AFRICAN DEVELOPMENT BANK

Public Disclosure Authorized Authorized Public Disclosure

GABON

ECONOMIC DIVERSIFICATION SUPPORT PROJECT (PADEG)

APPRAISAL REPORT

Authorized

Authoriezd Public Disclosure Authorized Public Disclosure

Translated Document

ECGF/RDGC June 2018

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

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

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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

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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 12.7515 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.

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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

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PROJECT SUMMARY

Project Title: Gabon - Economic Diversification Support Project (PADEG) General Geographic Scope: Nationwide Project Schedule: June 2018 - June 2022 Overview Financing: EUR 62.74 million (ADB loan) : Counterpart Contribution: EUR 11,88 million

Operating Instrument: Institution building project. 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. Needs The Bank's intervention is justified for the following reasons: (i) to stimulate private investment, Assessment economic growth and improve the living conditions of the people. PADEG will directly support the and Relevance 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 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 The Bank’s experiences, particularly those related to diversification of sources of growth and capacity building of Comparative 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 Advantages (establishment of business incubators and support by the Chamber of Commerce2 to artisans and and young entrepreneurs to facilitate their formalization and access to various sources of financing). Thus, Value Added 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.

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 Knowledge assistance (coaching). The project will develop good practice in the following areas: (i) sector Management management; (ii) entrepreneurial culture; (iii) business management; (iv) support and hosting of and Knowledge international productive investments; (v) monitoring and evaluation. This knowledge will be shared Building 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. v

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. MEANS OF RISKS/ PERFORMANCE INDICATORS VERIFICATION MITIGATION RESULTS CHAIN MEASURES Indicator Baseline Situation Target (including ISCs)

Contribute to Average annual GDP Min. 2.1% in 2016 3.1% in 2025 sustained and growth rate Finance/IMF

IMPACT inclusive non-oil growth Private investment rate, Min. 7% in 2016 10% in 2022 excluding oil Finance/IMF

Number of jobs created in 18000 jobs in businesses within the 12500 jobs in 2016 Growth of the Special 2022 Special Economic Zone SEZ/Min TEFP Economic Zone 67% (2017) 90% (2022) SEZ occupancy rate Risk 1: Min. of Water and - Socio-political Wood processing rate 4 in 2017 10 in 2021 Forests - Insecurity and

Sustainable growth in political the timber and mining instability. Number of new sectors concessions/mining 10 in 2016 20 in 2022 Min. of Mines Mitigation licenses granted Measure 1 OUTCOMES Increased Tax revenue from the non- 922 FCFA billion in 1615 FCFA mobilization of non- oil sector (FCFA billion) 2017 billion IMF Report - The country’s oil revenue in 2022 commitment and Component I : Support investment climate improvement and internal resource mobilization to that of the back economic diversification international community to Output I.1 : The I.1.1.The SEZ Impact No action plan for SEZ Phase II pursue peace Nkok SEZ is study conducted and the second phase of Action Plan SEZ Report consolidation operational optimization strategy SEZ development available and national drafted security. A training centre will be equipped Risk 2: I.1.2 The SEZ Training, No training, testing from 2018 and Testing and Certification and certification SEZ Report 150 people - Reversibility of Centre equipped centre in 2017 trained per year as Government's from 2018 commitment to I.1.3 The SEZ Design and pursue structural No new products on 2 products per Exhibition Centre reforms. display year as from 2019 OUTPUTS equipped Mitigation

Output I.2. The SEZ Measure 2 I.2.1 The port one-stop one-stop shop is Automated This is an shop transaction automated and Manual Transactions transactions from SEZ Report institution management software interconnected with 2019 building installed. the port one-stop operation and shop the Government has reaffirmed Output I.3. The The Gabonese OGR is deployed its commitment Gabonese Revenue I.3.1 OGR deployment Revenue Authority MIN DDEP and operational following the Authority (OGR) is does not exist to date Report (2022) programme operational (2018)

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Output I.4 The At least 10 agreement with Report of the overall business 1.4.1 Number of business simplified and the IMF, which Ministry of framework is procedures to be 0 operational requires the Investment strengthened and streamlined in 2017 procedures by the continuation of Promotion constraints on end of 2020 the priority value chains diversification identified programme.

