- Basic data
- Public finances and the state budget
- Banking system
- Tax System
Gabon’s economy is small and still under-diversified. Gabon has large reserves of mineral resources (oil, manganese, iron ore, uranium, gold…). Since the early 1990s, Gabon has been one of the richest and most developed economies in sub-Saharan Africa thanks to oil production. It is the country with the second highest GDP/population. in sub-Saharan Africa and has the status of an upper-middle income country. However, the pandemic has further exposed Gabon’s dependence on agricultural imports. After the closure of the borders due to the coronavirus, the price of some food in Gabon has doubled. With an economy that is oriented towards oil extraction and with 89% of the population living in large cities, Gabon of two million is essentially dependent on food imports (60% is imported). The government is trying to diversify the economy, support agricultural projects and develop the countryside, in 2014, the Graine program was launched, aiming for food self-sufficiency in 2030. Gabon entered recession in 2020 following the COVID-19 crisis. He was affected by a double shock. Heavily dependent on oil revenues (39% of GDP) it was hit by a drop in global demand and a corresponding drop in oil prices. In order to limit the impact on the population, the government released EUR 381 million (2.9% of GDP) to ensure the basic needs of households and businesses. Real GDP growth will average 3.1% per year in 2022. Growth will be supported by increased investment in oil fields, which will lead to higher production and sustained growth in the agriculture and timber industries. Inflation rose to an estimated 3.1% in 2021, and is expected to increase further due to rising global food and energy prices. Although the country remains heavily dependent on commodity imports. Check ebizdir for economical facts of Gabon.
Economic policy is guided by a plan to diversify the economy, develop infrastructure, support agriculture, manufacturing, services and tourism (“Gabon émergent”), which aims to bring Gabon into the category of “new” economies and reduce the country’s one-sided dependence on oil, mineral and timber extraction. The government is trying to attract foreign investors to the country, developing special economic zones, focusing on the export of goods with higher added value (by building wood processing plants, oil refineries, etc.). Together with international donors, it invests in the development of infrastructure, the telecommunications and the banking sector are developing. The share of Gabonese industry in the creation of GDP is about 61% and the annual growth is around 4%. The most important industries are oil mining and processing, fertilizer production, manganese mining and processing, wood mining and processing, gold mining, cement production, ship repair and food industry. However, Gabon’s industrial and manufacturing sector remains weak. Among the other larger industrial operations, it is worth mentioning the production of machine components for palm oil processing plants, a plant for the production of paint materials and a filling plant for technical gases in welding pressure cylinders. Sugar, flour, cigarettes, soft drinks, beer and bread are produced locally and in small establishments.
|GDP growth (%)||4||-3.2||1.7||3.1||4.2|
|Export of goods (billion USD)||5.8||3.4||5.9||6.4||6|
|Import of goods (billion USD)||2.7||2.5||3||3.2||3.3|
|Trade Balance (Billion USD)||3.1||2||2.9||3.2||2.8|
|Industrial production (% change)||ON||ON||ON||ON||ON|
|OECD export risk||06.VII||06.VII||06.VII||ON||ON|
Source: EIU, OECD, IMD
Public finance and state budget
|State budget balance (% of GDP)||-2.1|
|Public debt (% of GDP)||76.8|
|Current account balance (billion USD)||-0.6|
|AFTER||1 – 35%|
The country’s foreign debt is rated as relatively low, although the country’s foreign debt has been growing recently. So far, the government has no problem fulfilling its foreign obligations. The problem is domestic indebtedness, when in 2014 the government had to suspend debt repayments to companies implementing infrastructure projects due to lower oil revenues. The problem is also the drop in the price of oil on world markets, which does not help the situation. The question remains what impact COVID-19 will have on the economy and foreign trade..
Just like last year, the budget version presented by the Minister of Economy remains anchored in the implementation of reforms underway in the country. This includes those that were taken as part of the economic recovery plan. In addition, it has seven main objectives: to reduce the non-oil deficit; optimization of resource mobilization; active debt management to make it more sustainable and better prepare repayment schedules for the coming years (2021, 2022, 2023); control of current expenditure in order to create margins and finance investments; settlement and zero accumulation of arrears and final reconstruction of external assets to cover imports.
Gabon’s banking system is controlled by the Joint Central Bank of Central African Countries – BEAC, based in Yaoundé, Cameroon. It oversees the activities of banks in other member countries of the Central African integration group UDEAC (CEMAC currency zone). The CFA franc can circulate freely among the six CEMAC member countries and can be exchanged for other world currencies through the banking system based on commercial documents. The Central Bank of BEAC issues currency and oversees liquidity within the Central African Monetary Zone, in its monetary policy it basically copies the decisions of the European Central Bank. The Central African Franc is firmly anchored to the Euro, the exchange rate is 655.95 CFA/Euro. The exchange rate to the dollar fluctuates. In 1993, the BEAC member countries also created a transnational banking supervision institution – COBAC (Commission Bancairede l ́Afrique Centrale), which has special powers for the regulation of activities and compliance with discipline for all banking institutions of the CEMAC integration group. Like all other signatories to the CFA Franc Zone in Africa (1948), Gabon is also required to hold at least 60% of its foreign reserves in a “compte d’operation” account managed in Paris. The Gabonese banking system can be described as reliable and sound.
The following main commercial banks operate in the country: • Banque International pour le Commerce de l’Industrie du Gabon (BICIG), • BGFIBANK SA Gabon • Citibank Gabon, sa • Banque Gabonaise de Développement (BGD) – development bank • United Bank for Africa Gabon • Ecobank Gabon • Orabank Gabon • Union Gabonaise de Banque • Post Bank SA • Banque de l’Habitat du Gabon
The Gabonese tax system is adapting to the uniform system within the CEMAC countries. It does not discriminate against the business interests of foreign entities.
New companies that have invested 100 million CFA in the agricultural sector, 200 million in the manufacturing sector and 500 million CFA in the mining or timber industry do not pay corporate tax for two years, the third year this tax is reduced by 30%. For new investors and investors in important sectors (mining, oil, logging, tourism, agriculture, cement production) that are subject to special regulations, there are a number of other exemptions in the law. Furthermore, it is possible to negotiate additional concessions in the signed contract. A special regime (10-year corporate tax holiday, VAT exemption) applies to new companies operating in special economic zones.
The tax system consists of the following basic direct and indirect taxes and employee social insurance:
- Personal income tax – is progressive according to income in the 0-35% range
- Corporate tax – 1% of turnover or 30% of profit in the territory of Gabon, oil companies pay a tax of 35%, a special tax regime (25%) for state-owned enterprises and enterprises engaged in agriculture.
Business is also burdened by a number of payments and levies (withholding tax (10-15%), land tax (15%), real estate tax (25%), local tax).
- Value Added Tax (VAT) – 18.5%, was introduced in April 1995 and is payable by all companies with an annual turnover of more than approximately USD 330,000. A reduced rate of 10% applies to cement, chickens, mineral waters, sugar. The following services and products are not charged with this tax: international transport, printing, fertilizers, eggs, fresh fish, table oils, butter, milk and milk products, cereals, medicines and pharmaceuticals.
- Social insurance – 20.1% of the salary, another 2.5% is paid by the employee.
For more information on the tax system and reliefs, see www.dgi.ga.