Previous Quarterly Editions
Expropriation Risk: 56 54 51 48 Political Violence Risk: 64 59 55 52 Terrorism Risk: 34 34 34 34 Exchange Transfer and Trade Sanction Risk: 35 36 36 36 Sovereign Default Risk: 47 46 45 45
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More than a year after suffering a stroke and spending long periods of rehabilitation in Morocco and the UK, President Ali Bongo Ondimba is gradually reasserting his position. Although opposition leader Jean Ping continues to claim that he is not well enough to govern, Bongo has sought to retain public confidence by admitting that he is still recovering from a serious illness while gradually stepping up his public presence. After a succession of carefully scripted appearances in Libreville, he visited his family’s home region in September prior to his first spontaneous speech since his illness when he addressed supporters at a stadium in the capital in October. This was followed by moves to raise the profile of his inner family, including his wife Sylvia and his son. His daughter Malika now holds the parliamentary constituency that includes the birth village of the late President Omar Bongo, her grandfather, which is a seat that her father also held, and his son Nourredine was appointed a top presidential aid in December. The increasing prominence of family members coincides with the distancing of two of the figures who held power for the president during his absence. The intelligence chief, who is also the president’s half-brother, has been despatched to South Africa, while the head of the president’s office, Brice Laccruche Alihanga, was demoted and then dismissed from government before being arrested on corruption charges in December. His replacement is a low-profile technocrat, Théophile Ogandaga, who was previously deputy head of the Gabon arm of Olam, a Singaporean group with wide local interests in logistics and business. In a further effort to demonstrate his personal leadership, the president has promised to step up the pace of reform and the campaign against corruption; investigations are underway and a number of senior figures close to Laccruche Alihanga have been dismissed, including the oil, energy and economics ministers. Gabon is a relatively small economy and not of huge strategic economic significance, so it must work hard to interest and retain investors. Its strongest attraction remains the hydrocarbons sector, where its new code for the oil industry has been widely welcomed. Having secured two exploration contracts in August, the government signed seven more in October, including one with China’s Sinopec. Libreville is presenting this as a real boost to confidence in Gabon and a vindication of the decision to overhaul the unpopular 2014 hydrocarbons code. Looking ahead, there will inevitably be some waning in the “honeymoon” of popular relief at the president’s recovery from the most severe effects of his illness. Gradually, the public mood will shift back to hopes for development, jobs and better basic service provision and his administration will be under the usual pressure to produce tangible improvements. It should be able to cope with this, especially as oil revenue increases, but if it falls short in these basic areas then questions about the president’s competence will arise once more.
The risk of expropriation has substantially reduced since the government seized the 51% stake in national power and water utility SEEG held by French company Veolia in 2018, a move which has now ended in an amicable settlement. The government is fully aware of the need for external partners to manage key utilities and has stressed that the situation with SEEG was exceptional. Veolia itself has agreed to take on the national waste collection and management service. This is a top priority for Gabon’s mayors, who are under pressure from their electors to clean up urban areas. Meanwhile, France’s Suez has agreed to take on the national water supply contract. These latest agreements with Veolia and Suez were hard won, and the government is unlikely to take any capricious actions that would jeopardise them or discourage further foreign investment. Equally, having gone to such lengths to restore its credibility with international oil companies through the new oil code, the government seems unlikely to risk its improved standing, other than in a clear case of a company’s failure to comply with regulation or honour its investment commitments.
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The recent changes in the inner circles of power slightly reduce the risk of political violence by removing some high-profile figures whose presence had the potential to increase criticism of the president. However, there is at least as much danger in raising concerns about the potential for an extended Bongo dynasty, which could be a source of disquiet beyond the wider political class and add a new edge of grievance to routine strikes or demonstrations. Neither the government nor the opposition have forgotten that in the 2016 presidential election close to half the population voted for a change of leader. But while strikes and demonstrations can be fairly
common, the likelihood of actual civil conflict remains low.
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Libreville, like many African cities with large western expatriate populations is always at risk of terrorism attacks, particularly given Gabon’s military relationship with France. But there has been no publicly available evidence of local jihadist groups.
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Gabon is one of the 14 African countries to use the CFA franc, which is pegged to the euro at a parity guaranteed by the French treasury. Eight of these countries, all in West Africa, will adopt a new currency, the Eco, during 2020 which will initially retain a fixed parity to the euro. However, the six-country Central African Economic and Monetary Union (CEMAC), to which Gabon belongs, does not plan to adopt a new currency. Many members of the bloc are already wrestling with debt problems and are not able to take on a further challenge.
Gabon is one of the financially stronger members of CEMAC, with an economy that grew by 3% in 2019. However, with the encouragement of the IMF, the government is taking a cautious line and has tightened up the overall spending plans originally envisaged for the 2020 budget, even though there will still be a significant rise in capital expenditure. Cutting the public sector wage bill by 10%, which is a requirement for the IMF Extended Fund Facility, remains a substantial challenge.
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