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Gabon: Oil
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Gabon has been a major oil producer for many decades. Historically, oil revenues accounted for approximately 60% of the government’s budget, more than 40% of GDP, and 75% of export earnings. Despite holding Sub-Saharan Africa’s third largest oil reserves, oil preeminence in Gabon’s economy is expected to decline due to maturing oil fields. Gabon has reformed its legislation to provide incentives for exploration and development, a measure which has attracted the new players.
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Gabon's oil revenues have given it a strong per capita GDP of $7,200, extremely high for the region. On the other hand, a skewed income distribution and poor social indicators are evident. The richest 20% of the population receives over 90% of the income, and about a third of Gabonese live in poverty. The economy is highly dependent on extraction of abundant primary materials. After oil, logging and manganese mining are the other major sectors. Foreign and Gabonese observers have consistently lamented the lack of transformation of primary materials in the Gabonese economy.
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Gabon enjoys a per capita income four times that of most of sub-Saharan African nations. This has supported a sharp decline in extreme poverty; yet, because of high income inequality, a large proportion of the population remains poor. Gabon depended on timber and manganese until oil was discovered offshore in the early 1970s. The oil sector now accounts for 50% of GDP. Gabon continues to face fluctuating prices for its oil, timber, and manganese exports. Despite the abundance of natural wealth, poor fiscal management hobbles the economy.
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Gabon's economy is dominated by oil. Oil revenues comprise 65% of the Government of Gabon budget, 43% of gross domestic product (GDP), and 81% of exports. Oil production is now declining rapidly from its high point of 370,000 barrels per day in 1997. In spite of the decreasing oil revenues, little planning has been done for an after-oil scenario. Gabon public expenditures from the years of significant oil revenues were not spent efficiently. Overspending on the Transgabonais railroad, the oil price shock of 1986, the CFA franc devaluation of 1994, and low oil prices in the late 1990s caused serious debt problems.
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The economy of Gabon is largely dependent on the exploitation of mineral and forest resources, particularly oil. While Gabon’s gross domestic product of $3,600 per capita in 1999 was the highest in Africa, the economy fluctuates with world petroleum prices. The national budget in 1993 included revenues of $1.3 billion and expenditures of 1.6 billion.
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Hard times on the horizon: for decades Gabon enjoyed one of the highest per capita incomes in Africa on the back of its oil revenues. But the flood of 'black gold' has been dwindling alarmingly. Can Gabon cope with the new reality? Neil Ford looks at the options.(Gabon)
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