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AFRICAN DEVELOPMENT BANK
GABON
ECONOMIC DIVERSIFICATION SUPPORT PROJECT (PADEG)
APPRAISAL REPORT
Translated Document
ECGF/RDGC
June 2018
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TABLE OF CONTENTS
acronymns and Abbreviations ...................................................................................................................... i
Project Information Sheet ...........................................................................................................................iii
PROJECT SUMMARY ............................................................................................................................... v
Results-Based Logical Framework ............................................................................................................. vi
I. STRATEGIC THRUST AND RATIONALE ..................................................................................... 1
1.1 Project Linkage with Country Strategy and Objectives ............................................................ 1
1.2 Rationale for the Bank’s Involvement ....................................................................................... 2
1.3 Aid Coordination ....................................................................................................................... 5
II. PROJECT DESCRIPTION.................................................................................................................. 6
2.1. Project Objectives and Components .......................................................................................... 6
2.2 Technical Solutions Adopted and Alternatives Explored ........................................................ 10
2.3 Project Type............................................................................................................................. 11
2.4 Project Cost and Financing Arrangements ............................................................................... 11
2.5 Project Area and Beneficiaries ................................................................................................ 13
2.6 Participatory Approach to Project Identification, Design and Implementation....................... 13
2.7 Bank Group Experience and Lessons Reflected in Project Design ......................................... 13
2.8 Key Performance Indicators ..................................................................................................... 14
III. PROJECT FEASIBILITY .............................................................................................................. 15
3.1. Economic and Financial Performance ..................................................................................... 15
3.2 Environmental and Social Impact ........................................................................................... 15
IV. IMPLEMENTATION ..................................................................................................................... 16
4.1 Implementation Arrangements ................................................................................................ 16
4.2 Monitoring and Evaluation ...................................................................................................... 18
4.3 Governance .............................................................................................................................. 18
4.4 Sustainability ........................................................................................................................... 19
4.5. Risk Management .................................................................................................................... 19
4.6 Knowledge Building ................................................................................................................ 20
V. LEGAL FRAMEWORK ......................................................................................................... 20
5.1 Legal Instrument ...................................................................................................................... 20
5.2 Conditions Associated with the Bank’s Intervention .............................................................. 20
5.3 Compliance with Bank Policies............................................................................................... 20
VI. RECOMMENDATION .................................................................................................................. 20
Appendix I Country Comparative Socio-economic Indicators.....................................................................I
Appendix II Table of AFDB Country Portfolio.......................................................................................... II
Appendix III. Main Related Projects Financed by the Bank and Other Development Partners in the
Country ...................................................................................................................................................... III
Appendix IV. Map of Project Area ............................................................................................................. V
i
ACRONYMNS AND ABBREVIATIONS
AC Advanced Contracting
ADF African Development Fund
AFD French Development Agency
AfDB African Development Bank
ANUTTC National Agency for Urbanisation, Topographic and Land Registration Works
BGD Gabonese Development Bank
CBFF Congo Basin Forest Fund
CCAIMA Chamber of Commerce, Agriculture, Industry, Mines and Crafts
CFPP Vocational Training and Skills Improvement Centre
CNAMGS National Health Insurance and Social Security Fund
CSP Country Strategy Paper
DGETP Directorate-General Directorate for Technical and Vocational Training
DGFP Directorate-General for Vocational Professional Training
EPA Economic Partnership Agreement
ERP Economic Recovery Plan
EU European Union
FDI Foreign Direct Investments
GIS Geographic Information System
GSEZ Gabon Special Economic Zone
ICB International Competitive Bidding
IGA Income Generating Activities
ILO International Labour Office
LCB Local National Competitive Bidding
MFPIJ Ministry of Labor, Employment and Youth, in charge of Professional Training
MIC Middle Income Countries
MPIIC Ministry of Private Investment Promotion, Industry and Trade
MSE Micro- and Small-Sized Enterprises
OLAM Main GSEZ Operator
PADEG Gabonese Economic Diversification Support Project
PAREF Economic and Financial Reform Support Project - Budget Support (2016/2017)
PCN Project Concept Note
PCR Project Completion Report
PIU Project Implementation Unit
PPP Public- Private Partnership
PRSP Poverty Reduction Strategy Paper
PSC Project Steering Committee
PSGE Emerging Gabon Strategic Plan
SEM Société Equatoriale des Mines
SEZ Special Economic Zone
TAF Technical Assistance Fund for SMEs
TVE Technical and Vocational Education
UA Unit of Account
WB World Bank
ii
Currency Equivalents
March 2018
UA 1 = XAF 776.51534
UA 1 = EUR 1.18379
UA 1 = USD 1.44589
Fiscal Year
1 January – 31 December
Weights and Measures
1 metric tonne = 2204 pounds (lbs)
1 kilogramme (kg) = 2.200 lbs
1 meter (m) = 3.28 feet (ft.)
1 millimetre (mm) = 0.03937 inches (”)
1 kilometre (km) = 0.62 mile
1 hectare (ha) = 2.471 acres
iii
Project Information Sheet
Client Information Sheet
BORROWER: GABONESE REPUBLIC
EXECUTING AGENCY: Ministry of Investment Promotion and Public-Private Partnerships
Financing Plan
Source Amount (EUR) Instrument
AfDB
EUR 62.74 million
Loan / Debt
Others (Govt.) EUR 11.88 million Government
TOTAL COST EUR 74.62 million
Key AfDB Financing Information
Loan Currency: Euro (EUR) [or any other acceptable currency]
Loan Type: Fully flexible loan
Currency: To be determined (up to 25 years maximum)
Grace period:
To be determined (up to 8 years maximum)
Weighted average maturity **: To be determined (depending on the amortization profile)
Reimbursement: Half-yearly instalments after the grace period.
Interest Rate: Base rate + funding margin + Lending spread + Maturity
premium.
This interest rate must be greater than or equal to zero.
Base Rate: Floating (EURIBOR 6 months revised on 1 February and 1
August or any other acceptable rate).
A free-floating option is available to set the base rate.
Funding margin: The Bank's funding margin revised every 1st January and 1st
August with the base rate.
Lending spread: 80 basis points (0.8%)
Maturity Premium: To be determined:
- 0% if the weighted average maturity <= 12.75 years.
- 0.10% if 12.75<weighted average maturity <=15.
- 0.20% if the weighted average maturity >15 years.
Front-end fees: 0.25% of the loan amount payable by the date of signature of
the loan agreement.
Commitment fee: 0.25% per year of the non-disbursed amount, starting to accrue
60 days after the date of signature of the loan agreement and
payable on the set payment dates.
iv
Base rate conversion option*: Besides the free base rate fixing option, the borrower may
revert to the floating rate or reset all or part of the disbursed
loan amount.
Transaction fees apply.
Rate cap or collar option*: The borrower may cap or collar the base rate for all or part of
the disbursed loan amount.
Transaction fees apply.
Loan currency conversion option*: The borrower may change the currency of all or part of its
disbursed or undisbursed loan to another Bank loan currency.
Transaction fees apply.
TRF, NPV (baseline scenario) NA
ERR (baseline scenario) NA
*if applicable
Timeframe – Key Milestones (expected)
Concept Note Approval
20/07/ 2016
Project Approval 29/06/ 2018
Effectiveness 30/10/ 2018
Last Disbursement 31/03/2022
Completion 30/09/2022
Last Reimbursement
v
PROJECT SUMMARY
General
Project
Overview
Project Title: Gabon - Economic Diversification Support Project (PADEG)
Geographic Scope: Nationwide
Schedule: June 2018 - June 2022
Financing: EUR 62.74 million (ADB loan) : Counterpart Contribution: EUR 11,88 million
Operating Instrument: Institution building project.
Needs
Assessment
and Relevance
The second largest economy in the CEMAC zone, Gabon is heavily dependent on oil, the price of
which has crashed since 2014. This has led to a deep economic crisis and a drastic drop in reserves
at the Central Bank (BEAC). Therefore, the revival and diversification of Gabon's economy is crucial
for the stability of CEMAC's economic and monetary community. Project needs were identified in a
participatory manner, following several AfDB missions, the CSP and study reports1 on "diversifying
the sources of growth" (AfDB-2008) and "diversification and competitiveness of exports in the
Gabonese Republic" which underscore the need to strengthen institutional, regulatory, human and
infrastructural capacity, and to further boost the industrial and entrepreneurial fabric.
The Bank's intervention is justified for the following reasons: (i) to stimulate private investment,
economic growth and improve the living conditions of the people. PADEG will directly support the
timber and mining sectors because of their high potential in terms of foreign investment, exports and
employment. PADEG will also play a catalytic role through the establishment of a PPP framework,
the improvement of the investment climate and support for the development of the Nkok Special
Economic Zone as well as capacity building in priority sectors (timber, mining); (ii) PADEG will
provide support to the authorities to concretize their policy of promoting local SMEs-SMIs and
modernizing the craft sector, with particular emphasis on the priority sectors (timber, mining); (iii)
PADEG will also deepen and strengthen the reforms supported by the Bank within the budget support
framework (PAREF), particularly by backing the establishment of the Gabonese Revenue Authority and building capacity to coordinate economic and financial reforms.
The Bank’s
Comparative
Advantages
and
Value Added
The Bank is one of Gabon's main development partners. The Bank’s comparative advantage emanates
from the fact that it has already financed several investment climate operations in other countries with
focus on promoting priority sectors. PADEG’s design took into account lessons from these
experiences, particularly those related to diversification of sources of growth and capacity building of
SMEs-SMIs. The Bank also has a comparative advantage because PADEG will help to strengthen
previous or ongoing operations. This project will consolidate achievements under two operations
(establishment of business incubators and support by the Chamber of Commerce2 to artisans and
young entrepreneurs to facilitate their formalization and access to various sources of financing). Thus,
this operation complements the Bank's ongoing budget support (especially the establishment of the
Gabonese Revenue Authority) and the interventions of other donors, particularly the World Bank's
Private Sector Development Project.
Knowledge
Management
and Knowledge
Building
PADEG will contribute to knowledge building by identifying technical solutions to key economic
diversification issues. Knowledge will be transferred through training and various kinds of technical
assistance (coaching). The project will develop good practice in the following areas: (i) sector
management; (ii) entrepreneurial culture; (iii) business management; (iv) support and hosting of
international productive investments; (v) monitoring and evaluation. This knowledge will be shared
through consultancy services and specific training programmes in the above-mentioned fields.
1 Report on diversification of the sources of growth (AfDB-2008), and Report on the diversification and competitiveness of exports in Gabon (WB-2014). 2 Project to Support the Chamber of Commerce financed with an MIC-TAF grant, which set up an accredited certified accounting centre (“Centre de
Gestion Agréé”) at the Libreville Chamber of Commerce.
vi
Results-Based Logical Framework
VII. Results-Based Logical Framework
Country and Project Title: Gabonese Republic – Economic Diversification Support Project (PADEG)
Project Goal: The project’s overall objective is to contribute to strong and inclusive growth by improving the investment climate, building
institutional capacity and diversifying the Gabonese economy.
