CONTENTS | ANB-BIA HOMEPAGE | WEEKLY NEWS
by Antoine Lawson, Gabon, January 2000
THEME = ECONOMY
Gabon's rulers, used to living opulently, are now debating how to
reduce
the country's internal debts evaluated at 600 billion CFA francs
and the external debts evaluated at 3,000 billion CFA francs,
all the while tightening up budgetary strategy
The unparalleled economic and financial crisis Gabon is going through, only shows the deep imbalances which were partially produced by bad management and the rural exodus. The fact that people are leaving the countryside in droves for the towns, has harmed agriculture which only provides 10%-15% of Gabon's alimentary needs. At the beginning of the 1970s, before oil took over as a number one foreign currency earner, the economy was dominated by forestry activities, plus manganese and uranium mining.
After a number of good years, warning bells began to sound, and today, they are clanging even louder - all of which goes to show everything is definitely not alright in Gabon's economy. Gabon's external debt has been going up by leaps and bounds - 900 billion CFA francs in 1993; 1,900 billion CFA francs in 1997; 3,000 billion CFA francs in 1999. The fall in oil reserves on which the economy depends, the fact that no new wells are being discovered and that manganese mining is coming to an end, all means a painful future for a country of hardly 1.2 million inhabitants, used to depending on revenues from the oil sector.
Gabon's income per capita is the highest in Africa south of the Sahara, but there are many challenges now facing the economy. They include, as a priority, the re-launching of activities in the non- oil-producing sector, together with a programme of liberalising and diversifying the economy. Public expenditure; management of the country's economy; and budgetary control, must be part and parcel of the government's efforts.
In Gabon, the administration is an extremely heavy machine and this penalises the development of what is essentially a mining and forestry country. Gabon's economy is based on the exploitation of brute materials (petroleum, manganese, wood, rubber, etc). Recent studies underline that failings in managing the economy are to be found at managerial level and in the way the economy is structured. Recently, the United Nations Programme For Development (UNPD) published its report on human development, country by country. As far as Gabon is concerned, deficiencies of public management and the fragility of public service skills can be reduced to four categories: Public service structuring; human resource management; management of public finances; local and regional administration.
The Gabonese, it is true, are used to finding appropriate solutions to every problem. This explains the high proportion of non-Gabonese Africans in the private sector where, moreover, they are the most appreciated. The government tries in vain to promote budgetary, social and structural strategies to create non-inflationary growth and jobs, which are essential for overall social cohesion.
At the end of December 1999, with social disputes an on-going feature of Gabonese public life, President Omar Bongo, asked the National Assembly when debating budget proposals for the year 2000, not to touch the salaries of civil servants. The announcement of a proposed 20% reduction in their salaries, had caused a stir even though, according to the Minister of Economy and Finance, this would have saved around 37 billion CFA francs. An official statement signed by President Omar Bongo, declared: "Taking into account the difficult living conditions of the people, and of public opinion following on the provisions foreseen by the Budget for the year 2000, I have decided, after consultation with the government, to withdraw the plan to reduce salaries. Consequently, I have asked the government to implement similar savings elsewhere in the budget, keeping in mind the necessary financial constraints linked to negotiations with our donors".
Civil servants, trade unions and politicians were none too happy when they first heard about the proposed cut in salaries, so in withdrawing the recommended reductions in salaries, the government wanted to preserve social peace. The trade unions had been expecting an increase in salaries as this had been promised by the government in recent months.
During the past few years, Gabon's economy has increasingly become dependent on oil. However, because oil reserves and investments intended for petroleum exploration are now decreasing, the government is tackling the development of other sectors of the economy, among which, the processing of local timber. Agriculture has for a long time been reduced to the sidelines in Gabon, but thanks to the government's initiative in encouraging young people to enter this sector, agricultural activity has of late been enjoying rapid expansion. All across the country, the Gabonese people have been launching themselves into various aspects of agriculture - even if without too much enthusiasm, it must be admitted.
Gabon has had to face up to the major challenge of becoming self- sufficient in food production. This has been a thorny question for a long time and there's still no solution. People's way of life has had to change because of the high cost of food and difficulties of life in general. Gabon remains dependent on imports from surrounding countries, principally Cameroon.
It's disturbing to note that in spite of being a country where everything grows naturally, Gabon, with a surface area of 267,667 square kilometres and which is 80% covered by equatorial forest, has still not been able to develop its agriculture. 25% of the population which lives in the rural area, has systematically begun an exodus towards the city. Agriculture and agribusiness have long been neglected by the authorities in the interests of oil, timber and mineral exploitation, to the point that today the country practically depends on her neighbours for its alimentary needs.
