(Ecofin Agency) - At a meeting with employers, General Brice Clotaire Oligui Nguema, head of Gabon's military transition, pledged to resolve 4 of the 13 challenges reported by entrepreneurs. The process by which these commitments will be implemented has yet to be specified, but in the meantime, the commitment made by the head of the transition is welcomed by the employers' association present at the meeting.
At his first public meeting with the private sector, General Brice Clotaire Oligui Nguema, the transition president in Gabon, affirmed his commitment to first solving four of the 13 proposals made by employers. They include the privatization of the two social security funds (CNSS and CNGAMS), the enhancement of integrity in budgetary and accounting procedures, repayment of the domestic debt, and the systematic recourse to the banking system to finance projects.
Footage of the meeting showed representatives of the employers' association applauding the various announcements. However, it remains to be seen whether the proposals selected are the most relevant to Gabon's business leaders. For example, the process for the repayment of domestic debt was already underway way before the meeting.
In an analysis published on August 4, 2023, by rating agency Fitch Ratings, it was stated that the government was on course to reduce domestic public debt from 64.7% of Gross Domestic Product in 2021 to 55.7% by the end of 2023. The transition suggests that repayments will continue, but implied that they will only benefit legitimate creditors, after audits.
The privatization of social security institutions has been requested by employers for over two years now and the previous government had in principle approved it. The process was scheduled to begin after July 31, at the end of the provisional administration heading CNSS and CNGAMS.
However, the details of this process have yet to be defined. In an interview with state-TV Gabon 24 in June 2022, Patrick Ossi, then head of CNSS, spoke of problems ranging from lack of transparency in management to structural challenges such as non-payment of contributions by both public and private companies. The management of the liabilities generated by these two problems will influence the final decision of private buyers.
Also, the initiative to systematically recourse to the banking sector to finance infrastructure projects seems ambiguous. As the CEMAC banking sector is, its regulations offer no flexibility to invest in long-term projects so commercial banks’ ability to support such initiatives is limited.
In addition, in Africa, many infrastructure projects require significant financial resources, which local banks do not always have and cannot easily secure due to restrictive regulations. Gabon's banking sector has a limited involvement in the country’s debt. For instance, in its latest bond issue, investors based in Cameroon contributed 42.7% of the funds secured by Gabon.
Overall, it will be interesting to see how the junta will meet these commitments over time. The new leaders are yet to indicate how long the transition will last or whether power will subsequently be handed over to civilians. Nevertheless, everything points to business continuity rather than disruption. On Euronext Paris, some investors are already betting on that scenario.
The shares of Euronext Paris-listed companies like Maurel & Prom, Eramet, and Total Energies Gabon that have operations in Gabon are now recovering after a significant fall following news of the coup that toppled the elected president on August 30, 2023. Although the values are still below pre-coup levels, this means that the initial anxiety is giving way to greater confidence.