Previous Quarterly Editions
Expropriation Risk: 58 56 56 54 Political Violence Risk: 64 58 64 59 Terrorism Risk: 35 35 34 34 Exchange Transfer and Trade Sanction Risk: 36 36 35 36 Sovereign Default Risk: 46 45 47 46
TREND ▼ OUTLOOK ►
The prolonged absence of President Ali Bongo Ondimba, who spent several months convalescing in Rabat after a stroke suffered while visiting Saudi Arabia in October 2018, invited much speculation about the extent to which he remained in charge of key decisions. Although the move by a small group of soldiers at the start of the year to seize the national radio station achieved little, with no response to their calls for an uprising, it brought the president back to Libreville a few days later to swear in a new prime minister, Julien Nkoghe Bekalé. However, when the new defence minister, Rose Christiane Ossouka Raponda, was subsequently sworn in at the Gabonese embassy in Morocco, this only added to the speculation surrounding Bongo’s condition. The leader of the opposition Union Nationale called for the formal declaration of a presidential vacancy in February, forcing the regime to bring Bongo back to Libreville the next day where he was quickly shown on national television at the presidential palace meeting senior state dignitaries. The president, who appeared to have made significant recovery, went on to Libreville in a car with the windows open to greet residents and shoppers. After a final stint in Morocco, his return in March was met by a huge crowd. The genuine pleasure of many Gabonese at seeing their president home and in much improved health could strengthen his political room for manoeuvre. On 29 March he chaired a cabinet meeting for the first time since his illness and was filmed stressing the importance of social programmes. The same day Maixent Accrombessi, a long-serving key adviser and friend, was dismissed. He played a crucial role in Bongo’s first term as his chief of staff but had also amassed the enmity of other influential figures and his position had been weakened by his implication in an alleged scandal under investigation in France. In May, President Bongo dismissed his vice president over a scandal involving the apparent sale of protected timber.
The dispute between Gabon and the French group Veolia that has been building since the government last year forced Veolia to surrender its 51% stake in power and water utility SEEG reached a new phase in February when Veolia finally withdrew from Gabon and SEEG returned to the public sector. Although the case was being closely watched by current and potential investors, companies in the extractive sector appear more likely to regard it as an exception rather than a trend, as the country has a long history of successful mining and energy operations. Having demonstrated that it was prepared to hold companies operating public services to their commitments, the government now hopes to move on from the dispute as it steps up efforts to attract more foreign investors, particularly in the oil and gas sector. A new hydrocarbons code is now in place to supersede the one introduced in 2014 that set particularly tough conditions for the industry. The new code scraps the 35% corporation tax rate and the government seeks to reduce the overall fiscal burden. However, changes are also needed to the way in which taxes and customs duties are assessed and collected across all sectors.
TREND ▼ OUTLOOK ▼
The attempted coup in January now looks like an isolated incident rather than an indication of dwindling support for the president within the armed forces. In general, outright political violence now appears less likely, both because Bongo’s return home, which is being presented as permanent, has contributed to overall stability, and because the divisive period associated with the 2016 presidential contest and the 2018 local elections is now over. However, the government’s handling of the president’s health crisis has damaged its credibility, and the apparent determination to exclude wider circles of Gabonese society from discussions on the country’s political direction may yet have more substantial repercussions. Demonstrations are now quite common over political and social issues. The protests in April over student grants and the level of public sector pensions were fairly typical, being loud and well attended but not posing a serious threat to the government. Talks continue with the trade unions over public sector wages but reaching agreement will be difficult given the state’s constrained financial situation. Both sides are aware that the government cannot easily buy off potentially disruptive protests.
TREND ► OUTLOOK ►
Gabon could be a target for anti-Western jihadist terrorism of the kind seen in many parts of Africa given the presence of a large French expatriate community. However, there does not appear to be evidence of any specific threat to the country at present.
TREND ▲ OUTLOOK ►
While the central African CFA franc of the six-country Central African Economic and Monetary Union (CEMAC) is pegged to the euro, the underlying position of Gabon and the other five member states is fragile. The IMF has stressed the case for seriously tough financial discipline if the current fixed parity is to remain viable. It also wants the Gabon government to reinforce banking sector stability by tackling the increasingly serious issue of non-performing loans.
TREND ▼ OUTLOOK ▲
Gabon’s debt-to-GDP ratio increased from 21% to 66.5% between 2012 and 2017 largely as a result of falling oil prices, leaving it close to breaching the CEMAC limit of 70%. However, the modest increase in oil prices as global production is checked should provide the opportunity to come back from the brink. The IMF has been encouraged by the government’s performance under the three-year, 640-million-dollar Extended Fund Facility programme that was agreed in mid-2017 to help Gabon adjust to the impact of lower oil prices. The Fund particularly praised the government for resisting the temptation of a major increase in public spending ahead of last year’s elections. However, the continuing need to meet IMF requirements, which include a cut of 10% in the public sector wage bill, leaves the government with a difficult balance to strike. It needs to continue financial consolidation while also being seen to respond to the demand for social action to help and protect the least well off.
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