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Towards greener and more inclusive growth

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In recent years, Gabon has positioned itself as a climate champion, undertaking a series of actions towards a green economy – with a strategy focused on agriculture, mining, sustainable fishing and timber resources, clean energy and ecotourism. Its commitment to protecting forests and reducing greenhouse gas emissions is paying off, as Gabon is the first country in Africa to receive a payment from the Central African Forest Initiative (CAFI) hosted by the UN. The country can continue to embrace green economic transformation to reduce growth volatility and over-reliance on natural resources, thereby opening opportunities for diversification, job creation and stronger economic resilience.

Yet despite its abundance of natural resources, growth has been slow to reduce poverty. Gabon is an upper-middle-income economy, but real GDP per capita was 20% lower in 2020 than in 1990 and a third of its citizens live below the poverty line of $5.50/day. Even though Gabon’s economic base has expanded into the timber, mining and service industries, the lack of economic diversification remains a challenge. Gabon is one of the most commodity-dependent economies in the world, with oil, manganese and other extractive industries accounting for 98% of merchandise exports in 2021. As a result, Gabon’s growth, exports and finances countries remain very vulnerable to volatility. world prices of raw materials.

Dependence on oil has hindered the development of other economic sectors. The public sector employs more than 50% of the formal workforce, while private sector growth, trade and investment are limited by difficulties in accessing finance, an insufficiently trained workforce, bureaucratic inefficiencies, burdensome regulations, high tariffs and inadequate infrastructure. According to a World Bank survey conducted for the report, 24% of traders said they were subject to discretionary fees at checkpoints along the country’s trade corridors, revealing widespread practices of minor harassment and their negative effects on local and regional trade. In addition, on the journey between the Cameroonian border and Libreville, a truck can be stopped up to 44 times, causing a delay of more than 15 hours and increasing transport costs. The total cost is estimated at around 14% of the final consumer price of food, increasing the cost of living and impacting vulnerable and middle-class households.

Inadequacies in human capital also slow down Gabonese growth. The social protection system has continued to evolve over the past 15 years, but non-contributory social assistance for the poor remains underfunded, fragmented and poorly targeted. Furthermore, one in three young Gabonese people is unemployed, while two thirds of job offers remain vacant. Promoting technical and vocational education and training as well as reforms to better align the education system with employment opportunities could help reduce imbalances between opportunities and aspirations.

A stronger structural transformation of the economy is crucial for Gabon to achieve a better model of green growth and job creation. This objective can be achieved by: strengthening labor supply through better skills and training; build a more effective social protection system to support the most vulnerable; and create economic opportunities in a more conducive environment for investment and trade, allowing the country to benefit from the opportunities offered by regional and global value chains. In this context, the green economy presents a unique opportunity for Gabon to achieve faster, more inclusive and sustainable growth. To successfully diversify and green its export basket, Gabon could leverage its natural capital and invest in sectors such as agriculture, fishing, digital services, ecotourism and forestry.

Recommendations

Key recommendations to help Gabon achieve accelerated, sustainable and inclusive growth include:

  • Matching aspirations with opportunities improving the skills of schoolchildren in science, technology, engineering and mathematics; provide targeted programs and financial support for vulnerable youth to pursue secondary and tertiary education; further adapt the education system to the needs of the labor market and promote technical and vocational training from the earliest stages; and establish a well-targeted and well-funded integrated social safety net program to better support vulnerable groups.
  • Building a more favorable business environment reforming investment legislation and streamlining investment incentives, including those applicable in special economic zones; increase access to financing for small and medium-sized enterprises (SMEs); strengthen the competition regulatory framework; adopt a legal framework to promote digital development and support the information and technology sector; and create incentives to promote research and development of environmentally sustainable practices in different industries.
  • Greening and diversification of trade and production by strengthening the capacity to formulate and implement Gabon’s trade policy; exploit the opportunities created by the African Continental Free Trade Area (AfCFTA) to increase access to regional trade chains; invest in logistics and commercial infrastructure; the revision of the tariff structure of CEMAC (Economic and Monetary Community of Central Africa); streamline and digitize procedures to facilitate cross-border trade; improve forestry legislation; increase and/or revive the country’s agricultural, fisheries and manufacturing production and exports, as well as exports of services focused on ecotourism, environmental services and digital services.

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