Gabon SEZ : investment for the future

Africa is opening up to investments and Gabon, one of the most politically and economically stable country on the continent, has clearly taken the lead in attracting investors by doling out a number of fiscal and non-fiscal incentives. The Gabon Special Economic Zone (GSEZ) is fast emerging as West-Central Africa’s manufacturing hub, and entrepreneurs from across the globe are welcome to

An aerial view of the Gabon SEZ, which is spread over 1,126 hectares, barely 20 km from the capital city, Libreville.

Pioneering the ideology of processing natural resources within its territory to generate employment and boost its economy, the Gabonese Republic banned exports of raw timber in 2010. Subsequently, the African country has embarked on providing an amenable ecosystem and infrastructure to facilitate the secondary and tertiary processing of timber and other natural resources within its territory.

Witnessing a favourable investment climate, Olam International Limited, in partnership with the Gabonese Republic, decided to develop a special economic zone in 2010.

The Gabon Special Economic Zone (GSEZ) is the outcome of a vision to effectively master the transition toward industrialisation of Gabon, and is one of the largest industrial parks in sub-Saharan Africa, aimed at promoting sustainable production and processing of timber and various other resources in the country.

The GSEZ at Nkok currently has 96 investors from 17 nationalities, and foreign direct investment expected is in excess of US$ 1.7 billion. Out of these investors, 30 are from India.

The industries that have made GSEZ their base are those into wood transformation (saw milling, veneer and plywood), ferro-alloys, construction materials, pharmaceutical, food processing, telecom equipment, waste and metal recycling and warehousing. As of March 2017, nearly 30 companies have already launched commercial production, and another 30 companies are readying for it.

Utilities & connectivity

The GSEZ is spread over 1,126 hectares and is 20 km from the capital city of Libreville, with the Olam-led GSEZ-SA as its administrating and managing agency. The Gabonese Republic provides assistance on statutory public approvals through a single-window clearance (SWC) office, which is exclusively responsible for completing all formalities and giving approvals to all investors in GSEZ.

GSEZ-SA has developed all modern infrastructure and utilities, which include a dedicated 6 MLD (million litres per day) water supply scheme. A 5-hectare artificial lake has also been developed within GSEZ.

A sewerage and common effluent treatment plant has been developed for the entire area, which also handles the treatment of effluent disposed of by industrial units. A dedicated 70-mW dual-engine power plant, which can run both on gas and diesel, is already operational and can be augmented to 105 mW. Connection to hydro-electric power plant as a second source of power is being implemented.

With Ghana sitting on good reserves of petroleum, raw material for the power station is also not an issue. Another high tension line is under construction that will connect GSEZ to a hydro-electric power plant as well.

Fully operational high-speed fiber-optic broadband internet connectivity is also provided within GSEZ.

The GSEZ is located on the national highway network and enjoys all forms of connectivity. It has 45 lane kms of tarred internal roads with ample green areas and street lights. More than 350 solar energy street lights have been installed in the area.

In addition, GSEZ is on the trans-Gabonais railway line, now a part of common logistics facilities that are available to the industries here.

A quay, with a 200-metre-long berth, connects GSEZ to Owendo port, which is around 37 km by road. Other parts of Gabon are also connected by such waterways.

Furniture manufacturing

The GSEZ, located at Nkok, is an initiative to promote ‘Made in Gabon’ and has 60,000 square metres of ready-to-use sheds to promote manufacturing of finished products. As of March 2017, there are seven units working in this cluster.

In order to provide initial impetus to the furniture manufacturing cluster, the government has placed an order of 1,70,000 benches and tables for public schools across Gabon. This is being offered to all furniture manufacturing units as a confirmed order, even before setting up of the unit!

Investors in GSEZ enjoy fiscal incentives on their industrial investments and there is no income tax for the first 10 years, and a preferential rate of 10% if given over the next 5 years.

In addition, there is no customs duty of equipment and machinery for the industry, no value-added tax or property tax, and all foreign ownership is permitted as there is a 100% exemption from capital gains tax.

Other relaxations and waivers include 50% on electricity tariff, relaxed labour laws and flexibility in employing expatriates, reduced export duty for products manufactured in GSEZ, 100% repatriation of profits and up to 25% DTA sales is permitted without any tax implications.

Foreign investments

Gabon is a good investment destination for all kinds of businesses. It is among the least polluted countries of the world and can be called the “oxygen cylinder” of the Earth.

The country offers the best investor-friendly environment and is one of Africa’s most political and socially stable countries since its independence in 1960, with a per capita GDP of US$ 19,200. There is no currency devaluation risk, with the Gabonese Central African Franc permanently pegged at 655.957 to the Euro.

The country is ranked second on the UNDP’s 2014 Human Development Index in sub-Saharan Africa. As per World Bank’s 2015 ‘Ease of Doing Business’ report, Gabon ranks above most other African countries.

Besides easy e-visa and work permit rules, GSEZ-SA facilitates its investors in availing credit facilities for financing the initial investment, as well working capital from leading banking institutions.

Raw material

Gabon follows sustainable forest management (SFM), the best known system that ensures the natural regeneration of trees and that wood stock of the country does not deplete. With adherence to SFM rules, Gabon will never face a situation where there is a ban on round logs.

It thus makes immense sense to invest in a manufacturing unit in a country that is rich in timber resources. Another aspect of the wood resource is that it is certified by the Forest Stewardship Council (FSC), with proper traceability and legality certificates for furniture manufacture. Most big buying houses in the US and Europe have taken a resolution to source, by the year 2020, a minimum 30% of furniture done with FSC-certified wood.

FSC-certified wood in this quantity has limited availability, but is abundantly available in Gabon. GSEZ is also operating a log supply chain and offers long-term contract for assured supply of logs.

In April 2016, the Africa Finance Corporation, a pan-African multilateral financial institution, made an investment of US$ 140 million in the GSEZ. This investment is the final, independent validation of GSEZ business model, its future prospects and the ability of its team to execute and deliver.

For more information, visit www.gsez.com, or write to Ms. Sophie Bourcier, head of the furniture manufacturing cluster, at gabonsez@olamnet.com.

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