RESULTS CHAIN
PERFORMANCE INDICATORS
MEANS OF
VERIFICATION
RISKS/
MITIGATION
MEASURES
Indicator
(including ISCs) Baseline Situation Target
IMP
AC
T
Contribute to
sustained and
inclusive non-oil
growth
Average annual GDP
growth rate
2.1% in 2016 3.1% in 2025 Min.
Finance/IMF
Risk 1:
- Socio-political
- Insecurity and
political
instability.
Mitigation
Measure 1
- The country’s
commitment and
that of the
international
community to
pursue peace
consolidation
and national
security.
Risk 2:
- Reversibility of
Government's
commitment to
pursue structural
reforms.
Mitigation
Measure 2
This is an
institution
building
operation and
the Government
has reaffirmed
its commitment
following the
programme
Private investment rate,
excluding oil 7% in 2016 10% in 2022
Min.
Finance/IMF
Growth of the Special
Economic Zone
Number of jobs created in
businesses within the
Special Economic Zone
SEZ occupancy rate
12500 jobs in 2016
67% (2017)
18000 jobs in
2022
90% (2022)
SEZ/Min TEFP
OU
TC
OM
ES
Sustainable growth in
the timber and mining
sectors
Wood processing rate
4 in 2017 10 in 2021
Min. of Water and
Forests
Number of new
concessions/mining
licenses granted
10 in 2016 20 in 2022 Min. of Mines
Increased
mobilization of non-
oil revenue
Tax revenue from the non-
oil sector (FCFA billion)
922 FCFA billion in
2017
1615 FCFA
billion
in 2022
IMF Report
OU
TP
UT
S
Component I : Support investment climate improvement and internal resource mobilization to
back economic diversification
Output I.1 : The
Nkok SEZ is
operational
I.1.1.The SEZ Impact
study conducted and
optimization strategy
drafted
No action plan for
the second phase of
SEZ development
SEZ Phase II
Action Plan
available
SEZ Report
I.1.2 The SEZ Training,
Testing and Certification
Centre equipped
No training, testing
and certification
centre in 2017
A training centre
will be equipped
from 2018 and
150 people
trained per year as
from 2018
SEZ Report
I.1.3 The SEZ Design and
Exhibition Centre
equipped
No new products on
display
2 products per
year as from 2019
Output I.2. The SEZ
one-stop shop is
automated and
interconnected with
the port one-stop
shop
I.2.1 The port one-stop
shop transaction
management software
installed.
Manual Transactions
Automated
transactions from
2019
SEZ Report
Output I.3. The
Gabonese Revenue
Authority (OGR) is
operational
I.3.1 OGR deployment
The Gabonese
Revenue Authority
does not exist to date
(2018)
OGR is deployed
and operational
(2022)
MIN DDEP
Report
vii
Output I.4 The
overall business
framework is
strengthened and
constraints on
priority value chains
identified
1.4.1 Number of business
procedures to be
streamlined in 2017
0
At least 10
simplified and
operational
procedures by the
end of 2020
Report of the
Ministry of
Investment
Promotion
agreement with
the IMF, which
requires the
continuation of
the
diversification
programme.
Risk 3:
- Human
resources in the
structures
benefiting from
the project to
ensure the
efficient
implementation
of the activities
retained
Mitigation
Measure 3
- The
involvement of
high-level
experts to
provide training
and ensure
knowledge
transfer in these
structures will
mitigate this risk
at the level of
the beneficiary
structures.
1.4.2 Implementation of
the action plan on
identified constraints
0 constraint in 2017
At least 20% of
constraints lifted
per year per value
chain between
2018 and 2021
Report of the
Ministry of
Investment
Promotion
1.4.3 Operationalization of
the TGI Libreville
Chamber of Commerce.
The Chamber of
Commerce was not
operational in 2017
The Chamber of
Commerce will
be operational
end-2021
Report of the
Ministry of
Justice
Component II : Support Reforms in the Priority Timber and Mining Sectors
Output II.1 The
investment
framework in the
mining sector is
improved.
II.1.1. Build the Geoportal
capacity
Low capacity of the
Geoportal site in
2017
Geoportal site
fully operational
2020
MIN/DGM
Reports
II.1.2. Baseline of
production norms and
standards in priority
sectors and equipment for
AGANOR
No baseline in 2017
The baseline is
available and
AGANOR is
equipped
AGANOR Report
II.1.3. Finalization of the
mining cadastre and
Geographic Information
System (GIS)
The mining cadastre
is incomplete and
GIS resources
insufficient
The mining
cadastre is
operational and
GIS technical
resources will be
deployed before
end-2020.
MIN/DGM
Reports
Output II.2: Primary
and secondary
processing in the
forest/timber sector
strengthened.
III.2.1. Monitoring and
evaluation of forest
management plans
No monitoring
framework in 2017
A monitoring and
evaluation
framework for
WEPs will be
operational
before end-2020
MIN/DG Forest
Reports
OU
TP
UT
S
II.2.2. Equipment of the
Nkembo Vocational
Training Centre as a pilot
centre for primary and
secondary timber
processing trades
No primary and
secondary timber
processing centre for
artisans
The Nkembo
CFPP has
modern
equipment and is
operational.
Min. of
TEFP/Min
Forests
II.2.3. Technical
equipment for primary and
secondary processing is
available
No studies and
shared equipment for
primary and
secondary
processing available
Study and
equipment
available before
end of 2020
MIN/DG Forest
Reports
OU
TP
UT
S
II.2.4 Technical
Assistance Fund (TAF) to
Gabonese SMEs-SMIs is
operational
No TAF Technical
Assistance
At least 100
SMEs-SMIs
would receive
technical
assistance before
end of 2022
Report of the
Ministry in
charge of SMEs
and Investment
Promotion
viii
II.2.4.1 Of whom at least
40% are women and
young entrepreneurs
0 in 2017
At least 40%
women and
young
entrepreneurs
Report of the
Ministry in
charge of SMEs
and Investment
Promotion
K
EY
AC
TIV
ITIE
S
COMPONENTS INDICATIVE COSTS ADB 62.74
(MEUR)
Component 1. Support investment climate improvement and internal resource
mobilization to promote economic diversification: Support the development of the
Nkok Special Economic Zone and improve economic governance.
(M EUR 38.83)
Component 2. Support reforms in priority sectors (timber and mining): Support
reforms in the mining and timber sectors, and promote the upgrading and capacity
building for SMEs and SMIs as well as operators in the craft sector.
(M EUR 22.03 MEUR)
Component 3. Project management: Equip and ensure the operation of the Project
Management Unit. This component will also be responsible for coordinating the
recruitment of the external auditor.
(M EUR 1.88 MEUR)
xii
Years
Activities / Month J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J J F M A M J J A S O N D
Pre-condition for Start-up
Board Presentation
Loan Effectiveness
Establishment Project Team
Establishment of PSC
Project Launch Mission
Works
Invitation to Bid Works
Nkembo Rehabilitation
CFPP Nkembo Development
Equipment and Supplies
Movable Automation Office Ware
Procurement of OGR/SEZ Software
Bidd for Movable Office Ware
Invitation to Bidd, Other Equipments
Supply of Goods and Services
Consultants
Launch of Procurement Documents,
bidding, non-objection procedure and
assignment
Consultancy Services
Strengthening Special HCI Unit
Strenghtening HCI/OGR
OGR/SME/SMI Training
Strengthening
Various Training Programmes
SME/SMI/ DG Prospects
Operating Costs
Mid-Term Review
Monitoring-Evaluation
Steering Committee Meeting
Audit
Annual Audit of Accounts
20222018 2019 2020 2021
1
MANAGEMENT’S REPORT AND RECOMMENDATION TO THE BOARD OF
DIRECTORS CONCERNING A LOAN TO THE GABONESE REPUBLIC TO FINANCE
THE ECONOMIC DIVERSIFICATION SUPPORT PROJECT
Management hereby submits this report and recommendation on the proposal to grant a EUR
62.74 million loan to the Gabonese Republic from the ADB window to finance the Economic
Diversification Support Project (PADEG) for the period 2018-2022.
I. STRATEGIC THRUST AND RATIONALE
1.1 Project Linkage with Country Strategy and Objectives
1.1.1. The Government of the Gabonese Republic has made considerable effort to modernize and
diversify the economy under the Emergent Gabon Strategic Plan (PSGE), which is based on three
pillars: Industrial Gabon, developing industrial capacity particularly in the oil, mining and
metallurgy sectors; Green Gabon, strengthening the timber, agriculture, livestock and fisheries
sectors; and Gabon Services, promoting tourism and financial services. This Plan includes a clear
Action Plan and aims to transform the country into an emerging economy by 2025. The PSGE was
recently updated through the adoption of the Economic Recovery Plan, the aim of which is to adapt
the country to the new context of economic and financial crisis resulting from the crash in
international oil prices.
1.1.2. PADEG is aligned on the priorities of the Economic Recovery Plan (ERP), which is the
vehicle for implementing the Emergent Gabon Strategic Plan for the period 2017-2019, against the
backdrop of falling oil prices, with specific focus on the following strategic objectives: (i) internal
resource mobilization; (ii) economic recovery and diversification; and (iii) poverty reduction.
PADEG will support these three strategic objectives. Thus, improvement of the investment climate
will be sought through Component I aimed at supporting the development of the Nkok Special
Economic Zone and the consolidation of investment climate reforms particularly via activities to
operationalize and consolidate PPPs. This will contribute to alleviating the public investment burden.
Achieving the ERP objectives relating to public expenditure consolidation and the fight against
poverty will also be sought through support for the establishment of the Gabonese Revenue Authority
(OGR), whose aim is to strengthen internal resource mobilization. Finally, the objective of economic
recovery and diversification will be sought under Component II through holistic support for two high
potential sectors (timber and mining). The development of these sectors is a PSGE/ERP priority, in
view of the country's comparative advantages in them and their likelihood to contribute to
accelerating Gabon’s industrialization. In particular, the project will help to remove barriers with a
view to facilitating and enhancing FDI inflows and industrial transformation in both sectors. The
project will also strengthen the SMEs/SMIs development ecosystem set up by the authorities by
implementing a robust programme to upgrade and strengthen the capacity of Gabonese SMEs and
SMIs and selectively support the craft sector, increase the productivity of sector operators, make
them more competitive in a context marked by market liberalization, and improve their contribution
to wealth and job creation.
1.1.3. By supporting the attractiveness of investments, the development of economic infrastructure
via Special Economic Zones, capacity building for SMEs/SMIs and transformation of the timber and
mining sectors, the programme is aligned on the Bank's Ten-Year Strategy (2013-2022) in terms of
governance, accountability, and private sector development. PADEG is also in line with two of the
CSP 2016-2020 pillars, namely: (i) economic diversification support through infrastructure
development and business climate improvement; and (ii) support to the human development strategy.
Furthermore, PADEG supports the Bank's High 5s, especially "Industrialize Africa" and "Improve
the quality of life for the people.” PADEG will help move forward the Governance Action Plan 2014-
2018, in particular the pillar on improving the business climate. It is in sync with the Bank's Private
Sector Development Policy 2013-2017, particularly the first pillar on the business climate.
