary surge to 35 percent, but the rate dropped to 6 percent by 1996 and 2.9 percent by 1999. In 1997, an IMF mission to Gabon criticized the government for overspending on off-budget items, over-borrowing from the central bank, and slipping on its schedule for privatization and administrative reform. The IMF is expected to continue to support Gabon as long as progress is made on privatization and fiscal discipline. The rebound of oil prices in 1999 helped growth, but drops in production hampered Gabon from fully realizing potential gains. Gabon's potential for economic growth is based upon its considerable mineral and forestry resources. It is a country with high potential and with support from higher oil prices, reinforced by better economic management, Gabon can be expected to make steady progress.

DEPENDENCIES

Gabon has no territories or colonies.

BIBLIOGRAPHY

Economist Intelligence Unit. Country Profile: Gabon. London: Economist Intelligence Unit, 2001.

"Gabon." MBendi: Information for Africa. <http://www.mbendi.co.za/land/af/ga/p0005.htm>. Accessed September 2001.

Hodd, Michael. The Economies of Africa. Aldershot, England:Dartmouth, 1991.

U.S. Central Intelligence Agency. World Factbook 2000. <http://www.odci.gov/cia/publications/factbook/index.html>. Accessed August 2001.

U.S. Department of State. FY 2001 Country Commercial Guide: Gabon. <http://www.state.gov/www/about_state/business/com_guides/2001/africa/index.html>. Accessed September 2001.

World Bank. World Bank Africa Database 2000. Washington, DC: World Bank, 2000.

Allan C.K. Mukungu

CAPITAL:

Libreville.

MONETARY UNIT:

Communauté Financiére Africaine (CFA) franc. The CFA franc is tied to the French franc at an exchange rate of CFA Fr50 to Fr1. One CFA franc equals 100 centimes. There are coins of 5, 10, 50, 100, and 500 CFA francs, and notes of 500, 1,000, 2,000, 5,000, and 10,000 CFA francs.

CHIEF EXPORTS:

Crude oil and natural gas, timber and wood products, manganese, uranium.

CHIEF IMPORTS:

Machinery and equipment, foodstuffs, chemicals, petroleum products, construction materials.

GROSS DOMESTIC PRODUCT:

US$7.9 billion (purchasing power parity, 1999 est.).

BALANCE OF TRADE:

Exports: US$2.4 billion (f.o.b., 1999 est.). Imports: US__BODY__.2 billion (f.o.b., 1999 est.).