Housing Finance in Gabon

Macroeconomic Overview

Gabon is on the west coast of Africa and covers an area of 267,667 m². Gabon hosts a total population of 2 067 561 people, with 89.4 percent living in the urban area of the capital city Libreville and Port-Gentil, the second largest city. The current life expectancy at birth is 66.1 years old, [1] the population growth rate for 2018 is 2.09 percent and the urbanisation rate is 1.92% (2017).[2] A formerly French colony, the country gained independence in 1960 and French is the official language. Gabon shares common borders with Equatorial Guinea, Republic of Congo and Cameroon by land and Sao Tome and Principe by sea. The climate condition is characterised by tropical weather, hot and humid, with a range of terrestrial morphology such a narrow coastal plain, hilly interior, savanna in the east and south. The Gabonese territory is rich in mineral and natural resources such as petroleum, natural gas, diamond, indium, manganese, uranium, gold, timber, iron ore and hydropower.

The primary economic activity of Gabon is the exploitation and exploration of natural resources. It is now the ninth most significant producer of oil in Africa. In addition to oil, the country also produces and exports timber and other minerals such as manganese and uranium. In the past five years, the oil industry has accounted for almost 80 percent of exports, 45 percent of the GDP, and 60 percent of budget revenue. Nevertheless, in recent years, Gabon has been diversifying its economy by investing more in agricultural activities and the tourism industry.

For many years, France remained the main foreign economic and business partner of Gabon, benefiting from particular privileges in multiple sectors such finance and natural resource exploitation (oil) as well as infrastructure development. However, since the advent of the new government headed by the president Aly Bongo Ondimba, the country has opened up its border to new international investors interested in natural resources and infrastructure development.

[1] The World Bank (2018). The World Bank Open Data. https://data.worldbank.org/indicator/SP.DYN.LE00.IN?locations=ZG-GA (Accessed 29 Aug 2018).

[2] CIA (2018). The World Factbook. https://www.cia.gov/library/publications/the-world-factbook/geos/gb.html (Accessed 29 Aug 2018).

Access to Finance

The financial sector of Gabon consists of the Gabonese Development Bank (BGD) and nine commercial banks. However, approximately 80 percent of deposits and loans services are provided by three of the largest banks.  The financial system is also open to foreign commercial banks such as the US bank Citigroup. The primary business focus of BGD is to lend money to small and medium-size companies. Corporate services are offered by commercial banks. However, corporations operating in the country have the freedom to contract credit from abroad.[1] In addition, local credit is available to both local and foreign investors on equal terms. Nevertheless, the country’s main economic actors, such as oil companies, are financed from outside the country.[2]

Gabon is part of the Economic and Monetary Community of Central Africa (Communauté Économique et Monétaire de l’Afrique Centrale, or CEMAC) and as such utilises the common currency known as the Communauté Financière Africaine (CFA) Franc, which is tied to the Euro for the purpose of currency stabilisation. Furthermore, in compliance with being part of the CEMAC, Gabon’s centralised monetary agency is the regional Bank of Central African States (Banque des Etats d’Afrique Centrale/BEAC) which regulates the banking and microfinance institutions (MFIs) sectors through the Central African Banking Commission (COBAC).[3] The country is also home to the Central Africa Regional Stock Exchange which was established in 2008.

The microfinance sector is still at an infant stage with few limited registered microfinance institutions which cover only a limited portio of the population.

Deposit, savings and payment of services to low income earners are offered by Caisse d’Epargne Postal which is a postal savings bank that covers about 13.5 percent of the population. Nevertheless, access to finance for low income earners is still very low.

Gabon’s housing finance programme and budget are divided between different state institutions that have the mandate to deliver and execute housing programmes in the country. These institutions are: the Ministry of Housing, the ANGT, and the National Real Estate Company, a government body created in 1976 with the aim to develop and oversee housing projects. Today the government retains 70 percent of the stake of the National Real Estate Company. Additionally, there are the Gabon National Housing Fund (NHF) created in 1973 and the National Building Society (SNI) created in 1976 by merging the National Housing Corporation and the Gabonese Development of Real Estate and Equipment. In addition, Crédit Foncier of Gabon (CREFOGA) was established by the Gabonese government in 1976 as a specialised agency in housing finance. However, the business model of CREFOGA was severely handicapped by unpaid debts which resulted in its liquidation.[4] Another financial government institution is the Guarantee Fund for Housing (Fonds de Garantie pour le Logement, FGL). The FGL has the administrative and financial distribution mandate to deal with housing deficit. The government of Gabon has also established the housing bank, which is commissioned to provide loans at all stages of the housing construction and sale process.