2
1.2 Rationale for the Bank’s Involvement
1.2.1 The project will enable the Bank to play a key role in Gabon by assisting the authorities
in promoting strong, diversified and inclusive growth. The second largest economy in CEMAC,
Gabon depends mainly on oil resources. The slump in international oil prices since mid-2014 has
created a vicious circle of deteriorating public finances, slowing growth, plummeting foreign
exchange reserves, unsustainable accumulation of public debt and rising unemployment, particularly
among the youth and women. This crisis shows that to preserve stability and social peace, Gabon
must change its development paradigm from a growth model based on oil and public
investment to one that is more diversified and inclusive, driven by the private sector and job-
generating. Therefore, the Bank's intervention under PADEG is justified for two main reasons.
1.2.2. Under this project, the Bank will support the authorities in their effort to diversify the
economy by improving the investment climate and implementing targeted reforms aimed at
strengthening the competitiveness of priority sectors. PADEG is complementary with the reforms
implemented under the recent budget support (PAREF) backed by the Bank, whose aim is to create
more leeway for public finance sustainability and economic diversification, with particular emphasis
on strengthening revenue mobilisation. PADEG’s areas of intervention (i.e. improvement of the
investment climate, establishment of the Gabonese Revenue Authority and targeted support to
priority sectors in support of economic growth and job creation for young people) will help to
strengthen and deepen PAREF reforms. Therefore, PADEG’s implementation should contribute,
jointly with PAREF, to increase the Bank's visibility in Gabon and support major efforts made
to put the country's economy back on a more sustainable path and accompany its structural
transformation.
1.2.3 Given the falling oil prices, the authorities' main challenge is to accelerate the pace of
economic diversification and sources of growth. The Gabonese economy remains dependent on
revenue from the oil sector, which enabled it to achieve overall average growth of more than
6% during the implementation of the first phase of the ESMP (2010-2014). In 2015, the oil and
gas sector still represented about 40% of GDP, 45% of public revenue (compared to 18.6% in
Cameroon) and nearly 85% of exports. The collapse in oil prices, coupled with the rise in the cost of
financing on the capital markets, highlight the urgent need for strengthening internal resource
mobilisation while consolidating measures to rationalize and improve the quality of expenditure to
facilitate the continued implementation of the ERP. The crash in oil prices also highlights the need
to create the right conditions to attract more investment and better promote economic diversification.
This explains why emphasis has been placed on export sectors, particularly forestry and mining,
given their potential contribution to improving the trade balance and government revenue, as well as
to job creation, especially for young people and women.
1.2.4. Therefore, PADEG will address the obstacles to diversification of the sources of growth
at the sector level, particularly in the timber and mining sectors. Mining sector development is
a PSGE priority. Gabon is the fourth largest manganese producer in the world and has large reserves
of iron, diamond, gold and phosphates. Despite this potential, the contribution of the mining sector
to GDP is still marginal at around 3% on average in 2016. The mining sector remains highly
underdeveloped, although some industries have established themselves in certain fields. Manganese
is most exploited by the French Group Eramet (250 million tonnes).
3
The development of the mining sector suffers mainly from the following handicaps: (i) low investor
interest3 due to the complexity of procedures, weaknesses in the regulatory framework that hinder
access to resources; (ii) poor knowledge of resources due to the absence of an inventory; and (iii)
weaknesses in sector markets and governance.4
1.2.5. The forest industry is also a major priority of PSGE/ERP. It retains its status as the
second economic sector after oil and gas. Forest covers nearly 88% of the national territory5. The
forest industry is also a major priority of the PSGE. It retains its status as the second economic sector
after hydrocarbons. Together with the mining sector, the forestry sector offers opportunities to reduce
dependence on oil. With its unique forest endowment, Gabon has all the assets to play an
important role in the global timber industry. The country has 23 million hectares of forest in the
Congo Basin with a wide variety of species, forest concessions of about 12 million hectares and
privileged access to rare species. In terms of finished products, the international market for wooden
furniture is growing rapidly with more than 60 billion dollars of imports per year - an average growth
of more than 5% over the last five years. In addition, there are great opportunities for tropical timber
both in the high-end segment and in fair trade niches. Many countries like Malaysia, whose forest
endowment is similar to that of Gabon, have succeeded in developing a strong wood manufacturing
industry whose exports amount to more than USD1.8 billion per year with more than 345,000 jobs
created thanks to a dedicated cluster strategy6.
1.2.6. Based on this potential, the Gabonese authorities have adopted a strategy aimed at
accelerating the transformation of the timber sector, guaranteeing a sustainable and reliable
supply of logs, protecting high-value species, achieving USD 1 billion in wood furniture exports,
creating 20,000 jobs and positioning itself among the world’s top 10 furniture exporters. This
strategy will be implemented through the following components: supporting the sustainable
development of forestry activities and a reliable supply to the timber industry; increasing
productivity, improving the supply chain, developing the Nkok SEZ timber cluster and launching an
attractive offer of Gabonese products on international markets. The main measures implemented to
date are among others, ban on exporting logs, setting up of the Nkok SEZ and creation of an
Industrialization Fund of CFAF 20 billion. Despite the progress made, Gabon is still unable to take
full advantage of the comparative advantages in the timber sector. The forestry sector represents only
9% of total exports in value and its contribution to employment remains limited (12,500 jobs in 2016).
Log production is still limited (1.45 million m3 in 2015) as is processing into finished products.
However, the forest-based sector accounts for 60% of non-oil GDP and its contribution continues to
increase thanks to the strengthening of production and processing capacity by the major timber sector
operators (Rougier Gabon, Olam Gabon, and Société Nationale du Bois du Gabon - SNBG).
1.2.7. The development of the timber industry is hampered by persistent constraints in the
secondary and tertiary processing industries. These include: (i) the inadequate regulatory and
fiscal framework; (ii) the weak structuring and integration of the sector; (iii) the non-availability
of basic equipment, linked to the non-existence, inadequacy and poor management of industrial
structures; (iv) supply and marketing difficulties, related to scarcity and under-utilization of
resources (only 35-40% of the timber felled is used, compared to 80% as global best practice); the
low productivity of industrial wood processing facilities, the lack of product traceability and
logistical difficulties in the value chain; and (v) the low level of industrial processing linked in
particular to the lack of capacity to design finished products, companies producing auxiliary
3 IN 2015, Gabon received barely 1% of all FDI mobilized on the entire continent in the mining sector. 4 The AfDB is already assisting the country in the revision of its mining code through the legal facility, the interventions provided for in the section
"Mining Code". "Governance" take this support into account
5 With over 400 tree species, Gabon's ecological wealth is priceless. In view of this potential, the Gabonese authorities decided in 2010 to stop
exporting raw logs to promote local processing 6 Malaysia’s cluster strategy: favourable legal and fiscal framework ; dedicated access to raw materials, with emphasis on sustainable development ;
cluster with world class infrastructure and services; upgrade of human resources and strategy covering the entire value chain aimed at both local
SMEs and international actors
4
products and services for furniture, and the critical size of the cluster; (vi) the inadequate
training level of operators and the need to upgrade SMEs in the sector. The training problem7 is
highly crucial in the sector’s industrialization process. Ninety percent (90%) of workers encountered
in the industry are not trained. This constitutes a real handicap to the sector’s economic
competitiveness. The training need will also be addressed as part of the Bank project on youth
employability currently being implemented in Gabon.8
1.2.8. PADEG will also address the constraints hampering the diversification and
competitiveness of the Gabonese economy. These include weaknesses in the investment
environment, the low competitiveness of Gabonese SMEs and the craft sector in a context of
increased economic liberalisation, the high cost of factors of production and the lack of a critical
mass of skilled labour.
1.2.9. Institutional weaknesses in the investment environment affect the cost structure, the
ability to attract of investments and the development of priority sectors. Since 2015, Gabon's
competitiveness indicators have deteriorated compared with previous years. The 2016 edition
of the World Bank's "Doing Business" ranks the country 162nd out of 189 economies in the world, a
drop of 6 places compared to the 2015 publication. The drop in ranking is mostly attributable to the
loss of 43 places in connection with “dealing with construction permits”. Approximately, it would
take 329 days to obtain a building permit, particular because of the inefficiency of the agency
responsible for simplifying procedures (the “Centre de Développement des Entreprises” - CDE)
(Business Development Centre) set up since 2011. These downgrades persisted in 2017 and are
amplified by cumbersome procedures, the inadequate infrastructure for hosting investors and, in
particular, constraints in terms of supply of industrial land – a key determining factors in industrial
sector development. Finally, weaknesses in enforcing contracts do not reassure foreign investors.
1.2.10 The low participation of the national private sector in the development process driven
by PSGE poses an additional obstacle to economic diversification. Although the authorities have
set up a number of SME/SMI financing mechanisms to address constraints related to access to credit9,
Gabonese SMEs remain uncompetitive and have difficulty in accessing financing because of
limitations in terms of training10, mastery of quality standards, managerial capacity and access to
technology and markets. In addition, the microenterprise and craft sector, which employs more than
70% of the working population, is still cut off from major innovations, global business networks and
value chains. Consequently, an important part of economic sectors such as pottery, jewellery,
foundry, decoration, fashion and sewing, ceramics, joinery, ornamental plants, household waste
collection and recycling remain underdeveloped, only making a limited contribution to wealth
creation compared to their development potential. In this context, efforts to diversify the economy
must take into account the heterogeneity of the private sector, upgrade the skills of local SMEs and
SMIs and modernize the craft sector. This will enable them to play a more active role in promoting
growth sectors, respond better to public procurements and face international competition more
readily, particularly in the context of the forthcoming implementation of Economic Partnership
Agreements (EPAs) with the European Union. The ultimate goal of government's efforts is to enable
SMEs and craft businesses to play a greater role in job creation and the economic integration of young
people and women.
7 A technical assistance fund will be provided under this project to demonstrate the importance of training and the need for SMEs in the priority
sectors affected by economic partnership agreements to adapt 8 The AfDB Board of Directors approved EUR 84.63 million to Finance Capacity Building for Youth Employability and Social Protection
Improvement Project in Gabon. The project had two components: (i) youth employability; and (ii) health promotion and social inclusion
9 Through the Gabon Strategic Investment Fund, the Okoume-Capital Fund, COFINA and the National Social Assistance Fund 10 A technical assistance fund will be provided under this project to demonstrate the importance of training and the need for SMEs in the priority
sectors affected by economic partnership agreements to adapt
5
1.2.11 finally, the high cost of factors of production and the poor quality of production
infrastructure are a hindrance to economic diversification. This constraint is reflected in the weak
production infrastructure (water, electricity, transport, port) that underpins the development of the
economic fabric. Given its limited resources and the need to accelerate industrialization, the State,
in partnership with the OLAM group, has set up a multi-sector Special Economic Zone with particular
emphasis on timber processing. The zone offers quality infrastructure and integrated services (water,
electricity, world-class sanitation, an attractive legal and fiscal framework, human capital and
channelled services, good import-export connectivity, commercial and regional agreements) in order
to create an ecosystem conducive to the country’s rapid industrialization. The SEZ has been a strong
commercial and financial success that should be given more support11.
