AFRICA RISK CONSULTING Monthly Briefing December 2020 Gabon Summary 18 December 2020 Economy and recovery minister Jean-Marie Ogandaga resigns from cabinet following allegations that he unilaterally granted foreign oil producers operating in Gabon exceptional tax reductions. The government outlines its post-Covid-19 economic recovery plan, the Plan de Relance de l'Economie (PRE), which will run from 2021-2023. United States-based credit rating agency Fitch Ratings confirms a CCC credit for Gabon’s long-term foreign-currency issuer default rating, indicating a high possibility of Gabon defaulting on its debt payments. Economy minister Ogandaga resigns over tax exemption allegations Economy and recovery minister Jean-Marie Ogandaga has resigned from Gabon’s cabinet following allegations that he unilaterally granted foreign oil producers operating in Gabon exceptional tax reductions.1 Rumours that Ogandaga could be arrested on corruption-related charges further point to the government’s tougher stance on corruption over the last year.2 Although Ogandaga initially denied the allegations,3 pressure from the public, and reportedly also the presidency, forced him to tender his resignation to prime minister Rose Christiane Ossouka Raponda on 8 December.4 Ogandaga’s resignation came as a surprise; earlier in the day he had appeared before the Senate alongside budget minister Sosthene Ossoungou to defend the proposed 2021 budget.5 A presidency communiqué indicated that President Ali Bongo Ondimba (2009-present) had accepted Ogandaga’s resignation but failed to indicate the reasons behind it.6 Ogandaga’s resignation followed a report in local media organ Gabon News on 23 November alleging that he had granted significant tax exemptions to Total Gabon, a subsidiary of -based oil company Total and Franco-British oil firm Perenco.7 Gabon News based its allegations on the report of a joint mission undertaken by the Gabonese customs, tax and treasury directorates, which revealed that Total Gabon and Perenco owed the government a total of 9 billion FCFA ($16.8m).8 Although Total Gabon owed 4.516 billion FCFA ($8.4m), it only paid 700m FCFA ($1.3m), while Perenco was expected to pay 4.511 billion FCFA ($8.4m) but finally paid 150m FCFA ($279,000).9 Gabon News produced documentation indicating that Ogandaga had authorised the significant reduction in the tax paid by the two companies.10 Ogandaga released a statement on 25 November attempting to justify his actions, claiming that the decision to grant the tax reduction was in-line with Article 327 of the Code des Douanes (customs code).11 Ogandaga said the two companies were unable to pay the sums owed and in the interest of

1 Gabon Media Time, 8 Dec 2020 2 ARC Gabon analyst 3 Gabon Media Time, 26 Nov 2020 4 Gabon Review, 8 Dec 2020 5 Jeune Afrique, 9 Dec 2020 6 Gabon Review, 8 Dec 2020 7 RFI, 9 Dec 2020 8 Gabon Review, 8 Dec 2020 9 Gabon Review, 8 Dec 2020 10 Gabon Review, 8 Dec 2020 11 Gabon Media Time, 26 Nov 2020