Today, there are a number of financing mechanisms in Gabon that have been identified through the National Infrastructure Master Plan (NIMP) in order to facilitate real estate investment, publicprivate partnerships and built operation transfer cession as well as fully controlled private projects. In order to promote private investment in the country, the government has embarked on the establishment of development and growth funds destined to small and medium enterprises as well as the creation of specialised agency. These include private banks and credit institutions operating in the housing sector with the aim to stimulate and provide finances to real estate developers and new home buyers.

[1] US Department of State (2017). Investment climate statement report.

[2] Ibid.

[3] US Department of State (2017). Investment climate statement report.

[4] Republic of Gabon (2011). Projet d’appui a l’elaboration d’une strtegie national d’habitat et de development urbain.

Affordability

Gabon planned to improve its fiscal deficit to between 1.25 and 3 percent of the GDP in 2018 in order to compensate for the drop in oil revenues of the same magnitude.[1]  Hence, Gabon’s GDP per capita is US$7 221 in 2017.  However, the country is subject to high income inequality that has left some local community members who lack ties to government officials, in extreme poverty. As a result of the decline in oil prices and national budget cuts in 2015, the economic growth of Gabon decreased from 5.6 percent to 4 percent.[2] This situation has not only affected the local economy but also community purchasing power. As such the Plan Stratégique Gabon Emergent Vision 2025 (PSGE) was launched in 2012, to try and diversify and develop new industries including transformative industries (agribusiness and wood processing) and promote infrastructure development/construction by building smart cities that will respond to housing needs based on sustainable development principles. The expected economic growth of the country is 2 percent in 2018.[3]

According to the 2018 World Bank Doing Business Report, Gabon is currently ranked 167 out of 190 countries globally and stands at 132 on the ease of starting a business.[4] Among the key innovations that government has put in place, is reducing the paid-in minimum capital requirement for starting a business (CFA 500 000). Despite the fact that for the last four decades Gabon experienced high growth due to oil revenues, this did not translate into job creation or poverty alleviation. The 2018 unemployment rate is above 19.63 percent with primarily youth and uneducated people affected.

 

Gabon’s poverty rate is very high; 34.3 percent of the local population are vulnerable and living with a monthly income of below minimum wage of US$225 with an additional US$34 monthly allowance per child. In more than 60 of the regions, many local community/residents do not have access to basic services such as safe drinking water, electricity and health care.[5] Income inequality in Gabon and unemployment remain major challenges, especially among the youth population, 42 percent of which are under the age of 25.[6]

[1] International Monetary Fund (2017). Country report N0.17/408.

[2] World Bank Group Report (2016). Doing Business: Gabon.

[3]  International Monetary Fund (2018). Press release No 18/255.

[4] World Bank Group Report (2018). Doing Business: Gabon.

[5] World Bank Group Report (2016). Doing Business: Gabon.

[6] The World Bank (2017). The World Bank Open Data.

Housing Supply

The majority of social housing developments projects are initiated by the government and executed by international companies mainly from China and India. The Oxford Business Group stressed that Gabon is facing a huge backlog of housing demand especially social housing. However, this situation could improve with the new government’s financial strategies and through better regulations and efforts to facilitate access to land titles.

In 2009, the government has ratified the NIMP based on sustainable development principles with a short to long term vision. The plan includes the development of infrastructure strategies across different sectors, these are: transportation, energy, and telecommunication, housing and utility infrastructure.[1] According to the NIMP action 152, the government plans to build 35 000 houses with the aim of significantly increasing housing supply and facilitating access to mixed used housing. The project aims to build and deliver to the country on average 5 000 units annually, in order to encourage social diversity and vertical and horizontal densification.