1.2.12 Faced with these challenges, the Government decided to undertake reforms to improve the
business environment, while focusing on accelerating the pace of economic diversification and
strengthening the levers for inclusive growth by 2020 through the ERP. In this regard, PADEG will
focus on improving the investment climate and accelerating the industrialization process with
particular emphasis on the development of the timber and mining sectors. Special Economic Zones
will also be developed, the SME/SMI fabric densified, institutional capacity built through the
establishment of the Gabonese Revenue Authority, and the capacity to steer and coordinate State
economic and financial policies strengthened.
1.3 Aid Coordination
1.3.1 Gabon has set up a Joint Government-Technical and Financial Partners Committee,
which meets regularly. This Group is also sub-divided into various thematic groups. The Bank
participates in the activities of the partnership framework in Gabon with the other key partners: the
World Bank, French Development Agency, the European Union, the United Nations Agencies,
France and China, in compliance with the Paris Declaration. However, given its position as an upper
middle-income economy, Gabon does not have a strong tradition of implementing and monitoring
official development assistance (ODA), which represents less than 1% of the GNI. The African
Development Bank remains Gabon's most important historical partner. Technical and financial
partners coordinate their activities through sector and thematic groups: private sector,
governance/budget support, rural development, the environment, decentralization, transport, energy,
education and health.
1.3.2. Activities of Development Partners in the Country and Coordination Mechanisms. The
project was prepared in close collaboration with other donors. The World Bank is supporting the
promotion of investment and competitiveness through a private sector development project approved
in March 2014. Adopting a complementary approach in light of other donors’ interventions, PADEG
seeks to support crosscutting policies that have a major impact on improving the investment climate
and economic diversification, with particular emphasis on strengthening the competitiveness of the
timber and mining sectors.
11 Construction of the SEZ: world class infrastructure, respect of all PPP commitments (law on SEZ passed in Parliament, the one-stop shop
operational, more than three million hectares of forest allocated, government’s financial contribution made), high commercial success (67% of the industrial zone sold (Phase I), full commercialization before 2020, more than 75% of companies have reserved plots; strong financial performance
with cumulative profits of USD 162 million since 2011.
6
Table 1
Donor Interventions in Sectors Covered by the Project
Partners Improve the Investment Climate
Support
Economic
Diversification
Support to
Businesses
World Bank yes yes yes European Union no no no
African Development Bank yes yes yes French Cooperation
Table 2 - Complementarity between the World Bank PPIC Project and PADEG
PADEG PPIC
1. A Support investment climate reforms
Develop an investment promotion strategy for ANPI no yes
Operationalization of the Nkok SEZ yes no
Investment promotion in target sectors yes yes
Creation of a business register yes
Assistance to businesses
yes yes
2. Support reforms in priority sectors
Preparation of a PPP law and related decrees no yes
Operationalisation of the PPP Unit yes yes
Capacity building for the operationalization of the Commercial Chamber of the Libreville High Court yes no Tax revenue mobilization for private sector development yes no Support reforms in the mining sector yes no Support reforms in the forest-timber sector yes no Set up the Technical Assistance Fund for upgrading Gabonese SMEs and SMIs yes no
II. PROJECT DESCRIPTION
2.1. Project Objectives and Components
2.1.1 The project’s overall objective is to contribute to strong and inclusive growth by improving the
investment climate, strengthening institutional capacity and diversifying the Gabonese economy in
priority sectors. PADEG will be implemented over a four-year-period, and aims mainly to consolidate
the achievements of the Bank's previous operations12 and support efforts to structurally transform the
Gabonese economy. Specifically, PADEG will help improve the investment climate, strengthen internal
resource mobilization to ensure sustainable financing of economic diversification, and promote priority
sectors and SMEs in Gabon. Therefore, PADEG is divided into three complementary components
presented in detail in the table below: (i) support investment climate reforms to strengthen economic
competitiveness, and mobilize internal resources for economic diversification; (ii) support reforms in
the priority mining and timber sectors to diversify the sources of growth; and (iii) support the project’s
operational management..
12 Through the Project to Support the Chamber of Commerce, the Project to Support Incubators and PAGOS
7
Table 2.1
Project Components
Components Sub-
Components
Cost in EUR
Million Description
I - Support investment
climate improvement
and internal resource
mobilization to back
economic
diversification
1. A
Support
investment
climate reforms
38,83
Strategic and operational diagnostic, and preparation of an
Action Plan for optimizing the Nkok Special Economic Zone
for Phase II, coupled with a selective implementation of the
Action Plan (promotion and facilitation tools, etc.)
Provide equipment for a centre to offer training on primary
and secondary wood processing trades in Nkok
Provide equipment for an exhibition centre, including a
design studio and an exhibition platform to support the
marketing of finished products from primary and secondary
wood processing
Create and operationalize an e-trading marketplace to
promote marketing (TA 6 months = e-trading IT equipment)
(e-trading software and GU software with Singapore
government sponsorship)13
Equip a laboratory at the port to test the export of mining
products that have an impact on national GDP and to train the
workforce
Operationalize the PPP unit in support of the National
Investment Strategy
Identify and prepare a PPP pilot project
o Transaction consulting, consultation and
communication, programme management
Build capacity with a view to operationalization of the
Chamber of Commerce of the Libreville High Court
Build the capacity of the specialized units of the High Council
for Investment (HCI) to monitor and implement reforms
Help to build the capacity of the HCI capacity to monitor and
implement reforms
1. B
Support and
mobilize
internal
resources for
economic
diversification,
improve
economic
governance to
support private
sector
development
Help deploy the Gabonese Revenue Authority (OGR)
Study and establishment of a national wood traceability
system
Help to build the capacity of the Public Finance Reform
Programmes Monitoring Unit (Directorate-General of
Forward Planning in the Ministry of Economy and Forward
Planning)
Study and establishment of the Information System in the
Directorate-General of Competition and Consumption
(CFAF 50 million)
Study on the competitiveness of the hydrocarbons sector
Study on the competitiveness of the fishing sector
Study on the competitiveness of the mining sector; investor
targeting in the three sectors (Mining, Fishing and
Hydrocarbons)
Diagnostic study forest product export
13 e-trading and one-stop shop software
8
II – Support reforms in
priority sectors reform
(timber and mining)
I1.A
1 Support
mining sector
reforms
22,03
Translation and dissemination of the mining code and
enforcement texts
Consolidation of infrastructure allowing for access to mining
resources (GIS14 and the mining cadastre)
Finalization of the computerized mining cadastre
(system implementation, equipment, training and
maintenance)
Harmonization of GIS platforms, geological and
mining databases, and finalization of the mining
cadastre
Build the capacity of the geoportal www.gabon-
mines.org
Support the exploration project for rare metals (tin, lithium,
rare earths, niobium-tantalum, cassiterite, etc.) in the Booué-
Ndjolé region
Build the capacity of the mapping database by conducting a
very high resolution airborne geophysical survey on certain
areas with high potential for the discovery of new mines
I1.B
Support timber
sector reforms
Primary and secondary processing and training equipment
(set up a group of pilot craftsmen, Nkembo Training Centre)
Build the capacity of the Directorate-General for
Development of Timber Industry and Forest Products Trade
to control and monitor/evaluate industrialization and
industrial development plans
Build the capacity of the Directorate-General of Forestry to
control and monitor/evaluate forest management plans15
In-depth study of the timber value chain, identification of all
products that can be processed locally and implementation of
the action plan
Diagnostic and action plan to better understand structure and
build capacity in the craft sector.
Evaluate the Nkok Incubator and build the entrepreneurial
capacity of SMEs in the wood processing sector.
Provide assistance for the operationalization of the National
Forest Fund16
Technical assistance to sector structuring through the
establishment of a trade association, the status of craftsman
and development/implementation of a system of governance
for shared dryers and industrial equipment (including their
procurement/pilot craftsmen's lodge)
Review the institutional support mechanism in terms of
quality and standards management, and build the capacity of
AGANOR, particularly in relation to primary and secondary
processing
o Establishment of a baseline of production norms and
standards in priority sectors;
o Strategic watch and support regarding the standards
14 Finalization of aerial mapping, mining database and online platform for potential investors 15 Ensure downstream sustainability of the resource for industry, preserving the natural forest from current pressure through monitoring
forest/industry suitability 16 This action complements the development of the financing mobilization strategy carried out under the Green Gabon Initiative Support Programme
financed by AfDB.
9
of priority in the export sectors
o Equipment and training
Set up a Technical Assistance Fund to upgrade and build the
capacity of businesses (priority timber, mining, and SME-
SMI sectors with access to public procurement) and
Gabonese craftsmen
I. Project
Management
1,88
Coverage of project team allowances and training on Bank
rules and procedures
Office furniture, equipment and logistics
Administrative, financial and accounting procedures manuals
Management software, configuration and user training
Project monitoring and evaluation through studies for project
baseline and final indicators
Conduct annual project audits
Operating costs
Prepare mid-term review and completion reports
2.1.2. Under Component 1, the project will help improve the investment climate, economic
diversification and domestic resource mobilization through activities aimed at : (i) enhancing
the attractiveness, performance and visibility of the Nkok SEZ by helping it to improve investor
services both at the one-stop shop level and in related services, develop a strategic expansion plan,
provide training and technical laboratories and equipment to enhance Gabon's competitiveness
especially in the mining and timber sectors; (ii) operationalizing the PPP Unit and supporting the
implementation of a pilot contract to reduce the burden of infrastructure on public finances; (iii) build
capacity with a view to operationalizing the Chamber of Commerce of the Libreville High Court;
and (iv) promote revenue mobilization for private sector development, in particular by assisting the
authorities in establishing the Gabonese Revenue Authority; (v) build the institutional capacity of the
High Council for Investment in preparing and implementing reforms as well as the forward planning
and monitoring capacity of the Ministry of Sustainable Development, Economy and Forward
Planning.
2.1.3. Under Component 2, the project will support reforms of the ERP timber and mining
priority sectors. Support to the mining sector will be provided by: (i) strengthening the legal and
regulatory framework; (ii) consolidating mining infrastructure; and (iii) building institutional
capacity for negotiating and monitoring mining contracts. Support for the forest-timber sector will
be provided through: (a) monitoring the implementation of forest management and industrialization
plans in the forestry sector to promote its sustainable development; (b) technical assistance for
structuring the sector; (c) training and equipping SMEs and SMIs for secondary and tertiary wood
processing; and (iv) assistance for better mobilization of financing for the sector. Finally, the project
will support a Technical Assistance Fund to upgrade and build the capacity of Gabonese SMEs and
SMIs, with particular emphasis on those operating in priority and craft sectors in a bid to back
government's willingness to involve SMEs and SMIs more closely in implementing programmes
under the Emergent Gabon Strategic Plan.
2.1.4. The objective of the Technical Assistance Fund is to promote the conditions for
inclusive growth by providing technical assistance and support to SMEs to build their capacity
in entrepreneurship, management, access to technology, markets and shared basic equipment.