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preserving jobs, he felt it necessary to reduce their tax burden.12 Ogandaga threatened to sue the individuals who had made the allegations against him for spreading false information.13 Ogandaga’s decision to cancel upwards of 90% of debt owed by two multinational companies operating in Gabon’s highly strategic petroleum sector, in the midst of an economic recession, resulted in public outcry.14 The revelations emerged less than a month after Total Gabon denied reports that it would cease operations in Gabon,15 while other foreign firms involved in the hydrocarbons sector were threatening to scale down their activities because of the current unfavourable economic climate (see ARC Briefing Gabon November 2020).16 Rumours circulated that Ogandaga had orchestrated the tax reduction in return for the payment of kickbacks.17 Rumours also circulated that the Direction Générale de la Contre Ingérence et de la Sécurite Military (B2) (counter intelligence and military security directorate) would summon Ogandaga.18 B2 has been at the helm of investigating corruption allegations against high-ranking Gabonese public officials, including cabinet ministers who were arrested from November 2019 to January 2020 through the Operation Scorpion anti-corruption drive (see ARC Briefing Gabon November, December 2019 and January 2020), and more recently former mayor Léandre Nzue, who was arrested for alleged embezzlement in September (see ARC Briefing Gabon September).19 Initially these rumours appeared have some basis in truth, as Ogandaga was reportedly placed under house arrest and forced to wear an electronic bracelet after his resignation.20 However, he was seen at the Assemblée Nationale (national assembly) on 14 December, where he resumed his duties as an MP, a position he held before his ministerial appointment in July.21 Ogandaga enjoys parliamentary immunity and cannot be arrested unless the national assembly votes to withdraw this privilege.22 This happened in December 2019, resulting in the arrest of former public works minister Justin Ndoundangoye in January on corruption-related charges (see ARC Briefing Gabon January 2020).23 While Ogandaga is off the hook for the moment, there have been calls for further investigations into accusations that he engineered a major tax reduction of 1.5 billion FCFA ($2.7m) for local oil logistics firm FORASERV, which is owned by Port Gentil mayor Gabriel Tchango.24 Former minister delegate of economy and recovery Nicole Roboty Mbou replaced Ogandaga as economy minister on 9 December.25 Roboty Mbou was the former minister’s subordinate at the economy and recovery ministry and the second woman to be nominated economy minister after the current prime minister Ossouka Raponda.26 Roboty Mbou was educated in France and holds a masters degree in finance. She is a seasoned technocrat, having worked at the Banque Gabonais de Développement (BGD), and her appointment is likely to ensure continuity at the ministry.27 Government outlines post-Covid-19 economic recovery objectives One of new economy and recovery minister Roboty Mbou’s first major responsibilities will be to put Gabon’s long-awaited post-Covid-19 economic recovery plan into effect. With economic growth

12 Gabon Media Time, 26 Nov 2020 13 Gabon Media Time, 26 Nov 2020 14 Gabon Review, 8 Dec 2020 15 Direct Infos Gabon, 16 Nov 2020 16 Jeune Afrique, 28 Oct 2020 17 RFI, 9 Dec 2020 18 L’Union, 10 Dec 2020 19 Direct Infos Gabon, 16 Sep 2020 20 Direct Infos Gabon, 14 Dec 2020 21 Gabon Review, 14 Dec 2020 22 Gabon Review, 14 Dec 2020 23 Direct Infos Gabon, 17 Dec 2020 24 L’Union, 10 Dec 2020 25 Jeune Afrique, 9 Dec 2020 26 RFI, 10 Dec 2020 27 RFI, 10 Dec 2020

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expected to contract by 4.9% in 2020 (see ARC Briefing Gabon September 2020),28 the government has pinned its hopes on economic diversification and private sector involvement to improve the country’s economic growth trajectory.29 Before his resignation, now former economy and recovery minister Jean-Marie Ogandaga spoke on 3 December about the need to implement a coherent post-Covid-19 economic recovery plan.30 Ogandaga said the government needed to promote high-growth potential sectors such as hydrocarbons, agriculture and fisheries, trade, tourism and energy, and improve access to energy. Ogandaga said these goals would be articulated through the Plan de Relance de l'Economie (PRE) (economic recovery plan), which will run from 2021-2023. This follows the first PRE, which ran from 2017-2019, and complements Gabon’s medium-term economic agenda, the Plan Stratégique Gabon Émergent (PSGE) (2025). Ogandaga said the majority of funding for the PRE will come from domestic sources, as the government will strengthen customs and tax collection to fulfil this objective. The government will make use of Public-Private Partnerships (PPPs) and work more closely with the private sector. Prime minister Rose Christiane Ossouka Raponda will coordinate the PRE 2021-2023.31 During an 8 December inter-ministerial council, she outlined her goals for Gabon’s economic recovery, urging government members to do everything to ensure economic growth of 2-3% in 2021.32 Ossouka Raponda said the government needed to accelerate the execution of on-going investment projects, restore business confidence by improving the business climate and digitisation, and improve access to water and electricity, priorities identified in her presentation of the government’s political, social and economic agenda in September (see ARC Briefing Gabon September 2020).33 There are already positive signs of the government’s commitment to achieving these goals. The Gabon Special Economic Zone (GSEZ), Transgabonaise highway and Kinguele Aval hydroelectric power project are examples of PPP initiatives already underway.34 The government has also taken steps to improve agricultural development. Agriculture and livestock minister Biendi Maganga- Moussavou and forestry and water minister Lee White signed an agreement on 15 December for the creation of five high-productivity agricultural zones in the Estuaire, Moyen-Ogooué and Ngounié provinces.35 Past failure of initiatives such as the PSGE and PRE to significantly improve Gabon’s economic fortunes since its first economic recession in 2015 raise questions whether the new PRE will deliver the desired results. While the 2021 budget will see a 27% public investment increase to 483.4 billion FCFA ($877.3m) (see ARC Briefing Gabon November 2020),36 it is debatable whether the government will use these funds effectively or indeed, succeed in raising the desired amount, given Gabon’s increasingly precarious public debt situation (see below).37 Fitch confirms CCC rating for Gabon amid concerns of rising public debt United States (US)-based credit rating agency Fitch Ratings confirmed a CCC credit for Gabon’s long- term foreign-currency issuer default rating on 11 December, indicating that Gabon has a high possibility of defaulting on its debt payments.38 Fitch’s assessment mirrors an October report by US- based financial services company Goldman Sachs claiming that Gabon has a high probability of defaulting on its external debt obligations (see ARC Briefing Gabon November 2020).39 Both firms cite