Report of the 1.4.2 Implementation of At least 20% of Ministry of the action plan on constraints lifted 0 constraint in 2017 Investment Risk 3: identified constraints per year per value Promotion chain between - Human 2018 and 2021 resources in the structures The Chamber of benefiting from 1.4.3 Operationalization of The Chamber of Commerce will Report of the the project to the TGI Libreville Commerce was not be operational Ministry of ensure the Chamber of Commerce. operational in 2017 end-2021 Justice efficient implementation of the activities retained Component II : Support Reforms in the Priority Timber and Mining Sectors Output II.1 The II.1.1. Build the Geoportal Low capacity of the Geoportal site MIN/DGM Mitigation investment capacity Geoportal site in fully operational Reports Measure 3 framework in the 2017 2020 mining sector is II.1.2. Baseline of - The The baseline is improved. production norms and involvement of available and standards in priority No baseline in 2017 AGANOR Report high-level AGANOR is sectors and equipment for experts to equipped AGANOR provide training and ensure II.1.3. Finalization of the The mining knowledge mining cadastre and cadastre is The mining cadastre transfer in these Geographic Information operational and MIN/DGM is incomplete and structures will System (GIS) GIS technical Reports GIS resources mitigate this risk resources will be insufficient at the level of deployed before the beneficiary end-2020. structures. Output II.2: Primary III.2.1. Monitoring and No monitoring A monitoring and and secondary evaluation of forest framework in 2017 evaluation processing in the management plans framework for MIN/DG Forest

forest/timber sector WEPs will be Reports strengthened. operational before end-2020 II.2.2. Equipment of the The Nkembo Nkembo Vocational No primary and

CFPP has Min. of

S Training Centre as a pilot secondary timber modern TEFP/Min centre for primary and processing centre for equipment and is Forests secondary timber artisans operational. processing trades

OUTPUT II.2.3. Technical No studies and Study and equipment for primary and shared equipment for equipment MIN/DG Forest secondary processing is primary and available before Reports available secondary end of 2020 processing available At least 100 Report of the

II.2.4 Technical SMEs-SMIs Ministry in Assistance Fund (TAF) to No TAF Technical would receive charge of SMEs Gabonese SMEs-SMIs is Assistance technical and Investment

OUTPUTS OUTPUTS operational assistance before Promotion end of 2022

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Report of the At least 40% II.2.4.1 Of whom at least Ministry in women and 40% are women and 0 in 2017 charge of SMEs young young entrepreneurs and Investment entrepreneurs Promotion COMPONENTS INDICATIVE COSTS ADB 62.74 (MEUR)

Component 1. Support investment climate improvement and internal resource (M EUR 38.83) mobilization to promote economic diversification: Support the development of the Nkok Special Economic Zone and improve economic governance. Component 2. Support reforms in priority sectors (timber and mining): Support (M EUR 22.03 MEUR) 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.

KEY ACTIVITIES KEY Component 3. Project management: Equip and ensure the operation of the Project (M EUR 1.88 MEUR) Management Unit. This component will also be responsible for coordinating the recruitment of the external auditor.

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Years 2018 2019 2020 2021 2022 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

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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.

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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).

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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

3 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

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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.

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Table 1 Donor Interventions in Sectors Covered by the Project Support Support to Partners Improve the Investment Climate Economic Businesses Diversification 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

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Table 2.1 Project Components Sub- Cost in EUR Components Description Components Million 1. A  Strategic and operational diagnostic, and preparation of an Action Plan for optimizing the Nkok Special Economic Zone Support for Phase II, coupled with a selective implementation of the investment Action Plan (promotion and facilitation tools, etc.) climate reforms  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) I - Support investment (e-trading software and GU software with Singapore 13 climate improvement government sponsorship) and internal resource  Equip a laboratory at the port to test the export of mining mobilization to back products that have an impact on national GDP and to train the economic workforce diversification  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 38,83  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 . Help deploy the Gabonese Revenue Authority (OGR) Support and . Study and establishment of a national wood traceability mobilize system internal resources for . Help to build the capacity of the Public Finance Reform Programmes Monitoring Unit (Directorate-General of economic Forward Planning in the Ministry of Economy and Forward diversification, Planning) improve economic . Study and establishment of the Information System in the governance to Directorate-General of Competition and Consumption (CFAF 50 million) support private sector . Study on the competitiveness of the hydrocarbons sector development . 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

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I1.A . Translation and dissemination of the mining code and 1 Support enforcement texts mining sector . Consolidation of infrastructure allowing for access to mining reforms resources (GIS14 and the mining cadastre)  Finalization of the computerized mining cadastre (system implementation, equipment, training and maintenance)  Harmonization of GIS platforms, geological and II – Support reforms in mining databases, and finalization of the mining priority sectors reform cadastre (timber and mining)  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 . Primary and secondary processing and training equipment Support timber (set up a group of pilot craftsmen, Nkembo Training Centre) sector reforms . Build the capacity of the Directorate-General for Development of Timber Industry and Forest Products Trade 22,03 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.