The materialisation of the NIMP housing delivery vision is currently underway in the peripheral area of Libreville. One of the projects that have already started is the new urban development project called Angondje Development District located in the west part of the city. Since the beginning of this project, 872 pre-fabricated houses were completed, and, at the end of March 2016, 633 houses were allocated to their owners.[2] Another 420 social houses are being constructed by the Chinese company Dacheng Taihe Steel Structure Science and Technology, based in Beijing. The project is underway, and 320 houses have been completed and delivered. Chinese investment in Gabon is based on Sino-Gabonese friendship and cooperation. The government aims to allocate 5 000 registered plots annually with a title deed to identified builders, private developers and housing construction developers. The objective is to facilitate housing market access to public servants such as teachers, health personnel, and army personnel.

In addition, the SNI is currently working in partnership with a mining company known as Compagnie Minière de l’Ogooué to build 2 000 houses destined to low income earners in Bikélé. This project will be financed by the Gabon International Bank of Commerce and Industry (Banque Internationale pour le Commerce et l’Industrie) and the Union Bank of Gabon (Union Gabonaise de Banque). The Central African Development Bank based in Congo Brazzaville is also supporting the project. To date the project is two-thirds complete, with key infrastructures such as road connections, water and electricity supply remaining.

The government of Gabon has signed an agreement with a Chinese consortium, One Link Holding Group, to build 200 000 homes in several cities and across the country in addition to the development of a new town in Panga province of Nyanga (south of Gabon).

Another housing project currently underway in Gabon is the development of 3 133 houses in Estuaire. The project was initially planned for completion at the end of 2016, but only 2 048 houses have been completed so far. The government of Gabon is also committed to facilitate the establishment of housing cooperatives through public funding. At the same time, the government planned to divert housing bonuses usually paid to public servants to the finance housing cooperative.

However, in the last two years, most of Gabon’s housing development projects have suffered financial setbacks due to the drop in oil prices which have forced the government to reallocate funds to more prioritised projects. The main housing project which suffered setbacks is the Alvia Okolassi housing project that planned to build 650 social houses from 2016 to April 2018. However the project has not taken off due to the withdrawal of financial support from the bank. A second project is the social housing project of Bikele which suffered major setbacks due to financial maladministration and corruption. Another major project is the housing development of Mangoumba which was delayed for lack of finances.

Housing development programmes are currently taking place under Action 153 of the National Infrastructure Master Plan (2011) called ‘Restructuring and slum upgrading’. This programme will involve restructuring and relocation of residents from precarious neighbourhoods to new urban centres with suitable accommodation and social infrastructure. This approach will promote access to land and social facilities as well as social services to local residents. This new development is supposed to take into account all different categories of income.

Nevertheless, it is important to note that the Gabon housing and urban development sector is still characterized by (i) a weak institutional and legal system; (ii) rigid tenure; (iii) virtually ineffective financing systems and (iv) very low capacity of interventions by actors.

[1] Plan Strategic Gabon Emergent (2011 – 2016).

[2] Oxford Business Group (2018).

Property Markets

In the last decade, Gabon has experienced a rapid increase of its urban population, with 89 percent of the population now living in urban areas. However, the country’s real estate market has remained underdeveloped and characterised by high-end sales and expatriate rentals as key drivers, followed by demands for social housing.  Nevertheless, in 2017 the Knight Frank ranked Libreville 26^th among the most profitable African cities in terms of real estate investment.[1] According to the 2018 World Bank Doing Business Report, the number of procedures require to register a property in Gabon is 5 and it takes 33 days to complete. Gabon is ranked 173 in the world in terms of the ease of registering property.[2]

However, much of housing development, property demand and infrastructure development in the country were driven by the hosting of the 2012 and 2015 Nations African football tournament, despite the growing challenge/needs for social housing for poor communities and low income earners. Thus, the government of Gabon has set in place plans to establish the legal basis for a National Laboratory and Public Works (LNBTP) as a strategic institution for the promotion of improving real estate development.[3]

Hauts de Gué-Gué, La Sablière and Batterie IV are amongst the successful developments located around Libreville. Demand for high quality residential property is also on the rise due to competition demands between private and corporate occupiers with the consequence of rental price increases. In addition, there is an increasing demand for retail and office buildings in the country, with state institutions and international institutions being the target markets.