28 Gabon Review, 4 Sep 2020 29 Gabon Review, 4 Dec 2020 30 Gabon Review, 4 Dec 2020 31 Gabon Review, 4 Dec 2020 32 Gabon Review, 9 Dec 2020 33 Gabon Media Time, 4 Sep 2020 34 ARC Gabon analyst 35 Gabon Review, 15 Dec 2020 36 Agence Ecofin, 3 Nov 2020 37 ARC Gabon analyst 38 Fitch Ratings, 11 Dec 2020 39 Reuters, 27 Oct 2020

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poor governance and the ongoing oil price crisis as the main reasons for their assessments.40 Despite Fitch’s negative outlook, Gabon has increased its debt-payment service amounts and is expected to see a fall in its public debt levels from 2021.41 Fitch’s CCC credit rating reflects high risks associated with Gabon’s debt repayment capacity due to tight liquidity and uncertainty over access to external financing from the World Bank.42 Gabon is highly dependent on its oil revenue, which has decreased significantly due to the on-going global oil price crisis and Gabon’s application of the Organisation of Petroleum Exporting Countries (OPEC) production quotas.43 Gabon’s fiscal balance is expected to deteriorate from a surplus of 0.9% in 2019 to a deficit of 4.7% of GDP in 2020. Current expenditure will rise due in large part to increased healthcare spending. However, the budget deficit will fall to 3.4%, with an expected rise in oil prices and improved tax collection figures. Gabon’s public debt, which has been a recurring topic of concern, has increased from 62% to 76% of GDP from 2019 to 2020.44 The Direction Générale de la Dette (general directorate for debt) reported on 14 October that Gabon’s public debt had increased by 134 billion FCFA ($250m) or 14% to 5,835.1 billion FCFA ($10.8 billion) from July to September.45 At the end of June, public debt stood at 5,700 billion FCFA ($10.3 billion).46 Despite concerns over Gabon’s spiraling debt and its ability to repay its debt, the Direction Générale de l’Economie et Politique Fiscale (DGEPF) (directorate general of economic and tax policy) highlighted on 14 December that the country’s year-on-year debt payment from 2019 to 2020 had increased by 77.7% to 999.8 billion FCFA ($1.8 billion) by the end of September.47 Fitch has praised Gabon’s establishment of a presidential task force to assess the veracity of 650 billion FCFA ($1.17 billion) in domestic debt (see ARC Briefing Gabon October-November 2020).48 Fitch also suggests that Gabon’s situation could improve if it establishes a new support plan with the International Monetary Fund (IMF) to replace the Extended Fund Facility (EFF) that ran from July 2017 to June 2020.49 The IMF and Gabonese government have already started negotiations to implement such a plan, which would preserve macroeconomic stability, debt sustainability and help achieve more sustained and inclusive growth.50 Adherence to the IMF plan would also facilitate Gabon’s access to much needed external funding to finance its budgetary needs.51

