Construction materials provide foundation for Gabon’s growth

Construction materials provide foundation for Gabon’s growth

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AMIDST a continued push by the government to expand housing stock and road networks, Gabon is building a number of new cement and steel factories to boost domestic production of construction materials and reduce the trade deficit.

Today, with the exception of cement, some 90 percent of Gabon’s building materials are imported from Europe and China.

In June President Ali Bongo Ondimba inaugurated a new cement production plant operated by Moroccan-owned Ciments de l’Afrique (CIMAF) in Owendo, 20 km south of Libreville. Largely oriented to meet domestic demand, the CFA23bn (€38.9m) cement plant has an installed capacity of 500,000 tonnes per annum (tpa), with the potential to expand up to 1m tpa.

The new CIMAF facility joins a 250,000-tpa CimGabon plant, also in Owendo, bringing the country’s total capacity to 750,000 tpa – more than triple its production levels last year – and surpassing current domestic demand of 700,000 tpa.

Industry stakeholders expect production to increase even further as large-scale construction projects, as well as infrastructure and logistical improvements, move forward.

‘As an emerging economy, Gabon’s public infrastructure segment presents the best opportunities for growth given the number of roads and bridges remaining to be built,’ Salim Kaddouri, director-general of CIMAF Gabon, told OBG earlier this year. He expects national demand to grow around 3 percent annually.

Steel production capacity is also expanding on the back of rising demand and a push to grow the country’s metallurgical industry.

Gabon is home to two recently constructed steel rebar factories, with a combined capacity of 120,000 tpa of rebar. Located in the Nkok Special Economic Zone, the facilities have the capacity to meet 50 percent of domestic demand, which has increased in recent years due to a series of major infrastructure projects, including ports, bridges, flood drainage systems and housing.

The newest of these plants, managed by Steelworks of Gabon and inaugurated in February, has a production capacity of 60,000 tpa of rebar, with the second facility, managed by Boiler Gabon and launched last year, making up the difference.

Authorities are hoping the new facilities will reduce Gabon’s reliance on imports by strengthening the country’s domestic production capacity, particularly in cement, steel and timber. In doing so, they aim to reduce the cost of construction materials, which remain vulnerable to international currency and price fluctuations, as well as logistical challenges.

Cement, for example, is typically sold wholesale for CFA77,000 (€117.4) per tonne in Libreville, which accounts 70 percent of the country’s cement market. Distributors then move the cement by sea, train and road to various locations across the country. By the time the cement reaches its end destination, transport and logistical costs can add up to CFA25,000 (€38.1) more per tonne.

The expansion of domestic production capacity has already positively affected the steel industry, with the price of rebar decreasing by 36 percent between 2013 and 2015, according to press reports.

The construction sector is a priority of Gabon’s long-term growth strategy, dubbed the Emerging Gabon Strategic Plan (Plan Strategique Gabon Emergent, PSGE).

Under the PSGE, which targets emerging market status for Gabon by 2025, the country aims to diversify the economy away from oil revenues by relying on three main pillars: Industrial Gabon, Services Gabon and Green Gabon.

According to the IMF’s 2015 Article IV Consultation with Gabon, construction – along with the services industry – has already emerged as a key driver of economic growth.

‘High oil revenues funded a scaling up of public investment that helped propel overall growth to nearly 6 percent on average, led by construction and services,’ the IMF said.

Notably, building and public works’ contribution to the economy more than doubled, increasing from CFA185bn (€282m) in 2009 to nearly CFA500bn (€762.4m) last year.

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