SMEs account for 99% of production units and 60% of jobs in Gabon. Their development would help
to consolidate the national economy. The development of SME-SMIs and entrepreneurship is a major
focus in the implementation of PSGE's diversification and industrialization strategy, given the
potential of SMEs and SMIs in terms of job creation and contribution to economic growth. To this
10
end, the government has set up a number of funds aimed at alleviating constraints to access to term
finance. The main lesson learnt from these Government schemes is that local SMEs have been unable
to mobilize these funds due to low capacity in terms of management, access to technology and
markets.
2.1.5. PADEG, through this technical assistance fund, is a response to the shortcomings noted in
the current support system for SMEs and SMIs. It will support at least 100 SME-SMIs and artisans
operating in strategic sectors of the PSGE (Wood, Mines, Agro-industry,), with a particular focus on
women's entrepreneurship and youth. This assistance for upgrading and building of SMEs capacity
will cover the following areas: training, implementation of management tools, market research and
studies, feasibility studies, monitoring of quality programs, technology and industrial audit, business
plans, strategic plans and marketing, access to international markets so that they are equipped to
access the sovereign investment fund made available by the government. By reinforcing the
managerial, organizational, commercial and technological capacities of Gabonese SMEs and
business organizations, this support will enable Gabonese enterprises to strengthen their capacity to
invest, to modernize, to create jobs and to exploit growth opportunities in the market. In terms of
governance, an internationally renowned firm under the supervision of the Ministry of Investment
Promotion and Public-Private Partnerships will manage the SME Technical Assistance Fund. The
firm will be selected through competitive process and will develop a manual procedures with clear
targets and a communication strategy towards the targeted firms; taking into account lessons learnt
from best practices in both emerging countries and Africa (Malaysia, Vietnam, Rwanda).
2.2 Technical Solutions Adopted and Alternatives Explored
2.2.1. The technical and institutional solutions adopted drew from lessons and experiences
on completed Bank projects and those of other donors. Arbitration for selection of Bank
intervention thrusts under this project were predicated on the need to strengthen and deepen the
reforms that the authorities have already rolled out, notably as part of the ongoing Economic and
Financial Reforms Support Programme (PAREF). These trade-offs also took into account the need
to strengthen synergies with current or future investment climate support operations funded with MIC
grants, and for better complementarity with support by other donors, notably with the World Bank's
ongoing investment promotion project. At the technical level, the solutions adopted are based on
criteria and standards that ensure optimal management of the Nkok SEZ in line with global best practice
and build stakeholder capacity by offering modern equipment and practical training on various linkages
in the chain to facilitate secondary and tertiary wood processing. With regard to support for SMEs and
craftsmen, the project tapped into lessons and experiences from projects funded by the Bank and other
donors in terms of setting up the technical assistance fund that will help entrepreneurs to start up and
implement their activities. This will contribute to job creation and allow the reimbursement of funds that
will be ploughed back to finance other promoters.
2.2.2. During PADEG’s preparation, four (4) technical options were considered: (i) the first
was to prepare an institutional support project focused solely on private sector development, with
emphasis on the business climate and economic diversification (mining and timber sectors); (ii) the
second was to subsequently prepare a separate institution building project devoted solely to public
finance management to promote and consolidate PAREF reforms (establishment of the Gabonese
Revenue Authority), set up an integrated public service workforce management information system for
better control of the wage bill, implement an integrated biometric pension and family benefits
management system and build the coordination capacity of the Ministry of Sustainable Development,
Economy and Forward Planning; (iii) the third option was to prepare an institution building project
combining private sector development and government’s public finance management priorities; and (iv)
the fourth option was to build a project focusing on the investment climate and economic diversification,
and to selectively incorporate thereto government's public finance management priorities (establish the
Gabonese Revenue Authority, build the coordination capacity of the Ministry's Forward Planning
Department). The third option involved doubling the funding required for the project.
11
2.2.3. The authorities chose the fourth option because it has the advantage of combining a
selective consideration of government’s public finance management priorities with a moderate
increase in the financing required for the project. This option will facilitate better revenue
mobilization through the establishment of the Gabonese Revenue Authority and will build the capacity
of the Ministry of Economy to coordinate reform programmes and projects in addition to the
improvement of the investments climate.
2.3.4 Regarding institutional anchoring, several options were presented. First, it was envisaged to
place the project institutionally within the Ministry of Sustainable Development, Economy and Forward
Planning, which already coordinates PAREF. This option would have been chosen if project funding
had doubled from the initial amount, to fully reflect government's new priorities on public finance
management support. This initiative was rejected and the project was placed under the institutional
oversight of the Ministry of Investment Promotion and Public-Private Partnerships, with the support
of the GSEZ, since most project activities (improving the business climate, supporting the priority
timber, and mining sectors being developed by the Nkok Economic Zone) fall under the prerogative of
these two institutions.
2.3 Project Type
2.3.1 PADEG is an institution-building project following government’s request that focuses on
creating conditions conducive to improving the investment climate and economic diversification
through better promotion of domestic and foreign private investment. Based on a participatory approach,
it was designed to help beneficiary structures take ownership of the project objectives and sustainably
build their capacity. The project will build on the public-private partnership experiment initiated by the
Government to launch the first phase of the SEZ development.
2.4 Project Cost and Financing Arrangements
2.4.1 The project is estimated to cost EUR 74.62 million, excluding taxes and customs duties.
The Bank's financing is EUR 62.74 million. ADB resources will cover both local currency and foreign
exchange costs. Given the budgetary difficulties due to the decline in oil resources on which the country
is mostly dependent, the counterpart financing will amount to 15% of the cost (EUR 11.88 million), In
accordance with the provisions of the 2016-2020 CSP, paragraph 1.4 and Annex 15: Note on the
Financial Parameters of Gabon". To avoid a negative impact on project implementation, this
contribution will be made through the accounting valuation of: (i) taxes and customs duties on
invoices and statements from contracts and services financed net of taxes, estimated at a minimum
13% of the Bank's financing, or in kind. No further disbursements are expected in terms of
counterpart funding. Tables 2.3 to 2.7 present the estimated project cost by component and sub-
component, source of financing, expenditure category and year. A detailed cost table is provided in the
technical annex.
12
Table 2.3
Estimated Cost by Component [in EUR thousand]
Table 2.3. Estimated Project Cost by Component (in thousands of CFA Francs and EUR)
Cost in CFAF Cost in EUR
Components For. Exch. Local Cur. Total For. Exch. Loc.
Cur. Total %
Component I: Support
improvement of the investment
climate and domestic resources
mobilization to back economic
diversification
18 866 609,7 4 716 652,4 23 583 262,1 28 762,0 7 190,5 35 952,5 57%
Component II: Support reforms
in priority sectors (mining,
timber)
5 352 000,0 8 028 000,0 13 380 000,0 8 159,1 12 238,6 20 397,7 33%
Component III: Project
management and coordination 457 434,7 686 152,1 1 143 586,8 697,4 1 046,0 1 743,4 3%
Total Base Cost 24 676 044,4 13 430 804,5 38 106 848,9 37 618,4 20 475,0 58 093,4 93%
Contingencies (3%) 800 243,9 342 961,6 1 143 205,5 697,1 1 045,7 1 742,8 3%
Price escalation (4%) 952 671,2 952 671,2 1 905 342,4 1 161,9 1 742,8 2 904,7 5%
Total Project Cost 26 428 959,5 14 726 437,3 41 155 396,8 39 477,4 23 263,5 62 740,9 100%
Table 2.4
Sources of Financing [in EUR thousand]
Table 2.5
ADB Loan - Project Cost by Source and Expenditure Category [EUR thousand]
ADB Loan Table 2.5 Summary Estimated Cost by Expenditure Category (in EUR thousand)
Expenditure Category ADB
For. Exch. Loc. Cur. Total %
A. Works 0,0 152,4 152,4 0%
B. Goods 21 988,8 9 423,8 31 412,6 49%
C. Services 13 389,4 4 387,7 17 777,2 28%
D. Operation 0,0 6 465,3 6 465,3 10%
E. Training 2 240,2 45,7 2 285,9 4%
Total Base Cost 37 618,4 20 474,9 58 093,4 92%
Provision (Contingencies + price escalation 8%) 1 859,2 2 788,4 4 647,5 8%
Total Project Cost 39 477,6 23 263,3 62 740,9 100%
Table 2.4 Source of Financing (in EUR thousand)
Source of Financing Cost in Foreign
Exchange Cost in Local Currency Total % of Total
ADB Loan 39 477,4 23 263,5 62 740,9 85%
Government - 11 878,2 11 878,2 15%
Total Cost 39 477,4 35 141,7 74 619,1 100%
13
Table 2.6
Expenditure Schedule by Component [in CFAF] Table 2.6. Expenditure Schedule by Component (in CFAF thousand)
Component Year 1 Year 2 Year 3 Year 4 Total
Component I: Support improvement of
the investment climate and domestic
resource mobilization to back economic
diversification
4 716 652,4 7 074 978,6 7 074 978,6 4 716 652,5 23 583 262,1
Component II : Support reforms in
priority sectors (mining, timber) 2 676 000,0 4 014 000,0 4 014 000,0 2 676 000,0 13 380 000,0
Component III. Project Management and
coordination 228 717,3 343 076,0 343 076,1 228 717,4 1 143 586,8
Total Base Cost 7 621 369,7 11 432 054,6 11 432 054,7 7 621 369,9 38 106 848,9
Contingencies 13% 609 709,6 914 564,4 914 564,4 609 709,6 3 048 547,9
Total Project Cost 8 231 079,3 12 346 619,0 12 346 619,1 8 231 079,5 41 155 396,8
2.5 Project Area and Beneficiaries
2.5.1 Project Beneficiaries: The final (indirect) beneficiary of PADEG is the entire Gabonese
population and more particularly, the poorest sections. Improving the investment climate and
revitalizing priority sectors in the timber and mining sectors will boost investment and employment.
The direct beneficiaries are public departments (Ministry of SMEs and SMIs; Ministry of Mines;
Ministry of Forests; Ministry of Economy and Sustainable Development), state structures involved
in improving the investment climate, the SEZ, national economic operators (SMEs and SMIs) and
foreign investors.
2.6 Participatory Approach to Project Identification, Design and Implementation
2.6.1 The Bank's missions and permanent consultations between its country office (GAFO)
and various stakeholders laid the groundwork for developing a participatory approach. The
three missions conducted by the Bank to identify, prepare and appraise the project allowed for
exchange with stakeholders at the national level and collection of necessary data for project design.
Consultations were held with the main project beneficiaries, including the Ministry of Investment
Promotion, the Ministry of Economy and Sustainable Development, the Ministry of Water and
Forests, the Ministry of Mines and Geology, as well as employers' organizations and the Gabon
Special Economic Zone (GSEZ). Other consultations were held with the TFPs active in the
Economic and Financial Governance Thematic Group, in particular the European Union, the World
Bank and the French Development Agency (AFD).
2.7 Bank Group Experience and Lessons Reflected in Project Design
2.7.1. Lessons: The project builds on lessons learned from interventions by the Bank and
other partners in Gabon. In particular, they relate to the following difficulties: (i) weak project
implementation capacity; (ii) difficulties in mobilizing counterpart funding, worsened by recent
budgetary tensions; (iii) unpredictable cancellation of certain operations, sometimes immediately
after appraisal; (iv) slowness in meeting the conditions precedent to first disbursement; and (v) low
quality-at-entry of certain projects.
