Incentive for foreign direct investment in Gabon

By Jean-Pierre Bozec, Project Lawyers
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Gabon’s government is keen to continue attracting foreign direct investment (FDI). In July 2012, Gabon released President Ali Bongo Ondimba’s Strategic Plan for an Emerging Gabon (PSGE), an ambitious blueprint for developing Gabon into an emerging economy by 2025, by diversifying the country away from its reliance on energy exports and transforming Gabon into an internationally competitive investment destination. The plan calls for increased public and private investment, modernized infrastructure and improved human resources. The government understands that FDI will help it achieve its development goals.

JEAN-PIERRE BOZEC Project Lawyers律师事务所 管理合伙人和创始人 Managing Partner and Founder Project Lawyers
JEAN-PIERRE BOZEC
Project Lawyers律师事务所
管理合伙人和创始人
Managing Partner and Founder
Project Lawyers

The Gabonese government has taken several measures to strengthen public investment management and the transparency of infrastructure development. Priority sectors for the government include transportation, housing, public facilities, tourism, energy, education, healthcare, ports and other large infrastructure projects. Some projects have already been completed, but due to economic difficulties in the past three years, state investment had to be reduced, so there is now a higher demand for public-private partnerships (PPPs), which are notably profitable to Chinese investors in Gabon. China became the first commercial partner of Gabon for the first time in 2017.

Compliance with international investment framework. Gabon’s 1998 investment charter conforms to Central African Economic and Monetary Community’s (CEMAC) investment regulations, providing the same rights to foreign companies operating in Gabon as to domestic firms. Businesses are protected from expropriation or nationalization without appropriate compensation that is determined by an independent third party.

The investment charter is intended to encourage and stimulate productive investments in Gabon. It serves not only as proof of the conformity of Gabon with the international treaties relating to foreign investments, but also a plan for additional general rights for invstors, such as freedom of company and its property rights, transparency of the business law by virtue of the authorization of the OHADA (Organization for Business Law Harmonization in Africa), transparency of social laws, independence of justice, non-discrimination between nationals and foreigners, free conversion of the local currency, free transfer of profits in accordance with the foreign CEMAC exchange regulations, and a tax system with taxation rates according to international standards.

Thanks to recently concluded PPPs, Gabon remains a key player in the economy. The government is keen to comply with its obligations, but also expects more and more transparency from investors, and their compliance with obligations, too.

Foreign investors, including Chinese entities, are safeguarded without any discrimination. Recent public announcements confirm that Chinese construction companies are successful, as they were recently granted approvals for the construction of several new infrastructure projects. Other discussions on state projects and financings are also ongoing as local needs remain important.

Gabon is a member country of OHADA, which has issued uniform modern laws on general business, arbitration, accounting, enforcement procedures, bankruptcy, commercial corporate, co-operative, security interests, and carriage of goods by road. The organization has also set up a common court of justice and arbitration.

Foreign investment in Gabon is also subject to local law. While a foreign investor can usually benefit from rights similar to a national, including the rights to buy land, Gabonese law may require local participation in certain limited sectors (e.g., petroleum and mining).

Industrial promotion and incentive for certain sectors and projects. The PSGE requires the government to launch programmes to develop sectors of activity outside of traditional oil interests. Certain sectors such as oil & gas, mining, forestry, PPPs, social housing, agriculture and tourism have specific investment codes and regulations to encourage investment through specific customs and tax incentives.

According to the 2018 Finance Act, upon approval by a specific Gabonese investment commission, other projects can however enjoy temporary derogations from value-added tax at the standard rate of 18%, from corporate income tax at the standard rate of 30% on net profits, and from the 20% withholding tax for distribution of dividends, if the project: (1) involves investment of a minimum of 10 billion CFA francs, (US$19 billion); (2) creates a minimum of 100 new jobs for Gabonese; (3) needs the establishment of a corporate seat in Gabon; and (4) does not benefit from other incentives under other Gabonese regulations.

A Special Economic Zone (SEZ) – similar to the free zone with legal, tax and customs incentives and facilities at Nkok in the nation’s northwest, erected and operated by Olam Group – is aimed at attracting investment for development of exports in the timber sector and other sectors such as agro-business, heavy industry, and mining transformation. It is such a success that it has led to a recent extension of the SEZ area. Another similar SEZ project is also under construction in Port-Gentil for activities related to exportation as well as petrochemicals and oil.

Free foreign exchange for current international transactions. Gabon is a member of CEMAC and the Bank of Central African States (BEAC). The other members in these organizations are Cameroon, the Central African Republic, Congo-Brazzaville, Equatorial Guinea, and Chad.

The CFA franc is convertible and tied to the euro. Foreign investors have the option of opening local bank accounts in CFA francs, US dollars or euros, when authorized to do so by the minister in charge of economy. There is no difficulty in currency exchange, with the main commercial banks providing such services.

There are no legal restrictions on converting or transferring funds associated with an investment, including the inflow or outflow of funds for remittances of investment capital, earnings, profits, etc., except for certain declarations or authorizations for certain transactions (e.g., direct investment declaration, and authorization for borrowing money outside CEMAC, trade of securities, and gold transactions).

Jean-Pierre Bozec is the managing partner and founder of Project Lawyers, an independent leading business law firm in Gabon. He has wide experience in projects and project financing throughout North, West and Central Africa. He can be contacted on +241 07 51 48 26 or by email at jpbozec@project-lawyers.com / jpbozec@gmail.com