Gabon’s economy is dominated by oil. Oil revenues comprise roughly 46% of the government’s budget, 43% of the gross domestic product (GDP), and 81% of exports. Oil production is currently declining rapidly from its high point of 370,000 barrels per day in 1997.
Some estimates suggest that Gabonese oil will be expended by 2025. In spite of the decreasing oil revenues, planning is only now beginning for an after-oil scenario.
The Grondin Oil Field was discovered in 50 m (160 ft) water depths 40 km (25 mi) offshore, in 1971 and produces from the Batanga sandstones of Maastrichtian age forming an anticline salt structural trap which is about 2 km (1.2 mi) deep.
Gabonese public expenditures from the years of significant oil revenues were not spent efficiently. Overspending on the Trans Gabon Railway, the CFA franc devaluation of 1994, and periods of low oil prices caused serious debt problems that still plague the country.
Gabon earned a poor reputation with the Paris Club and the International Monetary Fund over the management of its debt and revenues. Successive IMF missions have criticized the government for overspending on off-budget items (in good years and bad), over-borrowing from the Central Bank, and slipping on the schedule for privatization and administrative reform.
However, in September 2005 Gabon successfully concluded a 15-month Stand-By Arrangement with the IMF. Another 3-year Stand-By Arrangement with the IMF was approved in May 2007.
Because of the financial crisis and social developments surrounding the death of President Omar Bongo and the elections, Gabon was unable to meet its economic goals under the Stand-By Arrangement in 2009. Negotiations with the IMF were ongoing.
Gabon’s oil revenues have given it a per capita GDP of $8,600, unusually high for the region. However, a skewed income distribution and poor social indicators are evident.
The richest 20% of the population earn over 90% of the income while about a third of the Gabonese population lives in poverty.
The economy is highly dependent on extraction, but primary materials are abundant. Before the discovery of oil, logging was the pillar of the Gabonese economy.
Today, logging and manganese mining are the next-most-important income generators. Recent explorations suggest the presence of the world’s largest unexploited iron ore deposit.
For many who live in rural areas without access to employment opportunity in extractive industries, remittances from family members in urban areas or subsistence activities provide income.
Foreign and local observers have lamented the lack of diversity in the Gabonese economy. Various factors have so far limited the development of new industries:
The market is small, about a million
Dependent on imports from France
Unable to capitalize on regional markets
Entrepreneurial zeal not always present among the Gabonese
A fairly regular stream of oil “rent”, even if it is diminishing
Further investment in the agricultural or tourism sectors is complicated by poor infrastructure. The small processing and service sectors that do exist are largely dominated by a few prominent local investors.
At World Bank and IMF insistence, the government embarked in the 1990s on a program of privatization of its state-owned companies and administrative reform, including reducing public sector employment and salary growth, but progress has been slow.
The new government has voiced a commitment to work toward an economic transformation of the country but faces significant challenges to realize this goal.