2.7.2 Mainstreaming of lessons learned: The project tackles these difficulties by: (i) selecting
project implementation teams based on skills and experience acquired during the implementation of
Bank-financed projects, including training on Bank rules and procedures; (ii) projecting a 15%
counterpart contribution, mostly in kind; (iii) obtaining approval prior to the appraisal mission; (iv)
obtaining clearance prior to negotiations et; (v) limiting conditions precedent to first disbursement to
the strict minimum.
14
Table 9
Lessons from Previous Institution Building Projects
Lessons Measures Taken to Mainstream Lessons into the Project
Area of intervention too
broad
The preparation mission focused on a single area, namely investment promotion. This helped to
limit the number of structures beneficiary structures. The direct project beneficiaries are the Nkok
SEZ, the Ministry of Justice, the Ministry of Mines, the Ministry of Forestry, ANPI, as well as
SMEs, craftsmen and young entrepreneurs.
Poor coordination of
interventions of the
various technical and
financial partners in the
sector
The project design was closely coordinated with the interventions of other development partners,
including the World Bank and AFD. The objective of this approach was to ensure the
complementarity of our interventions. The project is anchored in the Ministry of Private
Investment Promotion, Trade and Industry, which is the main government structure in charge of
promoting and facilitating private investment. This will allow harmonisation of interventions by
all donors in this field.
2.7.3 The Bank's active national portfolio in Gabon is modest and relatively young, with an
average age of 2.4 years old and a total commitment of UA 446.9 million as of April 30, 2017. It
consists of thirteen (13) operations of which four PRI grants totaling UA 3.6 million. These are: (i)
the project to set up a business incubator in Gabon approved in May 2014 for UA 800,000 with a
disbursement rate of 12.11%; and (ii) the Support Project for the Chamber of Commerce, Agriculture,
Industry, Mines and Handicrafts approved in October 2014 for UA 800,000 for which the
disbursement rate is 9.96%. The other two approved in June 2016 are: (i) the diagnostic of the
institutional framework for the promotion of investments in coffee / cocoa and food-producing value
chains with a disbursement rate of 66.76%; and (ii) technical support to the Gabon Green initiative
for the transformation of the forest-wood sector in Gabon with a disbursement rate of 53.37%. It is
also worth noting the budget support program (PAREF.II) of UA 263.47 million approved in
November 2017 with a disbursement rate of 100%. There is no problematic project in the current
portfolio of the Bank. (See Appendix II AfDB country’s portfolio table).
2.8 Key Performance Indicators
2.8.1 Project implementation monitoring will be based on a monitoring/evaluation system
that will allow decision-making in critical situations, sound management and achievement of
project objectives. In this regard, a monitoring/evaluation specialist will be recruited within the PIU
to monitor the logical framework indicators. Provision has also been made to hire a consultant to
establish the baseline situation and set up the monitoring and evaluation system. At the end of the
project, the final status of the indicators will also be established. The project indicators are included
in the results-based logical framework (see pages “ix” and “x” above).
2.8.2 The key performance indicators identified and the expected outcomes upon PADEG’s
completion are presented in the results-based logical framework and summarized below.
Box 1: Key Performance Indicators
Outcome Indicators
Strategy and action plan on optimisation of the SEZ
At least 100 small- and medium-sized enterprises supported by the Technical Assistance Fund
Design and exhibition centre in place at the Nkok SEZ
Equipment and training centres for primary and secondary processing
Mining product testing laboratory set up at the port
Output Indicators
The level of private investment (domestic and foreign) in Gabon increased from 15.2% of GDP in 2013 to 20% of
GDP in 2021;
The tax yield - tax revenues from the non-oil sector rose from CFAF 922 billion in 2017 to CFAF 1615 billion in
2022
The number of new licences increases (20 for mines) and (50 for timber) in 2021
Impact Indicators
The rate of non-oil private investment rises from the current 7% to 10% in 2021
15
III. PROJECT FEASIBILITY
3.1. Economic and Financial Performance
3.1.1 PADEG is a capacity-building project. Therefore, it is not the type of productive project that
aims at immediate financial gain or return on investment. Thus the financial analysis usually carried
out for projects does not apply: capacity building does not generate cash flows (expenses and income)
allowing a financial analysis. Taking into account the project’s nature and specific objectives, only
the economic analysis reflects the overall economic benefits generated and their distribution among
beneficiaries.
3.1.1 Economic Benefits. The project will support structural transformation efforts in Gabon's
economy. Specifically, it will help to improve the investment climate, strengthen domestic resource
mobilization to ensure sustainable financing for economic diversification and promote the
development of Gabon's priority sectors. Through the acceleration of the industrialization process,
PADEG will contribute to the sustained creation of national wealth and generation of sustainable
employment, hence to significant poverty reduction and improvement of the people's well-being.
3.2 Environmental and Social Impact
3.2.1 Environment. In accordance with the Bank's environmental guidelines, the project is
classified under Environmental Category III. Activities planned will not have negative social
impacts, and will not cause adverse environmental outcomes. The infrastructure component concerns
the provision of equipment for existing structures with a view to improving their functionality and
various interior fittings. PADEG will limit itself to provide equipment to only the Nkok and Nkembo
training centres, and to AGANOR, the exhibition centre for primary and secondary processing, and
the laboratory for testing mining products for export. These activities will not have a negative
environmental impact. With the assistance of consultant (environmental expert), the Project
Implementation Unit will be in charge of environmental and social impact management and
PADEG’s implementation to ensure compliance with environmental and social clauses;
consequently, the project neither has a negative impact on forest resources nor does it contribute to
increasing greenhouse gases in Gabon.
3.2.2 Climate Change. Project activities are not likely to increase the amount of greenhouse gases
emitted in the country. Therefore, the PADEG has no impact on climate change.
3.2.3 Gender. PADEG will mainstream gender issues. The project is aligned on the Bank's
Gender Strategy 2014-2018, especially Pillar 2 on "Economic Empowerment" and Pillar 3 on
"Knowledge Management and Capacity Building". Women are highly vulnerable in the labour
market. First, 39.1% are self-employed, working mainly in informal agricultural and trade jobs or in
unpaid jobs, compared to 27.6% of men. Secondly, unemployment among women is about twice that
of men, while they also account for a higher number of discouraged unemployed people. As a result,
they are less present on the labour market (activity rate estimated at 34.5% or more than 15 points
higher than that for men at 49.6%). To meet these challenges, PADEG will ensure that women form
a significant portion of the participants in project training activities. Women entrepreneurs will
benefit from specific training and coaching to assist them in setting up and managing their investment
projects in priority sectors (wood, mining, trade). Women entrepreneurs will take a significant share
of SME support funding (at least 40% of beneficiaries).
3.2.4 Social: the increased mobilization of internal resources to ensure sustainable financing of
economic diversification and promote the development of Gabon's priority sectors will also allow
the Government to free up additional budgetary headroom. Increased budget allocations through
better resource mobilization will make allow for infrastructure financing from own resources in
support of economic development to improve the quality of life. Part of the budget will also be
earmarked for the basic social sectors (health, education and agriculture), which will ultimately
contribute to improving the well-being of the entire population.
16
3.2.5 Forced resettlement. Project activities will not result in any population displacement or
forced resettlement.
IV. IMPLEMENTATION
4.1 Implementation Arrangements
4.1.1. The Ministry of Private Investment Promotion, National Entrepreneurship, SMEs,
Trade and Industry will be responsible for PADEG’s institutional supervision. This ministry is
charged with defining and implementing private sector development policies and has good
experience in managing projects financed by donors, notably the World Bank, in the area of
investment promotion. The ministry has been assessed and meets the requisite conditions. The project
implementation arrangement will comprise: (i) a Steering Committee; (ii) an implementation unit
within the Gabon Special Economic Zone (GSEZ); and (iii) focal points representing each project
beneficiary.
4.1.2 The Project Steering Committee (PSC) will oversee project implementation. The
Steering Committee shall meet in ordinary session twice (02) yearly, and in extraordinary session
whenever necessary. Depending on the issues to be addressed, The Steering Committee will be
chaired by the Ministry of Investment Promotion and Public-Private Partnerships, or his/her
representative. This Committee will include representatives of the various stakeholders (the Ministry
of Economy, the Ministry of Finance and Budget, the Ministries in charge of investment promotion,
justice, mining and forestry, and a representative of GSEZ). The establishment of this structure is
a condition precedent to first disbursement.
4.1.3 The Project Implementation Unit (PIU) will ensure project programming,
implementation and monitoring/evaluation. It will be responsible for preparing procurement
dossiers and payment requests, quarterly activity reports and annual audits of project accounts. The
unit will comprise: (a) a coordinator; (b) a finance/accounting officer; (c) a procurement specialist;
(d) a monitoring/evaluation officer; (e) an environmental specialist; (f) an administrative and
financial assistant; (g) a driver; and (h) a messenger or support staff. The Gabon Special Economic
Zone (GSEZ) will host project coordination, given the predominance of activities related to
SEZ and timber sector development in PADEG. The (i) procurement specialist; (ii)
finance/accounts officer; and (ii) unit monitoring/evaluation officer will be selected through a call
for candidature, based on their experience and knowledge of the rules and procedures regarding the
implementation of projects financed by donors (including the Bank) in their respective fields of
competence. Focal points will be designated by each beneficiary ministry to work with the Project
Implementation Unit to execute activities concerning their respective ministries. Based on the project
and annual project work budget, they will be responsible for preparing the technical dossiers,
coordinating and monitoring the implementation of activities concerning their ministries. Evidence
of setting up the PIU as the project executing agency to serve as the Bank's interlocutor and
designation of focal points shall be a condition precedent to first disbursement.
4.1.4 Financial management. The evaluation of the capacities of the Ministry of Private
Investment Promotion and Public-Private Partnerships, which will ensure the institutional
supervision of the project, has been carried out in accordance with the Bank's policy. The Ministry
has good overall experience in managing donor-funded projects, including the World Bank.
However, since the Project Implementation Unit (PIU) is not yet set up. Therefore, the risk associated
with the financial management of PADEG is considered high, and the following measures have been
proposed to strengthen the capacity of the hosted PIU within the Gabon Special Economic Zone
(GSEZ) to mitigate the risks associated with the financial management of the project. Thus, the PIU
supported by technical assistance will be responsible for the financial management of PADEG, and
will implement all necessary controls to ensure that: (i) the project funds are used wisely and
efficiently and economically (ii) the preparation of periodic, accurate, reliable and timely financial
reports is made, (iii) the project assets are well safeguarded, and (iv) the audit reports are submitted
on time. The capacity of the PIU will be strengthened through the services of a technical assistance
17
(two individual consultants) of high level composed of an Expert in procurement and an expert in
accounting. This technical assistance will be recruited on a competitive basis. The PIU will be
provided with appropriate management tools (manual, software) financed from project resources.