The average rental rates in Gabon are as follows, in and around the capital city of Libreville:

• Apartment (1 bedroom) in City centre: US$ 1529
• Apartment (1 bedroom) outside city centre: US$655
• Apartment (3 bedrooms) in city centre: US$4 150
• Apartment (3 bedrooms) outside city centre: US$1 340

In 2012, the government of Gabon announced the implementation and construction of 5 000 houses to take place in Esterias, 30 kms north of Libreville, which will be financed by the Gabon government through Gabonese Development Bank (Banque Gabonaise de Développement).

To support delivery, the government is engaged in a number of reforms to try and stimulate the housing sector. These reforms include efforts to alleviate the burden of administrative and regulatory obstacles that were hampering social housing delivery projects. Institutional reforms are also taking place in the housing sector which include the creation of new specialised housing agencies and the establishment of several new institutions, such as: the National Agency for Urban Planning and the Topographical Works and Land Registry called (Agence National de l’Urbanisme, des Travaux Toppographique et du Cadastre, ANUTTC), whose mission is to plan and oversee all land and real estate development projects, maintain and extend the national land registry, and facilitate the purchase and transfer of property units.

Hence, Gabon’s priority is to increase the housing stock as stressed in the NIMP launched in June 2012. The budget for the housing development projects identified in the master plan for the period between 2011 and 2016 is estimated at US$ 2.66 billion; part of this money will come from the public sector, as well as the private sector and foreign investment.

 

[1] Le Nouveau Gabon. http://www.lenouveaugabon.com

[2] World Bank Group Report (2018). Doing Business: Gabon.

[3] Oxford Business Group (2018).

Policy and Regulations

Gabon’s current economic policy and regulations are aimed at transforming the country into an emerging economy. This approach seeks to improve investment in other sectors to move away from oil dependency. The country’s 1998 i nvestment code, elaborated in accordance with CEMAC’s investment regulations, provides equal rights to foreign and local companies operating in Gabon. However, a certain number of strategic business sectors, such as mining, forestry and petroleum, are organised under a specific investment code based on customs and tax incentives. In order to increase transparency in its recourse and mining industry, the country is in the process of introducing a new mining and petroleum code. Gabon has also adhered to the Organisation for the Harmonisation of Business Law in Africa (OHADA) which allows foreign investors to choose without restraint from a wide range of legal business structures, such as a private limited liability company or a public limited liability company.

The Gabon constitution of 1991, which has been amended several times, acknowledges the right to housing for every Gabonese citizen in Article 1:

• Paragraph 10: “Everyone Gabonese has the right to property. No one maybe deprived of his/her property except for public necessity, legally recognised, required on condition of prior and just compensation; however, property expropriations incurred in the public interest, for failure or lack of development, and properties registered, are governed by law.”
• Paragraph 11: “All of Gabon has the right to freely choose his domicile or residence anywhere in the country and to engage in all activities, subject to respect for public order and law.”

Gabon does not have a clear land policy. The closest form of land policy dates back to 1911 which still forms part of the land legislation.[1] Most land belongs to the state and there is no cadastral plan in some parts of the country aside from Libreville. The country also suffers from a lack of a proper system of transfer of title deed/land ownership, which affects poor communities as without proper land/property ownership, households lack collateral to access credit. To overcome this situation, the NIMP, under Action 146, plans to reinforce the legal framework for the construction and housing sector. This plan aims to create a legal framework and incentives in order to facilitate access to private property development and construction activities by defining and putting in place clear rules and regulations.

[1] AldenWily (2012). Les Droit Foncier au Gabon-Faire fasse au passé et au present, FERN.

