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Extent of U.S. Investment in Selected Industries.-U.S. Direct Investment Position Abroad on an Historical Cost Basis-1993—Continued
[Millions of U.S. dollars]
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Income, Production and Employment:
Real GDP (1989 prices) 2
Unemployment Rate (pct.)
Money Supply (M2)
Exports to U.S.
1,883.0 5543.2 741.1 5 20.0 N/A
Imports from U.S.
940.6 835.2 48.2 168
12 3,358.4 119.0
N/A 3,442.0 463.7
Key Economic Indicators-Continued
Trade Balance with U.S.
11994 figures are all estimates based on available monthly data in October 1994. GDP at factor cost.
Figures are actual, average annual interest rates, not changes in them.
Figure is based on January-June data.
1. General Policy Framework
The Gabonese economy is dominated by petroleum and mining production, which together contribute nearly 40 percent of gross domestic product (GDP). Oil is the key variable, as the petroleum industry generates 80 percent of Gabon's export earnings and nearly half of government revenues. Although most finished goods are imported, there is some manufacturing in Gabon including a brewery, an oil refinery, and factories which produce plywood, plastics and cigarettes. The remaining manufacturing is concentrated in the initial transformation of Gabon's raw materials (e.g., a uranium "yellowcake" plant located adjacent to the uranium mine at Mounana in southeastern Gabon, and a petroleum refinery located at Port Gentil). The civil service accounts for over 10 percent of GDP by itself. A wide range of tertiary activities ranging from banking to legal and accounting services and business consulting also figure prominently in the economy.
Since oil prices weakened sharply in 1986, the Gabonese government has been in fiscal crisis. Large deficits have led Gabon to turn to foreign creditors for financing. Following years of arrears accumulation and the January 1994 devaluation of the CFA (African Financial Community) franc, Gabon reached an agreement with the IMF in March 1994 on a stand-by arrangement and a compensatory and contingency financing facility. This was followed by Gabon's sixth Paris Club debt rescheduling, a ten-year agreement with the London Club of private creditors, a World Bank economic recovery credit, and a credit from the African Development Bank for general budget support. Despite these arrangements, government revenue remains depressed and expenditures have not been significantly reduced.
Monetary policy is tight, exercised through adjustments in the Central Bank discount rate, ceilings on net lending, and adjustments in bank reserve requirements. Given the arrangements of the Franc Zone, monetary policy is not used as a tool for sectoral policies and is largely neutral in its effect on the competitiveness of U.S. exports.
2. Exchange Rate Policy
As a member of the CFA Franc Zone, Gabon has no flexibility in monetary and exchange policies. The value of the CFA franc is currently set at 100 CFAF per French franc. While this mechanism assures exporters and importers of the convertibility of the currency, it ensures a fixed exchange rate vis-a-vis the French franc only. Thus, it discriminates in practice against imports from outside France in that prices for French goods can be more readily anticipated and transactions with with
Although the CFA franc is fully convertible, the Central Bank exercises administrative control over foreign exchange transactions. Outflows of foreign exchange must be justified with an invoice or other contractual document, which must be accepted by the the Central Bank before the commercial bank may complete the transaction. Generally, these controls appear to be little more than an administrative formality, and there are no known instances where exchange controls have been used to impede the operations of U.S. firms.
3. Structural Policies
The Gabonese government levies a personal income tax, a corporate income tax, a value-added tax and customs duties on imports. The government draws a major component of its revenues from oil royalties. Newly founded small- and mediumsized businesses (SMBs) routinely receive tax holidays for up to five years, and the government uses similar incentives without discrimination by nationality to attract oil exploration companies. The personal income tax is widely evaded. Customs duties have recently been lowered, but here too, collection is inefficient. In the past, some observers estimated the annual loss in revenues due to fraud and smuggling to be as high as $100 million.