4.1.5 Procurement Arrangements
4.1.5.1 All procurements of goods, works and consultancy services financed by the Bank's
resources will be in accordance with the Procurement Policy for Bank Group-financed
Operations ("ADB Procurement Policy"), edition October 2015 and according to the
provisions mentioned in the Financing Agreement. In accordance with this policy and following
the various evaluations conducted, it was agreed that: (a) all the following Goods and Works
acquisitions: rolling stock, furniture and office supplies and work on local, archives, rehabilitation
(TGI Chamber of Commerce Libreville and other buildings) will be in accordance with the country's
procurement system ("National System") embodied by Decree No. 000027 / PR / MEEPPD bearing
Public Procurement Code ("CMP"); (b) the following acquisitions (i) IT, office automation and
software, (ii) industrial equipment and, (iii) all consulting services will be in accordance with the
Bank's procurement system ("ADB System").
4.1.5.2 The use of the National System improves efficiency through; inter alia, the following
actions: (i) better ownership of the procurement system to be used by the executing agency; (ii) a
saving of time with the absence of a second control (after that of the national entities) that represents,
the priori review of the Bank. However, the Bank reserves the right to request the borrower to return
to the use of the Bank System if: (a) the legal framework for Gabonese government procurement
changes to evolve into a system unsatisfactory for the Bank; (b) the provisions in force were not
complied with by the Executing Agency or (c) the appropriate risk mitigation measures included in
the risk assessment action plan were not met.
4.1.5.3 Acquisition Risk and Capacity Assessment (ERCA): To take into account the specificities
of the project, the Bank assessed: (i) risks at the national, sectoral and project levels; and (ii) the
capacities of the executing agencies. The results of these evaluations concluded that there was a
substantial level of risk in the procurement and determined, subject to the application of mitigation
measures proposed in paragraph 5.9 of Appendix B.5, the procurements to be concluded according
to the Bank system and that likely to be implemented, without major risk, according to the National
System.
4.1.5.4 Specific conditions arising from the use of the national system: The use of the national
system requires the implementation of specific measures as defined in point B.5.7 of Technical
Annex B5.
4.1.6 Disbursement Arrangements: Disbursement of loan resources will be made in accordance
with the Bank's Disbursement Manual once the loan agreement becomes effective and the conditions
for first disbursement have been fulfilled. The first disbursement is expected to take place within six
months of the signing of the Loan Agreement. Disbursements will be made through: (i) the direct
payment method for goods and services procurement contracts, including audit costs; (ii) the working
capital or special account method (mainly for operating and training costs); and (iii) the
reimbursement guarantee method for goods procurement contracts. The Government's contribution
to project financing will be made through accounting valuation or in kind. The: (a) the current
operating expenditure of the General Secretariat financed by the State budget; and (b) taxes and
customs duties on invoices and statements from contracts and services financed, net of taxes, are
estimated at approximately 15% of the total cost. No further counterpart funding is expected.
Evidence of the opening of the Special Account is a condition precedent to first disbursement
of the loan.
4.1.7 Audit Arrangements: The annual project audits financed from Loan resources will be
conducted by an independent external audit firm recruited on a competitive basis and in accordance
with the Bank's terms of reference (TOR), and must seek the prior opinion of the Bank. The annual
18
financial statements will be prepared by the PIU, as well as the internal control system and the
situation of the loan resources. The audit reports and the letter to the management must be sent to the
Bank by the PIU within six months of the end of the audited financial year. The Request for Proposal
(RFP) file for the recruitment of auditors must include, as eligibility criterion, the submission of (a)
a recent certificate issued by the competent authorities of Gabon (The Order of Chartered
Accountants for example) certifying that the Cabinet is authorized to carry out audit missions; and
(ii) a recent certificate issued by the National Order of National Accountants of the country of
nationality of the Cabinet or Regional if the country does not have a National Order. The audit service
contract will be approved for a maximum of three (3) years, including a conditional validity clause
of the contract for the second and third year: the condition would be that the auditor's services for the
previous year were satisfactory to the Bank.
4.2 Monitoring and Evaluation
4.2.1 The internal monitoring and evaluation system will be contingent on annual work
plans and budgets (AWBP), based on: (i) regular monitoring of activities by the Gabon Country
Office (GAFO); (ii) periodic supervision, two or more yearly, and periodic Project Management Unit
(PMU) reports and audits; (iii) mid-term review to assess project implementation performance; and
(iv) regular supervision by ECGF/RDGC.4. Preferably, this supervision will be conducted in
collaboration with other development partners, culminating in the systematic preparation of a Report
on Status and Outcomes (EER) after each mission. A monitoring/evaluation mechanism will be set
up, and will take into account the character and specificities of the project. A quarterly activity report
will also be prepared. At the end of the project, a completion report will be prepared. The table below
presents the major indicative steps:
Table 3.1
Monitoring and Feedback Loop
4.3 Governance
4.3.1 Project implementation could encounter issues of governance (fraud, corruption), especially
fiduciary management. Procurement risks will be mitigated by the following arrangements: for
international bidding and selection of consultants, the Bank will conduct a preliminary review at each
stage of the process through the issuance of no objection notices on procurement documents, award
proposals and contracts. The PIU is the body authorised to conduct the procurement process. Internal
administrative and technical control mechanisms, complaint and claims management mechanisms
Schedule Stages Monitoring Activities/Feedback Loop
June.-18 Loan approval by the Board Notification to Government
Oct 18 Loan effectiveness
Signature of loan agreement, ratification and fulfilment of
conditions precedent to first disbursement
Nov-18 Mission launch Training of project managers
Oct-18 NGA and NSA UNDB; National and regional newspapers
Non-18 Compliance with conditions for 1st disbursement Opening of the special account and project team
Dec-18 Launch of the first activities
Preparation of the work programme and establishment of the
Project Implementation Unit
Dec-18 Bid preparation and invitation
Preparation by the beneficiary structures and the Project
Implementation Unit
March-19 Bid analysis and contract award
Evaluation by the Project Implementation Unit and approval by
the authorities
2018-2022
Implementation of activities, other project
activities Quarterly and annual activity reports
2018-2022 Launch, supervision and mid-term review
missions Mission reports
2019-
2023
Annual project audit Audit reports
June-23 Project completion Completion Report
19
already in place and operational, will ensure the continued promotion and extension of mechanisms
to combat fraud and corruption. For financial governance, please refer to adequate financial and audit
arrangements discussed in § 4.1.4, § 4.1.5, § 4.1.6 and § 4.1.7.
4.4 Sustainability
4.4.1 The project adopts a sustainable development approach. Its durability is founded on
the fact that most of the activities to be financed were identified with various stakeholders
during the preparation and appraisal missions. Furthermore, all activities will be implemented by
the national party through the Gabon Special Economic Zone under the supervision of the Ministry
of Private Investment Promotion, National Entrepreneurship, SMEs, Trade and Industry, and with
the support of focal points of other beneficiary ministries (Mining, Forestry, Justice, Economy,
Finance). Actions initiated by the project will serve to consolidate the ongoing industrialization
process, lay the foundations for the promotion of investment and entrepreneurship, and
strengthen the State’s capacity to mobilize public revenue and coordinate reforms
implementation. Similarly, various actions targeted by the project - such as building
entrepreneurial culture, business management and the organisational dynamics of beneficiary groups
- are likely to promote inclusive growth. Thanks to the supervision, support and knowledge that will
be transmitted through the provision of services and specific training in: (i) entrepreneurial culture;
(ii) PPP; (iii) primary and secondary product processing techniques, the combination of all these
efforts will provide an additional guarantee of sustainability of the achievements, while maintaining
the dynamics generated beyond the end of the project. In addition, building the State’s capacity to
mobilize resources for development financing and to better steer and coordinate reforms will help to
make PADEG activities sustainable.
4.5. Risk Management
4.5.1. Measures have been taken to address the risks of poor governance as they might affect
the procurement process, financial management and disbursement conditions. Moreover, to
ensure the success of the project, risk mitigation measures have been identified. The key measures
below are also presented in the Results-based logical framework.
Table 3.2
Potential Risks and Mitigation Measures
Risks Importance
of risk
Mitigation measures
Socio-political - insecurity and
political instability.
Reversibility of government's
commitment to pursue structural
reforms.
The problem of human resources in
the project beneficiary structures to
ensure the efficient implementation
of activities.
Medium
Medium
Medium
The commitment of both the country and the
international community to further consolidate
peace and national security. The relative
consensus around the recommendations of the
conference on political dialogue
This is an institution building operation and the
government has reaffirmed its commitment to
continue diversifying the domestic economy. The
existence of an economic recovery plan (ERP)
and an agreement with the IMF for a reform
programme whose implementation is supported
by several TFPs, including the Bank and the IMF,
are mitigation measures
The involvement of high-level experts to ensure
training and knowledge transfer in these
structures will mitigate this risk at the level of the
beneficiary structures.
20
4.6 Knowledge Building
4.6.1 Studies, capacity building activities and detailed analyses of priority sectors will provide
a better understanding of the economic environment of the sectors and international investment in
Gabon. These studies will improve knowledge of the constraints facing these sectors and the
appropriate response to them.
V. LEGAL FRAMEWORK
5.1 Legal Instrument
5.1.1. The project will be financed by an ADB loan of EUR 62.74 million. The counterpart financing
will account for 15% of the cost. « in accordance with the provisions of the CSP 2016 - 2020,
paragraph 1.4 and Annex 15: Note on the financial parameters of Gabon ». To avoid a negative
impact on project implementation, this contribution will be made through the accounting valuation
of: (i) the current operating expenses of the General Secretariat financed from the State budget; (ii)
taxes and customs duties on invoices and statements from contracts and services financed net of
taxes, estimated at a minimum 15% of the Bank's financing, or in kind. The legal framework will be
a loan agreement between the Gabonese Republic and the Bank.
5.2 Conditions Associated with the Bank’s Intervention
5.2.1 Conditions precedent to loan effectiveness. The Government shall fulfil the conditions
applicable to loan and guarantee agreements setting out the modalities and principle governing
financing by the African Development Bank Group.
5.2.2 Conditions precedent to first disbursement of the loan resources:
Evidence of establishing the Project Steering Committee (PSC) and appointing its
members (§ 4.1.2);
Evidence of setting up the PIU within the GSEZ as executing agency, to serve as
interlocutor to the Bank and the designation of focal points in each structure involved
in the project to serve as interlocutor to the PIU (§ 4.1.3);
Evidence of opening a special account in a bank acceptable to the Bank to receive the
loan resources (§ 4.1.6);
Recruitment of the project's fiduciary team;
The development of the management procedures and manual validated by the Bank
and;
The acquisition and configuration of the management software.
5.2.3 Other condition: The Borrower shall furthermore, to the satisfaction of the Bank, provide
prior to the request for disbursement of special account loan resources, evidence of the opening of a
special account in the name of the Project with a bank acceptable to the Bank for receiving the loan
resources.
5.3 Compliance with Bank Policies
5.3.1. This project complies with applicable Bank policies. The project is included in the CSP
2016-2022 indicative lending programme. Therefore, it will be implemented as part of the Bank's
intervention strategy in Gabon approved by the Board in March 2016.