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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 . 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 I. Project 1,88 Management . 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

9 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.

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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.

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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 Loc. Components For. Exch. Local Cur. Total For. Exch. Total % Cur. Component I: Support improvement of the investment climate and domestic resources 18 866 609,7 4 716 652,4 23 583 262,1 28 762,0 7 190,5 35 952,5 57% mobilization to back economic diversification Component II: Support reforms in priority sectors (mining, 5 352 000,0 8 028 000,0 13 380 000,0 8 159,1 12 238,6 20 397,7 33% timber) Component III: Project 457 434,7 686 152,1 1 143 586,8 697,4 1 046,0 1 743,4 3% management and coordination 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 2.4 Source of Financing (in EUR thousand) Cost in Foreign Source of Financing Cost in Local Currency Total % of Total Exchange

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%

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%

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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 4 716 652,4 7 074 978,6 7 074 978,6 4 716 652,5 23 583 262,1 resource mobilization to back economic diversification Component II : Support reforms in 2 676 000,0 4 014 000,0 4 014 000,0 2 676 000,0 13 380 000,0 priority sectors (mining, timber) Component III. Project Management and 228 717,3 343 076,0 343 076,1 228 717,4 1 143 586,8 coordination 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.

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Table 9 Lessons from Previous Institution Building Projects Measures Taken to Mainstream Lessons into the Project Lessons Area of intervention too The preparation mission focused on a single area, namely investment promotion. This helped to broad 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 The project design was closely coordinated with the interventions of other development partners, interventions of the including the World Bank and AFD. The objective of this approach was to ensure the various technical and complementarity of our interventions. The project is anchored in the Ministry of Private financial partners in the Investment Promotion, Trade and Industry, which is the main government structure in charge of sector 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

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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.

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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

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(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

17 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

Schedule Stages Monitoring Activities/Feedback Loop June.-18 Loan approval by the Board Notification to Government Signature of loan agreement, ratification and fulfilment of Oct 18 Loan effectiveness 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 Preparation of the work programme and establishment of the Dec-18 Launch of the first activities Project Implementation Unit Preparation by the beneficiary structures and the Project Dec-18 Bid preparation and invitation Implementation Unit Evaluation by the Project Implementation Unit and approval by March-19 Bid analysis and contract award the authorities Implementation of activities, other project 2018-2022 activities Quarterly and annual activity reports 2018-2022 Launch, supervision and mid-term review missions Mission reports 2019- Annual project audit Audit reports 2023 June-23 Project completion Completion Report

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

18 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 Mitigation measures of risk

 Socio-political - insecurity and Medium  The commitment of both the country and the political instability. international community to further consolidate peace and national security. The relative consensus around the recommendations of the conference on political dialogue

 Reversibility of government's commitment to pursue structural Medium  This is an institution building operation and the government has reaffirmed its commitment to reforms. 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,  The problem of human resources in Medium are mitigation measures the project beneficiary structures to ensure the efficient implementation  The involvement of high-level experts to ensure of activities. training and knowledge transfer in these structures will mitigate this risk at the level of the beneficiary structures.

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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.

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Appendix I. Country Comparative Socio-economic Indicators Gabon COMPARATIVE SOCIO-ECONOMIC INDICATORS

Develo- Develo- Year Gabon Africa ping ped Countries Countries Basic Indicators GNI Per Capita US $ Area ( '000 Km²) 2016 268 30 067 94 638 36 907 Total Population (millions) 2016 1,8 1 214,4 3 010,9 1 407,8 12000 Urban Population (% of Total) 2016 88,8 40,1 41,6 80,6 10000 Population Density (per Km²) 2016 6,8 41,3 67,7 25,6 8000 GNI per Capita (US $) 2014 9 450 2 045 4 226 38 317 6000 Labor Force Participation *- Total (%) 2016 49,2 65,6 63,9 60,3 4000 Labor Force Participation **- Female (%) 2016 40,3 55,6 49,9 52,1 2000

Gender -Related Dev elopment Index Value 0

2000 2008 2013 2009 2010 2011 2012 2014 2007-2013 0,748 0,801 0,506 0,792 2005 Human 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 ...

