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Investor Relations

Gabon: Exceptional in the Africa context

By Gagan Gupta, President & Country Head, Olam Gabon

One of the main reasons that Olam chose to invest in Gabon initially was the West African nation’s political stability and the government’s desire to promote economic growth.  Gabon is one of the most stable countries in Central and West Central Africa (rated BB- stable by Standard & Poor’s) and has the highest income per capita in the region (US$11,565 per head).

Since 2009, Gabon has set out to implement political and economic reforms under its “Emerging Gabon” policy to transform itself around three pillars: a “Green Gabon” to sustainably develop its natural resources; an “Industry Gabon” to develop local processing industries for exports; and a “Services Gabon” to develop its people in the financial, ICT, health and tertiary education sectors.

Recently, the country has witnessed rapid infrastructure development, with a shift from public to private services. In parallel the government has focused on diversifying sources of revenue by investing in and supporting businesses. This focus enables Olam Palm Gabon (OPG), the joint venture between Olam and the government of Gabon (RoG), to play a leading role in the African Green Revolution.

Gabon is blessed with 5 million hectares of fertile arable land and a tropical climate. The RoG has adopted a national land use plan that allocates land for different uses and explicitly excludes “intact forests, high conservation value forests and forests which are particularly rich in carbon”. As part of that plan, a land bank of 300,000 hectares has been committed in suitable agro-climatic conditions for development by OPG.

The plantation sites have been selected in the regions of Gabon most suited for high yields with a low rural density, making it possible to implement best practices both for optimum agronomy and socio-economic development for the local communities. The RoG has a strong commitment to sustainability and this greatly enhances the operating environment for us in the country.

Collaborative expansion via PPP

OPG stands out in the Africa context as one of the larger and more successful public private partnerships or PPPs. It helps contribute towards broad-basing the economy, embedding best practice sustainability, creation of more jobs for the rural sector and the nation’s food security.

Olam’s recent participation in RoG’s GRAINE scheme through a 49/51 joint venture with RoG is another case in point. It is a bold venture which seeks to replicate the successful FELDA scheme of Malaysia. The RoG provides land and financial resources for developing smallholder plantations and logistics. Olam leverages its proven expertise in palm plantation and responsible rural investment models to support nucleus development of smallholder plantations.

The Phase 1 development under this initiative has benefited more than 14,000 Gabonese farmers and the joint venture will also offer market access to these farmers through Olam’s distribution.

Mitigating risks

Having the government’s direct involvement in the business as a joint venture partner helps to promote better visibility and transparency aligned with the government’s overall policy framework. We have also ensured financial and development institutions participate in the financing of the projects we undertake, encouraging a high level of constructive scrutiny by the financial community.

Overall, Olam is the largest and one of the preferred private sector employers in the country employing over 7,100 people.  We continue to work on a model that is built on a strong social franchise in conjunction with an economic model where all of our 5,200 OPG employees have a stake in the project’s success.