Gabon Infrastructure Report Q3 2012

Despite the fact Gabon is one of West Africas oil producing countries, with respectable output of 243,000b/d in 2011, oil windfalls have not translated into investment in the countrys deteriorating infrastructure. Over Q112, there was a virtual absence of activity in the sector in terms of new project announcements or developments. Gabon relies on official development assistance and foreign funding to support infrastructure projects, a pattern we believe will continue in the coming years as oil output declines. Low industry value and minor expansion make for an unimpressive construction sector growth story to the end of our forecast period in 2021.

Key developments in Gabons infrastructure sector include:

- The news that Indian infrastructure firm RPP Infra Projects has secured funding from ECOBANK of Libreville and BDEAC Bank for the first phase of a EUR250mn (US$356mn) housing project in Gabon is a positive development in a country where access to finance remains prohibitive.

- We believe Gabons construction sector will continue to rely heavily on official development assistance.

- French infrastructure companies spearhead foreign involvement in Gabon. Major players active in the countrys infrastructure sector include Bouygues, EDF and Veolia. However, bilateral ties with China and India have strengthened, with Chinas Sinohydro having been awarded the largest road reconstruction contract: the PR1 highway project.

- A small construction industry and prohibitive business environment limit the potential returns from Gabons infrastructure sector. In BMIs infrastructure risk/reward ratings (RRRs), Gabon scores 28.9 out of 100, the second lowest in Sub-Saharan Africa (SSA).

- Political risk is a pivotal consideration in Gabon. The situation deteriorated in August 2011, when Gabonese President Ali Bongo Ondimba dissolved the main opposition party, reversing previous minor democratic successes. We estimate that Gabon recorded real GDP growth of 5.6% in 2011 on the back of elevated oil prices, but this figure will begin to tail off from 2013 onwards, in line with declining output from maturing fields. We have revised up our forecasts for Gabons construction industry value, following a significant revision of historical data. Construction industry value has increased from our previous forecast of XAF192bn (US$0.4bn) to XAF302bn (US$0.6bn) for 2012. Our revised forecast suggests that by 2016, Gabons construction industry value will increase to XOF343bn (US$0.7bn), with annual average growth of 0.5% forecast between 2012 and 2016.

The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.