Economics of Gabon.
Current demographic and economic features.
Gabon is an African country that borders Cameroon, Equatorial Guinea, and Congo. Gabon’s current population is estimated at 2,220,923, with a population density of 9 per kilometer square. The population is generally sparsely populated. The total land area is approximately 257,670 kilometers squared. The largest city in Gabon is Libreville, with a population approximated at 578,156 (The World Bank in Gabon, 2020).
Gabon is endowed with profuse natural resources. The country highly relies on its natural resources for most of its production activities. Some of the main natural resources include natural gas, petroleum, gold, diamond, cement, manganese, and iron. Gabon has a dense forest cover, approximately 77% of the country is covered with a wide variety of tree species. Okoume tree is the major forestry export product because of its high demand globally for use in the making of plywood. Gabon is ranked fifth-largest oil producer on the African continent (The World Bank in Gabon, 2020).
Gabon is an upper-middle-income country. The country’s economy has been growing for the last ten years due to the large-scale oil and manganese production. Oil constitutes the country’s main export, which accounts for approximately 80% of Gabon’s exports. Moreover, oil contributes about 45% of the Gross Domestic Product and 60% of the fiscal revenue in the last ten years. Crude oil, sawn wood, manganese, and rubber are the main products exported. The main export countries of Gabon include China, Australia, India, and Malaysia. At the same time, passenger and cargo ships, computers, poultry Meat, and packed medicaments are the main imports (The World Bank in Gabon, 2020).
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Gabon is not only a member of CEMAC, which aims to integrate economies and boost trade but also the European Union, whose main purpose is to act as an economic unit globally. The majority of the people in Gabon are either employed in the oil production sector in the urban areas or are engaged in a variety of business enterprises. The concentration of the country’s population is found in Libreville and Port-Gentil, where most industrial establishments are found. In rural areas, people mainly depend on farming as the main economic activity (World Bank, 2018).
Economic Policies.
The French colonial era had such a significant influence on the current economy of Gabon. The French made Gabon’s economy highly dependent on trade and neglected other essential activities in the growth of an economy. France greatly benefited from the oil that was coming from Gabon. To date, Gabon’s economy is over-relying on oil, and there has been a need for the economy to diversify to accommodate various economic activities (Zafar, 2004).
Since independence, Gabon, despite being a resource-rich country, has been experiencing poor fiscal management and overdependence on the oil sector. For the last decade, Gabon has had a high level of public debt denominated in foreign currency. There has been less attention paid to the improvement of the infrastructure, which is evident in cases of water shortage and power cuts being reported. Only a few people control the oil reserves, leaving the majority living in poverty (BIDZO, 2019).
Gabon has benefited from the efforts coming from the World Bank and the IMF.IMF conducted a survey in which it was found that there was a decline in oil prices that kept destabilizing the economy and recommended the need to transform the economy and to also focus on infrastructure development that is essential in promoting economic growth. The World Bank has also assisted Gabon by financing more than twenty significant projects in different sectors of the economy (IMF, 2020).
Basic economic indicators.
The Gross Domestic Product (GDP) in Gabon is estimated at 15.50 billion US dollars in 2019, according to data derived from the World Bank, while the Gross National Product was 14.46 billion US dollars in 2019. The GDP of Gabon grew by 3.4 %, meaning the country invested more in the economy, as opposed to only depending on oil. There was an increase in production activities in other sectors of the economy, including timber, rubber, and palm oil. The GDP growth could also be a result of the exploitation of new oil reserves, which now increases the export volume (The World Bank in Gabon, 2020).
The unemployment rate in Gabon shot from 19.50 percent in 2018 to 19.60 in 2019. Gabon’s government debt is estimated at 56.40 percent of the country’s Gross Domestic Product in 2019. Data from the United Nations show that 60-70 percent of the Gabon population live below the poverty line. The increase in unemployment rates indicates that the economy needs to be modified to create more employment opportunities for the growing population. The fact that the government debt tends to be high shows that the current account deficit for the country has deepened and as such measures should be put in place to reduce the deficit. However, recent reports by the IMF stated that government debt from the figures is sustainable. It is undeniable that the different economic indicators point to the need of the country to improve its economy, to not only depend on crude oil but also to come up with varied production activities that will complement other major activities in the economy (World Bank, 2018).
Technology.
The use of internet Internet and mobile phone is increasingly being adopted in Gabon. The government has been in support of the use of the internet, as the constitution gives people the freedom of speech. Most people use the internet and mobile phones to do research, communicate, and access social media platforms. The use of the internet and cell phone has made communication between people easy. Mobile money services were introduced in 2012, including Airtel and Eco bank. The introduction of mobile banking has simplified the manner in which people receive and transfer cash. Moreover, Mobile banking has aided people to keep their finances under control; they can readily check their balances and transfer money instantly. The use of the internet, cell phones, and the adoption of mobile banking have indeed promoted business activities and thus contributed to the development of Gabon’s economy (World Bank, 2018).
Conclusion.
In conclusion, it is irrefutable that Gabon is enriched with some of the precious resources that have always given the country the potential to perform well economically. However, Gabon faces economic challenges ranging from dependency on the oil sector, inadequate infrastructure, weak banking sector, high levels of unemployment, and high poverty rates. The country needs to revive other areas of the economy, especially the agricultural sector, by focusing more on the production of cash crops such as cocoa, coffee, and palm oil, which have been proved to perform well in such climatic conditions. The agricultural sector has the potential to employ numerous people. The government should also initiate programs that will stimulate other economic sectors with the aim of restoring economic stability and attaining debt sustainability. Additionally, the existing forest heritage can be used to stimulate tourism, which will also offer employment opportunities. I believe that Gabon has the potential to be among the states in Africa that have a stable economy; with the right economic decisions, the country is bound to improve economically.
References
BIDZO, M. M. (2019). The Hypothesis of Fiscal Devaluation in Developing Countries: The Case of Gabon. Applied Economics and Finance, 6(5), 70-82.
IMF Staff Initiates Discussions with Gabon toward a Possible Financial Arrangement. (2020). Retrieved 2 June 2020, from https://www.imf.org/en/News/Articles/2017/02/28/pr1767-IMF-Staff-Initiates- Discussions-with-Gabon-toward-a-Possible-Financial-Arrangement
The World Bank In Gabon. (2020). Retrieved 2 June 2020, from https://www.worldbank.org/en/country/gabon/overview
World Bank (2018). ‘World development indicators,’ Retrieved from http://databank.worldbank.org/data/ source/world-development-indicators [Data file] on 28 July 2018.
Zafar, A. (2004). What happens when a country does not adjust to terms of trade shocks? The case of oil-rich Gabon. The World Bank.