Previous Quarterly Editions
Expropriation Risk: 52 53 58 56 Political Violence Risk: 60 62 64 58 Terrorism Risk: 35 35 35 35 Exchange Transfer and Trade Sanction Risk: 32 35 36 36 Sovereign Default Risk: 45 44 46 45
TREND ▼ OUTLOOK ▲
There are signs that Gabonese politics are finally moving beyond the aftermath of the controversial 2016 presidential election. Jean Ping still refuses to accept the validity of the official results showing that he lost to incumbent president Ali Bongo, However, most other opposition politicians are now concentrating on the long-delayed legislative elections, most recently postponed just days before they were set to take place in April and then rescheduled for October. Opponents of the president and his ruling Parti Démicratique Gabonais (PDG) have more confidence in the electoral process this year, believing they have a real chance of winning a significant number of national assembly seats. In an effort to re-establish a degree of national consensus and distance himself from the questionable events of August 2016, Bongo accepted reforms intended to strengthen the democratic credibility of the Gabonese political system. Central to this is the creation of the Centre Gabonais des Elections (CGE), which will take over responsibility for organising the electoral process. Half of the CGE’s 10 members are drawn from the governing presidential majority in the legislature that is built around Bongo’s PDG, and half are drawn from opposition parties. The opposition still has criticisms, including the way in which the chair of the CGE will be selected, but the overall mood is one of readiness to work within the political system rather than boycott it. Meanwhile, continuing a tactic first used by his father when he was head of state, the current president continues to broaden his own base by persuading opposition figures to accept government or state posts. But while political tensions have been easing, there are still risks to overall stability. The president’s decision to impose severe austerity measures has sparked widespread protest from the labour movement. In June 2017 the IMF approved a three-year Extended Fund Facility (EFF) programme worth almost 650 million dollars to help Gabon adjust to the impact of lower oil prices and weak economic growth. When the Fund indicated its concern about budget slippages, President Bongo responded with a plan for drastic action to reduce the cost of public sector salaries. These have come to consume 59% of all state revenues, far above the 35% target set by the Central African Economic and Monetary Union (CEMAC), to which Gabon belongs. In late June the government announced a package of tough austerity measures. Personnel on low salaries are unaffected but pay cuts of 5-15% came into force for those on mid-level salaries and higher. Staffing in the offices of the president, prime minister and ministers is being cut by 25% and there is a three-year freeze on recruitment and promotion across the public service. Growth is expected to reach 2% this year, up from 0.5% in 2017, as the core sectors of agriculture, mining and forestry show renewed strength.
TREND ▼ OUTLOOK ▼
When the government transferred control of power and water utility SEEG, 51% owned by French group Veolia, to new Gabonese management appointed by the state, it sent a sharp warning to companies, especially those whose operations directly affect voters, to meet their contractual obligations. But it was a high-risk tactic, and Veolia has taken the issue to the International Centre for the Settlement of Investment Disputes (ICSID), an offshoot of the World Bank. The episode has the potential to damage investor confidence, although the government has taken pains to stress that the situation with SEEG was unique and its actions do not indicate a change of policy towards foreign investors. Oil workers held a 15-day strike against Total in July after demands for higher pay were rejected.
Although Gabon has a culture of public street protest, the risk of political violence that produces clashes between the protestors and the security forces has fallen as the political situation becomes less tense. However, Jean Rémy Yama, who leads the country’s main trades union federation, has been vocal in his criticism of the government’s austerity measures, suggesting that a rise in strikes and protest marches by unionised workers is possible in the second half of the year. The legislative elections in October should be less controversial if, as the government promises, they are free and fair and it accepts a result that could be a setback for the ruling PDG.
TREND ► OUTLOOK ►
Gabon does not face any specific terrorist threat. But the country hosts a large French community and a French military base, and at some stage these could become targets for the sort of anti-Western jihadist attack seen in other African cities.
Gabon belongs to the six-member Central African Economic and Monetary Union (CEMAC), whose CFA franc currency has a fixed parity to the euro that is guaranteed by the French treasury. Since 2014 Gabon and fellow members Cameroon, Chad and Equatorial Guinea have been hard hit by weak oil prices and Gabon’s reserves at the regional central bank fell by two-thirds between 2014 and 2016. Some reports have suggested that the IMF has privately advised members of the bloc to consider devaluation, but CEMAC governments do not want to devalue because this would push up import prices and risk urban unrest. The IMF remains publicly supportive but believes that tough reforms are essential if the viability of Gabon’s economic model and exchange rate policy is to be maintained.
The government’s fiscal programme has suffered some slippages, but by August it had managed to clear all the arrears owed to external multilateral and bilateral creditors and those commercial creditors guaranteed by a sovereign. The government aims to clear all non-guaranteed arrears to commercial creditors by the end of 2018, although this will severely test its capacity to contain other current expenditure and increase its revenues.
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