Gabon - Economy

Gabon's per capita income is over four times that of most sub-Saharan African countries. Over 50% of Gabon's GDP comes from petroleum and mining production. The petroleum industry generates 80% of export earnings and more than 50% of government revenues. The manufacturing sector accounts for 60% of GDP overall and services account for 30%. Inefficient parastatal enterprises restrain private sector growth. Gabon received close to 22% of its total revenues from state-owned enterprises and government ownership of property in 2000. As of 2003, fewer than 10 state-owned enterprises had been completely privatized since 1997.

Gabon imports the majority of its food; it is densely forested and only a fraction of the arable land is cultivated. Yet, in 2002, 60% of its population gained their livelihood in the agricultural sector, where the staple food crops are cassava, plantains, and yams.

Gabon's cash crops are palm oil, cocoa, coffee, and sugar. Palm oil is the most important of the four. The coffee sector was hard hit in the 1980s by low world prices and lower producer prices; coffee prices strengthened again in the mid-1990s but sank again in the early 2000s. Gabon is self-sufficient in sugar, which it exports to the United States and other countries. Rubber production has been promoted in recent years.

Rich in resources, Gabon is a country that realized growth rates of 9.5% in the 1970s and early 1980s before succumbing to oil-price instability and international borrowing. In 1986 Gabon saw its GDP drop by half after a dramatic fall in the world price for oil. The economy suffered a second dramatic shock in 1994 when France suddenly devalued the CFA franc, causing its value to drop in half overnight. Immediately, prices for almost all imported goods soared as the inflation rate shot up to 35%. In the face of dramatically escalating prices, uncertainty and anger led petroleum workers to strike for a doubling of their wages. The government reacted by imposing a national "state of alert." Lootings and burnings were reported as government troops tried to silence opposition parties. High inflation was short-lived as the government's tight monetary policy helped reduce inflation to 11% in 1995 and 1.5% in 2001. Unfortunately, because there is little value-added to Gabon's exports (oil and minerals), the devaluation has not helped Gabon's economy, which continues to post growth rates of between 1–2%.

Content to remain dependent on oil and its other primary product exports, the government has not taken the steps necessary to diversify the economy. High labor costs, an unskilled workforce, and poor fiscal management continue to inhibit economic growth. In 2000, the government signed an agreement with the Paris Club to reschedule its official debt; however, because the country's per capita income is higher than the eligibility levels set by the World Bank/IMF Heavily Indebted Poor Countries Initiative, it was unlikely to qualify for debt relief under that program in 2003.