The effects of the devaluation of the CFA franc in January 1994 and the implementation of the newly enacted budget law have yet to be fully determined. Inflation surges prompted the government to impose price controls on certain staples at the retail level at the beginning of 1994.
4. Debt Management Policies
Gabon has experienced a sharp increase in its indebtedness since the international oil price drop of 1986. External debt rose from about $1 billion in 1985 to $3.5 billion in 1993, or 96 percent of projected 1994 GDP. The country was in the grips of stagflation and the internal arrears of the government threatened to paralyze the domestic financial system. Gabon rescheduled its private debts with the London Club in 1987 and in 1994. It has been to the Paris Club six times, most recently in April 1994.
Faced with recurrent domestic political crises since late 1989, the government considered itself unable to implement necessary fiscal reforms. It suspended debt repayments on most foreign obligations in early 1990. Its history with the Paris and London Clubs is checkered, sometimes difficult. The Gabonese government was unable to meet obligations under the September 1991 Paris Club, and the agreement was "pulled back" a year later.
Negotiations with the IMF have often been protracted, with key issues being the government's lack of fiscal discipline, the need for parastatal reforms, and questions surrounding the accounting for the country's oil revenues. The January 1994 decision of the CFA countries to devalue the CFA franc was a basis for an IMF standby arrangement. Official creditors took a relatively firm stand at the Paris Club, rescheduling principal but requiring payment of previously deferred Paris Club arrears over 12 months. As of October 1994, the government had paid its first tranche of 30 percent of deferred Paris Club arrears. The London Club rescheduled loans for ten years with a two-year grace period.
5. Significant Barriers to U.S. Exports
Decrees, pursuant to the IMF standby, have lifted prohibitions against importing mineral water, household soap, cooking oil, cement and sugar. The prices paid for wheat and rice are subject to government approval. The wheat market is under the control of a French firm, SETUCAF, which is principal shareholder in Gabon's only flour mill and which has an exclusive right to import wheat. The rice market is more open, with several Asian brands available. U.S. rice has been imported successfully, but faces a price disadvantage which excludes it from the mass market. Technical and other standards tend to be drawn directly from the relevant French standards. Telecommunications equipment, for example, has in the past been restricted to French brands due to a perception in the Telecommunications Ministry that only French equipment could be used in Gabon. Perceptions such as these can be successfully challenged, although factors such as language, distance, culture, and historical ties to France remain as practical barriers to U.S. trade.
The Gabonese government has not imposed intrusive or discriminatory measures on the investments of foreign firms, which are the mainstay of the petroleum industry. Gabon signed the MIGA convention on April 15, 1994.
The Gabonese government does not always adhere to competitive bidding practices, and French technical advisers are well placed to steer contracts to French firms. In the petroleum sector, the government has organized seven bidding rounds for exploration leases since the the mid-1980's, but it continues to sign contracts outside the rounds. Off-round deals are not reserved for French firms, however, and U.S. firms have struck off-round exploration deals as well.
Customs procedures are slow and cumbersome, particularly since the introduction of a new computer system. The burden, however, affects all suppliers equally, regardless of nationality.
The Gabonese government passed a revised budget law in June of 1994 which incorporates many new standards and practices relating to the country's financial activities, but the implementation and effects of the new law have yet to be determined.
6. Export Subsidies Policies
Gabon's exports are almost exclusively raw materials, subject to export taxes rather than benefiting from subsidies. The 50 percent devaluation of the CFA franc, which occurred on January 12, 1994 was in part a measure designed to make exports more competitive.