G ab on A fri ca Demographic Indicators Population Grow th Rate - Total (%) 2016 2,2 2,5 1,9 0,4 Population Grow th Rate - Urban (%) 2016 2,5 3,6 2,9 0,8 Population < 15 y ears (%) 2016 37,0 40,9 28,0 17,2 Population Growth Rate (%) Population >= 65 y ears (%) 2016 5,1 3,5 6,6 16,6 3,0 Dependency Ratio (%) 2016 72,6 79,9 52,9 51,2 2,5 Sex Ratio (per 100 female) 2016 102,4 100,2 103,0 97,6 Female Population 15-49 y ears (% of total population) 2016 24,3 24,0 25,7 22,8 2,0 Life Ex pectancy at Birth - Total (y ears) 2016 65,4 61,5 66,2 79,4 1,5 Life Ex pectancy at Birth - Female (y ears) 2016 66,2 63,0 68,0 82,4 1,0 Crude Birth Rate (per 1,000) 2016 29,2 34,4 27,0 11,6 0,5

Crude Death Rate (per 1,000) 2016 8,2 9,1 7,9 9,1 0,0

2000 2010 2012 2015 2009 2011 2013 2014 Infant Mortality Rate (per 1,000) 2015 36,1 52,2 35,2 5,8 2005 Child Mortality Rate (per 1,000) 2015 50,8 75,5 47,3 6,8 Total Fertility Rate (per w oman) 2016 3,8 4,5 3,5 1,8 G abo n A fric a Maternal Mortality Rate (per 100,000) 2015 291,0 495,0 238,0 10,0 Women Using Contraception (%) 2016 35,1 31,0 ......

Health & Nutrition Indicators Phy sicians (per 100,000 people) 2004-2013 29,2 47,9 123,8 292,3 Life Expectancy at Birth Nurses and midw iv es (per 100,000 people) 2004-2013 501,7 135,4 220,0 859,8 (years) Births attended by Trained Health Personnel (%) 2010-2015 87,1 53,2 68,5 ... 80 Access to Safe Water (% of Population) 2015 93,2 71,6 89,3 99,5 70 60 Healthy life ex pectancy at birth (y ears) 2013 57,2 54,0 57 68,0 50 Access to Sanitation (% of Population) 40 2015 41,9 39,4 61,2 99,4 30 Percent. of Adults (aged 15-49) Liv ing w ith HIV/AIDS 2014 3,9 3,8 ...... 20 Incidence of Tuberculosis (per 100,000) 10

2014 444,0 245,9 160,0 21,0 0

2010 2014 2005 2009 2011 2012 2013 2015 Child Immunization Against Tuberculosis (%) 2014 91,0 84,1 90,0 ... 2000 Child Immunization Against Measles (%) 2014 61,0 76,0 83,5 93,7 Underw eight Children (% of children under 5 y ears) 2010-2014 6,5 18,1 16,2 1,1 G ab on A fri ca Daily Calorie Supply per Capita 2011 2 781 2 621 2 335 3 503 Public 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 Infant Mortality Rate Secondary School - Total 2010-2015 53,3 50,9 57,8 105,3 ( Per 1000 ) Secondary School - Female 2010-2015 44,7 48,5 55,7 105,3 100 90 Primary School Female Teaching Staff (% of Total) 2010-2015 52,9 47,6 50,6 82,2 80 Adult literacy Rate - Total (%) 2010-2015 83,2 66,8 70,5 98,6 70 60 Adult literacy Rate - Male (%) 2010-2015 85,3 74,3 77,3 98,9 50 Adult literacy Rate - Female (%) 2010-2015 81,1 59,4 64,0 98,4 40 30 Percentage of GDP Spent on Education 2010-2014 3,8 5,0 4,2 4,8 20 10