40 Fitch Ratings, 11 Dec 2020 41 Direct Infos Gabon, 14 Dec 2020 42 Fitch Ratings, 11 Dec 2020 43 Fitch Ratings, 11 Dec 2020 44 Fitch Ratings, 11 Dec 2020 45 Direct Infos Gabon, 14 Dec 2020 46 Direct Infos Gabon, 17 Nov 2020 47 Direct Infos Gabon, 14 Dec 2020 48 Financial Afrik, 15 Nov 2020 49 Fitch Ratings, 11 Dec 2020 50 Gabon Media Time, 4 Dec 2020 51 Gabon Media Time, 4 Dec 2020

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Planner 2021 (Gabon) Deadline for tender submissions for 12th round of petroleum licences, scheduled for April, new date TBA Jul 2021 Montpellier (France) France-Afrique summit Late 2020/early 2021 (Gabon) Senate elections 2023 (Gabon) Local and national assembly elections Chronology 17 Dec 2020 Libreville (Gabon) Direct Infos Gabon. The Direction Générale des Hydrocarbures (general directorate for hydrocarbons) reports that annual petroleum exports dropped by 0.8% year- on-year at the end of September compared to the same period in 2019, with export of 59.55m barrels in the first nine months of 2020; 17 Dec 2020 Libreville (Gabon) Gabon Review.The Agence Nationale de l’Aviation Civile (ANAC) (national civil aviation agency) reveals air traffic decreased by 55.7% during the first nine months of 2020, compared to the same period in 2019; 15 Dec 2020 Libreville (Gabon) Direct Infos Gabon. Gabon generated 401.7 billion in oil revenue in the first nine months of 2020, a 24.7% decrease compared to the same period in 2019; 15 Dec 2020 Libreville (Gabon) Direct Infos Gabon The Senate and Assembleé Nationale (national assembly) have voted to maintain Gabon’s curfew, which lasts from 10pm until 4am, until 22 February 2021; 14 Dec 2020 Libreville (Gabon) Direct Infos Gabon. Gabon has initiated steps to rejoin the Extractive Industries Transparency Initiative (EITI) following its departure from the organisation in 2018; 14 Dec 2020 Libreville (Gabon) Direct Infos Gabon. The Direction Générale de la Dette (general directorate for debt) reports that Gabon’s public debt increased by 134 billion FCFA ($250m) or 14%, to 5,835.1 billion FCFA ($10.8 billion) from July to September; 14 Dec 2020 Libreville (Gabon) Direct Infos Gabon. The 95km Port-Gentil-Omboué road network, built at a cost of 342 billion FCFA ($637.9m), will be inaugurated on 15 December; 11 Dec 2020 New York (United States) Fitch Ratings. United States-based credit rating agency Fitch Ratings has confirmed a CCC credit for Gabon’s long-term foreign-currency issuer default rating, noting Gabon has a high possibility of defaulting on its debt payments; 9 Dec 2020 Libreville (Gabon) Gabon Review. President Ali Bongo Ondimba carries out mini- cabinet reshuffle appointing Olivier Nang Ekomie as housing minister, Brice Paillat minister of transport, Léon Armel Bounda Balonzi public works minister and Nicole Roboty Mbou as economy minister; 9 Dec 2020 Libreville (Gabon) Gabon Review. Prime minister Rose Christiane Ossouka Raponda expects economic growth of 2-3% in 2021; 8 Dec 2020 Libreville (Gabon) Gabon Media Time. Economy and recovery minister Jean-Marie Ogandaga resigns following allegations he unilaterally granted foreign oil companies tax exonerations; 5 Dec 2020 Libreville (Gabon) Direct Infos Gabon. Nine individuals, including two men of Lebanese and three men of Malian nationality, have been arrested for issuing 120 Gabonese passports utilising fake documents; 26 Nov 2020 Libreville (Gabon) Gabon Media. Economy and recovery minister Jean-Marie Ogandaga defends his decision to grant tax exonerations to foreign oil companies operating in Gabon;

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