7. Protection of U.S. Intellectual Property
Gabon is a member of the World Intellectual Property Organization (WIPO) and several international intellectual property rights conventions including the Berne
Convention for Protection of Literary and Artistic Works, the Paris Convention for
a. The Right of Association.-Since 1990 reforms ended the single party political system in Gabon, the Gabonese Union Confederation (COSYGA) no longer has an exclusive right to represent workers. Unions throughout the economy have proliferated; in some cases two or more unions compete for members in the same industry. In addition, a second trade union confederation, the Gabonese Confederation of Free Unions (CGSL) now competes with COSYGA and has made significant inroads as a collective bargainer for industrial employees.
b. The Right to Organize and Bargain Collectively. With the promulgation of the Constitution of 1991 the right of collective bargaining was confirmed. Before its for. mal passage, Gabonese workers had begun to bargain with management outside the COSYGA framework as early as mid-1990.
c. Prohibition of Forced or Compulsory Labor.-The Constitution of 1991 guarantees the right to employment. The Labor Code of 1978 forbids forced labor. However, credible sources report cases of prisoners, mostly African expatriates, being forced
d. Minimum Age of Employment of Children. --The Labor Code of 1978 sets a minimum age of sixteen years for employment, UNICEF and other organizations have reported instances of abuse of children as domestic or agricultural help. Non-Gabonese children are most at risk.
e. Acceptable Conditions of Work.-Conditions of work in much of the formal sector in Gabon are reasonably good. Health and safety standards are in place, but not always observed; it is not uncommon to see workers without hardhats or protective footwear in some industrial plants. Most of the firms operating production facilities in Gabon are subsidiaries of, or are otherwise associated with, European or U.S. companies and tend to follow European or U.S. standards. Conditions in the informal sector and in Gabonese SMBs are less uniform and less favorable for the work. ers. The Gabonese authorities do not exercise effective monitoring of working conditions, primarily for lack of enforcement capability.
f. Rights in Sectors with U.S. Investment.-U.S. investment is almost exclusively in the petroleum sector. Worker rights, working conditions, and adherence to safety standards are generally better in U.S. firms than elsewhere in the economy.
Extent of U.S. Investment in Selected Industries.-U.S. Direct
(Millions of U.S. dollars]
Food & Kindred Products
Source: U.S. Department of Commerce, Bureau of Economic Analysis
Income, Production and Employment:
474,600 498,300 523,200 Real GDP Growth (pct.)
5.0 GDP (at current prices) 1
3,008,800 3,949,000 5,030,000 By Sector: Agriculture
1,461,005 1,887,633 N/A Energy/Water
63,130 71,082 N/A Manufacturing
261,538 359,361 N/A Construction
105,216 126,369 N/A Rents ....
N/A Other Services
941,036 1,259,739 N/A
481,408 775,852 1,056,300 Real Per Capita GDP (1975 base)
511 Labor Force (000s)
5,900 Money and Prices: Money Supply (M2)
360,690 461,347 N/A Base Interest Rate (pct.)
35.0 Personal Saving Rate
22.5 Wholesale Inflation
510.8 645.6 790.9 Exchange Rate (USD/Cedi) Official .......
1/520 1/780 1/1060 Parallel
1/545 N/A N/A Balance of Payments and Trade: (USD millions) 3 Total Exports (FOB)2
986.3 1051.0 490.9 Exports to U.S.
96.4 208.6 117.9 Total Imports (CIF)2
622 Imports from U.S.
123.8 214.5 253.0 Aid from U.S. ......
50.0 Aid from Other Countries
N/A Debt Service Payments (paid)
N/A Gold and Foreign Exch. Reserves
N/A Trade Balance 2
-470.7 -677.0 - 131.1 Trade Balance with U.S.
- 27.4 - 5.9 - 135.1
* 1994 data is for six months.
Ghana operates in a free market environment under a civilian government headed by elected President, Jerry John Rawlings. Rawlings headed a “provisional” regime Written constitution, was restored. A popularly-elected parliament-absent opposipresidential vote was fraudulent—took office in January 1993. The executive branch before enactment. The judiciary, in particular the Supreme Court, acts
as the final takes the lead in promulgating legislation which requires parliamentary approval arbiter of Ghanaian laws. As an indication of its independence, the
Supreme Court rendered several decisions in 1993 in favor of parties bringing suit against the government's executive branch.