0

2000 2005 2011 2015 2010 2012 2013 2014 Environmental Indicators 2009 Land Use (Arable Land as % of Total Land Area) 2013 1,3 8,6 11,9 9,4 Agricultural Land (as % of land area) 2013 20,0 43,2 43,4 30,0 Forest (As % of Land Area) 2013 87,7 23,3 28,0 34,5 G ab on A fri ca Per 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 : August 2016 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+)

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Annex II. Table of AfDB Country Portfolio

List of ongoing projects (loans and grants) by sector:

Project Description Project Code Approval Completio Age Amount Amount Disbursem Departm Status Date n Date (year) million Disburse ent Rate ent UA d in% 1 SIAT GABON P-GA-AAG-002 11/09/07 01/02/2021 NA 8.92 8.92 100 OPSD Ongoing AGRICULTURAL EXPANSION PROJECT Ongoing 2 BUSINESS INCUBATOR P-GA-KF0-001 23/05/14 31/12/2017 1,3 0.8 0.096 12.11 OSGE PROJECT Ongoing 3 PROJECT TO SUPPORT P-GA-KF0-00 14/10/14 31/12/2017 0,9 0.8 0.076 9.96 OSGE THE CHAMBER OF COMMERCE, AGRICULTURE, INDUSTRY, MINING AND CRAFTS DIAGNOSTIC OF THE 4 P-GA-KF0-002 20/06/201 31/12/2017 - 0.8 - - OSGE Signed INSTITUTIONAL 6 on 03 FRAMEWORK FOR THE August PROMOTION OF 2016 INVESTMENTS IN COFFEE/COCOA AND FOOD CROPS VALUE CHAINS

TECHNICAL SUPPORT TO 5 THE GREEN GABON P-GA-AAD-005 30/06/2016 31/12/2017 - 1.2 - - OSAN Not INITIATIVE FOR THE signed TRANSFORMATION OF THE FOREST-TIMBER SECTOR INTO GABON - PROGRAMME PREPARATION AND RELATED STUDIES TOTAL 1.1 12.52 9.092 86

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Appendix III. Main Related Projects Financed by the Bank and Other Development Partners in the Country

UNDP WB AfDB FDA EU

State reform aimed at clarifying missions Support to sector and making better use governance: of public resources. Road Governance maintenance, Support to Territorial mining, Networks for Local environment and Governance and public finance. Development

- Review and reform of the tax system (completed in 2013) Public finance - Continuation governance Support to the of TA for the Support: National Commission Improvement Improving the to Fight Corrupt of Public quality and pace of Enrichment and the Public Finance Finance execution of National Financial Management public Investigation Agency expenditure, - Technical monitoring and assistance budget execution. project for the reform of the tax system in Gabon

- Support the production and marketing of agricultural products - Forest: forest management control - Forest: development of the Arc d'Emeraude area SIAT Gabon - Forest: satellite Agricultural Agriculture Agriculture statistics monitoring of forest Expansion cover Project - Forest: combat poaching - Forestry: support for the forest-wood sector - (following a debt conversion agreement of EUR 60 million)

Preparation of a study on - Support to the Project to Health the financing of the National Health operationalize the health system (study Development Ndougou health

III

UNDP WB AfDB FDA EU

completed in 2014) Project (PNDS) - department Ongoing discussions on Phase 1 possible assistance to the - Support to the social protection system. PNDS - phase 2 Discussions initiated on a possible project to support the health system Support to vocational training and integration: Capitalize, National consolidate, Support to technical and Employment Education Sector sustain and vocational education and Education and Investment Project promote training improvement of youth Unemployment (PISE) process employability Survey mechanisms through work- linked training and professional integration - Rainwater Remediation in - National Shared Discussions initiated on Libreville Urban Household Support for the - Rainwater and Solid Waste development of a Solid wastewater Management Support for Waste Management treatment in Port- Project Water and rainwater Strategy. No further Gentil Sanitation sanitation in action to date. It seems - Development of the - Sustainable Libreville that the Government is Gué Gué catchment Management of working with FDA on area in Libreville the Mbé River the subject. - Solid waste Dam Project management in Libreville - Development of the road from Ndjolé to Central Africa Regional Médoumane Fibre Optic Networks

Project - Rehabilitation School projects and e-Gov Applications of bridges with the Road Infrastructure Project and Fund (PAGOS- Rural Electrification engineering routes)" Project (FY 2015) structures in Local Infrastructure rural areas Development Project II

- Rehabilitation of railway infrastructure

IV

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.

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