VI. RECOMMENDATION
Management recommends that the Board of Directors approve the proposed loan of EUR 62.74
million to the Government of the Gabonese Republic from the ADB window for the purpose and
under the conditions set out in this report.
I
Appendix I. Country Comparative Socio-economic Indicators
Year Gabon Africa
Develo-
ping
Countries
Develo-
ped
Countries
Basic Indicators
Area ( '000 Km²) 2016 268 30 067 94 638 36 907Total Population (millions) 2016 1,8 1 214,4 3 010,9 1 407,8Urban Population (% of Total) 2016 88,8 40,1 41,6 80,6Population Density (per Km²) 2016 6,8 41,3 67,7 25,6GNI per Capita (US $) 2014 9 450 2 045 4 226 38 317Labor Force Participation *- Total (%) 2016 49,2 65,6 63,9 60,3Labor Force Participation **- Female (%) 2016 40,3 55,6 49,9 52,1Gender -Related Dev elopment Index Value 2007-2013 0,748 0,801 0,506 0,792Human Dev elop. Index (Rank among 187 countries) 2014 110 ... ... ...Popul. Liv ing Below $ 1.90 a Day (% of Population) 2008-2013 8,0 42,7 14,9 ...
Demographic Indicators
Population Grow th Rate - Total (%) 2016 2,2 2,5 1,9 0,4Population Grow th Rate - Urban (%) 2016 2,5 3,6 2,9 0,8Population < 15 y ears (%) 2016 37,0 40,9 28,0 17,2Population >= 65 y ears (%) 2016 5,1 3,5 6,6 16,6Dependency Ratio (%) 2016 72,6 79,9 52,9 51,2Sex Ratio (per 100 female) 2016 102,4 100,2 103,0 97,6Female Population 15-49 y ears (% of total population) 2016 24,3 24,0 25,7 22,8Life Ex pectancy at Birth - Total (y ears) 2016 65,4 61,5 66,2 79,4Life Ex pectancy at Birth - Female (y ears) 2016 66,2 63,0 68,0 82,4Crude Birth Rate (per 1,000) 2016 29,2 34,4 27,0 11,6Crude Death Rate (per 1,000) 2016 8,2 9,1 7,9 9,1Infant Mortality Rate (per 1,000) 2015 36,1 52,2 35,2 5,8Child Mortality Rate (per 1,000) 2015 50,8 75,5 47,3 6,8Total Fertility Rate (per w oman) 2016 3,8 4,5 3,5 1,8Maternal Mortality Rate (per 100,000) 2015 291,0 495,0 238,0 10,0Women Using Contraception (%) 2016 35,1 31,0 ... ...
Health & Nutrition Indicators
Phy sicians (per 100,000 people) 2004-2013 29,2 47,9 123,8 292,3Nurses and midw iv es (per 100,000 people) 2004-2013 501,7 135,4 220,0 859,8Births attended by Trained Health Personnel (%) 2010-2015 87,1 53,2 68,5 ...Access to Safe Water (% of Population) 2015 93,2 71,6 89,3 99,5Healthy life ex pectancy at birth (y ears) 2013 57,2 54,0 57 68,0Access to Sanitation (% of Population) 2015 41,9 39,4 61,2 99,4Percent. of Adults (aged 15-49) Liv ing w ith HIV/AIDS 2014 3,9 3,8 ... ...Incidence of Tuberculosis (per 100,000) 2014 444,0 245,9 160,0 21,0Child Immunization Against Tuberculosis (%) 2014 91,0 84,1 90,0 ...Child Immunization Against Measles (%) 2014 61,0 76,0 83,5 93,7Underw eight Children (% of children under 5 y ears) 2010-2014 6,5 18,1 16,2 1,1Daily Calorie Supply per Capita 2011 2 781 2 621 2 335 3 503Public Ex penditure on Health (as % of GDP) 2013 2,4 2,6 3,0 7,7
Education Indicators
Gross Enrolment Ratio (%)
Primary School - Total 2010-2015 142,0 100,5 104,7 102,4 Primary School - Female 2010-2015 139,9 97,1 102,9 102,2 Secondary School - Total 2010-2015 53,3 50,9 57,8 105,3 Secondary School - Female 2010-2015 44,7 48,5 55,7 105,3Primary School Female Teaching Staff (% of Total) 2010-2015 52,9 47,6 50,6 82,2Adult literacy Rate - Total (%) 2010-2015 83,2 66,8 70,5 98,6Adult literacy Rate - Male (%) 2010-2015 85,3 74,3 77,3 98,9Adult literacy Rate - Female (%) 2010-2015 81,1 59,4 64,0 98,4Percentage of GDP Spent on Education 2010-2014 3,8 5,0 4,2 4,8
Environmental Indicators
Land Use (Arable Land as % of Total Land Area) 2013 1,3 8,6 11,9 9,4Agricultural Land (as % of land area) 2013 20,0 43,2 43,4 30,0Forest (As % of Land Area) 2013 87,7 23,3 28,0 34,5Per Capita CO2 Emissions (metric tons) 2012 3,4 1,1 3,0 11,6
Sources : AfDB Statistics Department Databases; World Bank: World Development Indicators; last update :
UNAIDS; UNSD; WHO, UNICEF, UNDP; Country Reports.
Note : n.a. : Not Applicable ; … : Data Not Available. * Labor force participation rate, total (% of total population ages 15+)
** Labor force participation rate, female (% of female population ages 15+)
COMPARATIVE SOCIO-ECONOMIC INDICATORS
Gabon
August 2016
0
10
20
30
40
50
60
70
80
90
100
20
00
20
05
20
09
20
10
20
11
20
12
20
13
20
14
20
15
Infant Mortality Rate( Per 1000 )
G ab on A fr i ca
0
2000
4000
6000
8000
10000
12000
20
00
20
05
20
08
20
09
20
10
20
11
20
12
20
13
20
14
GNI Per Capita US $
G ab on A fr i ca
0,0
0,5
1,0
1,5
2,0
2,5
3,0
20
00
20
05
20
09
20
10
20
11
20
12
20
13
20
14
20
15
Population Growth Rate (%)
G abo n A fr ic a
01020304050607080
20
00
20
05
20
09
20
10
20
11
20
12
20
13
20
14
20
15
Life Expectancy at Birth (years)
G ab on A fr i ca
II
Annex II. Table of AfDB Country Portfolio
List of ongoing projects (loans and grants) by sector:
Project Description Project Code Approval
Date
Completio
n Date
Age
(year)
Amount
million
UA
Amount
Disburse
d
Disbursem
ent Rate
in%
Departm
ent
Status
1 SIAT GABON
AGRICULTURAL
EXPANSION PROJECT
P-GA-AAG-002 11/09/07 01/02/2021 NA 8.92 8.92 100 OPSD Ongoing
2 BUSINESS INCUBATOR
PROJECT
P-GA-KF0-001 23/05/14 31/12/2017 1,3 0.8 0.096 12.11 OSGE Ongoing
3 PROJECT TO SUPPORT
THE CHAMBER OF
COMMERCE,
AGRICULTURE,
INDUSTRY, MINING AND
CRAFTS
P-GA-KF0-00 14/10/14 31/12/2017 0,9 0.8 0.076 9.96 OSGE Ongoing
4 DIAGNOSTIC OF THE
INSTITUTIONAL
FRAMEWORK FOR THE
PROMOTION OF
INVESTMENTS IN
COFFEE/COCOA AND
FOOD CROPS VALUE
CHAINS
P-GA-KF0-002 20/06/201
6
31/12/2017 - 0.8 - - OSGE Signed
on 03
August
2016
5 TECHNICAL SUPPORT TO
THE GREEN GABON
INITIATIVE FOR THE
TRANSFORMATION OF
THE FOREST-TIMBER
SECTOR INTO GABON -
PROGRAMME
PREPARATION AND
RELATED STUDIES
P-GA-AAD-005 30/06/2016 31/12/2017 - 1.2 - - OSAN Not
signed
TOTAL 1.1 12.52 9.092 86
III
Appendix III. Main Related Projects Financed by the Bank and Other Development Partners
in the Country
WB
AfDB
FDA
EU
UNDP
Governance
Support to sector
governance:
Road
maintenance,
mining,
environment and
public finance.
State reform aimed at
clarifying missions
and making better use
of public resources.
Support to Territorial
Networks for Local
Governance and
Development
Public Finance
- Review and
reform of the
tax system
(completed in
2013)
- Continuation
of TA for the
Improvement
of Public
Finance
Management
- Technical
assistance
project for the
reform of the
tax system in
Gabon
Public finance
governance
Support:
Improving the
quality and pace of
execution of
public
expenditure,
monitoring and
budget execution.
Support to the
National Commission
to Fight Corrupt
Enrichment and the
National Financial
Investigation Agency
Agriculture Agriculture statistics
SIAT Gabon
Agricultural
Expansion
Project
- Support the
production and
marketing of
agricultural
products
- Forest: forest
management control
- Forest: development
of the Arc
d'Emeraude area
- Forest: satellite
monitoring of forest
cover
- Forest: combat
poaching
- Forestry: support for
the forest-wood
sector
- (following a debt
conversion
agreement of EUR
60 million)
Health
Preparation of a study on
the financing of the
health system (study
- Support to the
National Health
Development
Project to
operationalize the
Ndougou health
IV
WB
AfDB
FDA
EU
UNDP
completed in 2014)
Ongoing discussions on
possible assistance to the
social protection system.
Discussions initiated on
a possible project to
support the health
system
Project (PNDS) -
Phase 1
- Support to the
PNDS - phase 2
department
Education
Support to technical and
vocational education and
improvement of youth
employability
National
Employment
and
Unemployment
Survey
Education Sector
Investment Project
(PISE)
Support to
vocational training
and integration:
Capitalize,
consolidate,
sustain and
promote training
process
mechanisms
through work-
linked training and
professional
integration
Water and
Sanitation
Discussions initiated on
Support for the
development of a Solid
Waste Management
Strategy. No further
action to date. It seems
that the Government is
working with FDA on
the subject.
- Rainwater
Remediation in
Libreville
- Rainwater and
wastewater
treatment in Port-
Gentil
- Development of the
Gué Gué catchment
area in Libreville
- Solid waste
management in
Libreville
Support for
rainwater
sanitation in
Libreville
- National Shared
Urban Household
Solid Waste
Management
Project
- Sustainable
Management of
the Mbé River
Dam Project
Infrastructure
Central Africa Regional
Fibre Optic Networks
Project
and e-Gov Applications
Project
Rural Electrification
Project (FY 2015)
Local Infrastructure
Development Project II
- Development
of the road
from Ndjolé
to
Médoumane
- Rehabilitation
of bridges
and
engineering
structures in
rural areas
- Rehabilitation
of railway
infrastructure
School projects
with the Road
Fund (PAGOS-
routes)"
V
Appendix IV. Map of Project Area
This map was provided by the staff of the African Development Bank exclusively for the use of readers of the report to
which it is attached. The names used and the boundaries shown on this map do not imply on the part of the Bank Group
and its members any judgement concerning the legal status of any territory or any approval or acceptance of its
boundaries.