An official from the Ministry of Agriculture describes the situation as follows: "Agriculture accounts for only 3.6% of the Gross Domestic Product (GDP) and covers only 10%-15% of the country's alimentary needs". It has been remarked that the obsession of the majority of the Gabonese to work in administrative offices is striking, and has fostered the control of large companies and small businesses by foreigners. Hampered by the rural exodus, Gabon's agricultural sector has been neglected because of the deplorable state of the roads which are impassable during the rainy season for six months of the year. Also, people like to get involved in such areas as palm oil production, and the meat industry. As proof, the contribution made by agriculture to the GDP went from 11.6% in 1964, to 10% in 1975, then down to 6.75% in 1992, before plunging to 5% in 1995, 4.5% in 1996, and 3.6% in 1998, according to official figures. Imports, mainly coming from Europe, South Africa and the countries of the sub-region are not always within the reach of the ordinary Gabonese family whose buying power, severely cut since 1994, can no longer withstand the escalation of prices. Paradoxically, the small-scale fishing sector is 80% controlled by West Africans.
In order to lower the price of basic necessities, Mr Louis-Gaston Mayila, president of the Economic and Social Council, suggested that in order to reduce the cost of living, common charges which have increased by 53%, should be reduced. Without touching salaries, solutions can be found elsewhere...and let's face it, the International Monetary Fund (IMF) demands this".
President Bongo knows he's got to save money and to fall in line with the demands of international donors, so what's he done? To everyone's surprise, he's recently begun to reduce the size of his government, from 42 to 32 members. However, the trade unions say "it could be better". Preceding governments were truly financial bottomless pits which swallowed up around 10% of the country's salary bill. Mr Pierre Mamboundou, president of the Union of the Gabonese People and leader of the Opposition, declares: "Since 1990, successive governments sinned by their inefficiency and by their bad management of public affairs, to the detriment of the general population, mostly made up of families with modest means".
Who were the members of the governments in question? Mostly representatives from the various political parties and groups, and the ethnic groups which supported the President. According to some political observers, cutting back on government-members is a strong signal sent to Gabon's financial backers. The authorities are also waiting for the publication of the results of the stabilisation measures, and the conclusion of the talks with international financial institutions. One senior official says: "The State can save two billion CFA francs each year on cutting back on the number of ministers".
The fact that the government has to do something about the country's finances is not made any the easier because of a number of major expenses entered into by the government. The World Bank's representative in Gabon, Mr Ousmane Sissoko, says that with the help of the international community, Gabon is trying to redress the balance in its public finances, by activating a Structural Adjustment Programme which reduces expenditure, but which will not attain its aim for quite some time.
Gabon has got to tighten its belt, and it's not used to that. The budget for the year 2000 foresees a major deficit of 1,359.5 billion CFA francs, in spite of an increase of 18.6% in its own resources compared to the previous financial year. Income is foreseen at 710.4 billion CFA francs and expenditure at 2,069.5 billion CFA francs. The imbalance is explained by taking into consideration, outstanding national debts amounting to 1,027.4 billion CFA francs, to which is added the estimated service charge for the debt during 2000, estimated at 470.5 billion CFA francs. Prime Minister Jean-François Ntoutoume was hoping to be able to balance the books, but there are stumbling blocks in his way: Lack of motivation by civil servants who are claiming a rise in salaries; misappropriation of public funds; bad management and non-application of the measures hoped for by Gabon's financial backers.
The Minister of Economy, Finances, Budget and Privatisation, Emile Doumba, recently obtained permission from President Bongo to begin audits in order to clean up the country's public finances. However, commenting on this exercise, a senior official said that: "The Finance Minister can only inspect the accounts of junior officials. It's going to be a major undertaking to recover money owed to banks by the major debtors, because they're virtually "untouchable", even if some of them are known to have been responsible for the demise of the Gabonese branches of the Banque Méridien, the Banque du Gabon et du Luxembourg".
Heavily in debt, Gabon's got to do something to restore confidence in its economy by international backers. So, the new government has appealed to private investors who are more rigorous in management and more apt to apply the measures called for by the IMF, which is fully aware what's going inside Gabon's financial institutions. Everyone knows that capital from abroad is essential to kick-start the economy. The subject is frequently spoken about, and Mr Louis Gaston Mayila, says that: "Solidarity with Gabon in its hour of need, means knowing that the country is in dire straits and then making every effort to improve the situation."
Many international organisations, among which, France's Agency for Overseas Development and the African Development Bank, have already suspended disbursements. The year 2000, however, is likely to be even more difficult for Gabon, because of difficulties in balancing the budget. The fact is, Gabon's debt ought to such that the country can manage it, even if the country is still crushed beneath the burden of outstanding debts accumulated during previous years, and that Gabon remains excluded from debt cancellation.
END
ENGLISH CONTENTS | ANB-BIA HOMEPAGE | WEEKLY NEWS
PeaceLink 2000 - Reproduction authorised, with usual acknowledgement