Opportunities

Gabon offers many business and financial opportunities for investors regardless of its small population. The country has one of the highest GDP per capita rates in Africa, which is an advantage for investment in the country. In the last decades it has attracted and continues to attract French retailers such as Carrefour super markets and Casino. There is also a new shopping centre called Le Grand Marché de Libreville soon to be completed on a 7-hectare land parcel in Libreville. The Grand Marché project is financed by the Swiss group Webcor at the value of roughly US$49 million and the construction is conducted by the same company. This project has not been completed yet.

Up until recent years Gabon has enjoyed a relatively stable economic relationship with its former colonial power. However, due to changes in the global economic arena, Gabon has broadened its economic and diplomatic partners to other emerging powers from Asia and Africa who possess the financial weight and expertise to boost Gabon’s economy away from oil dependencies.

In 2012, Gabon also introduced a new system of ‘guichet unique’ (one stop shop) with the aim to simplify the procedure of land purchase and reduce the time to acquire a title deed from the initial 10 years to 180 days and reduced administrative steps from 134 to seven.

In addition to the Angondje District Development project, there are also other similar projects in the pipeline with the same approach and addressing the same issues with the same standards. These projects are Nkoltang, located on the Route national 1, situated 5 km east of Nkok; this project is yet to begin. The other urban district project in the pipeline is the Lambarene situated in the river transport hub—the aim of this project is the construction of 1000 units.

Private investment in development projects is also expected to increase gradually over the next 20 years due to government commitments to make the country an “emerging’ economy”. However, one of the biggest challenges remains the affordability and accessibility to housing for low income earners/poor unemployed communities. The policies in place do not clarify the strategies that will be utilised in order to improve access to adequate and safe shelter for all Gabonese. However, the government strategy to boost the property market and housing sector is beginning to show positive signs by attracting foreign investment.

Sources

African Development Bank Group (2011). Gabon: Country strategy paper 2011- 2015.

African Development Bank Group (2016).  Joint 2016-2020 Country strategy paper (CSP) and Country portfolio performance review (CPPR) Report.

The Borgen Project (2013). Oil, inequality and youth in Gabon. 14 July 2013. https://borgenproject.org/oil-inequality-and-youth-poverty-in-gabon/  (Accessed 24 June 2018).

GlobalSecurity.org. “Gabon-China Relations.” www.globalsecurity.org/military/world/africa/gb-forrel-prc.htm (Accessed 28 Aug 2018).

Habitat World Map. www.wm-urban-habitat.org/eng/gabon/#Social-and-economic-aspects  (Accessed 28 Aug 2018).

IMF (2018). Press release No 18/255. IMF Staff Completes Review Mission to Gabon. 25 June 2018. https://www.imf.org/en/News/Articles/2018/06/25/pr18225-imf-staff-completes-review-mission-to-gabon (Accessed 27 Sept 2018).

International Monetary Fund (2017) Country Report No. 17/408.28 Dec 2017. https://www.imf.org/en/Publications/CR/Issues/2017/12/28/Gabon-First-Review-of-the-Extended-Arrangement-under-the-Extended-Fund-Facility-Requests-for-45529 (Accessed 27 Sept 2018).

Oxford Business Group (2016). The Report: Gabon 2016. https://oxfordbusinessgroup.com/gabon-2016 (Accessed 27 Sept 2018).

Oxford Business Group (2018). “Bridging the gap: Several new projects will help to reduce the housing deficit.” http://www.oxfordbusinessgroup.com/overview/bridging-gap-several-new-projects-will-help-reduce-housing-deficit-0. Accessed 28 Aug 2018.

Plan strategic Gabon Emergent (2012). Vision 2015 et orientation strategiques 2011 – 2016.

Programme des Nations Unies pour les établissements humains (2013). Etude diagnostique pour l’élaboration d’une stratégie national d’habitat et de développement urbain au Gabon.

U.S. Department of State Bureau of Economic and Business Affairs (2017). “Gabon: 2017 Investment Climate Statement.” https://www.state.gov/e/eb/rls/othr/ics/2017/af/269735.htm (Accessed 27 Sept 2018).

World Bank (2018) Doing Business: Gabon. http://www.doingbusiness.org/ (Accessed 28 Aug 2018).

Worldometers. “Gabon population.” http://www.worldometers.info/world-population/gabon-population/ (Accessed 28 Aug 2018).