Gabon's Nkok SEZ making an impact on industry and drawing in investment

Special economic zones (SEZs) have become a popular way for governments around the world to try and accelerate investment in select sectors and industries, and for its part Gabon has seen more success than most. In an effort to attract the investment that was pledged under the Industrial Gabon pillar of the Emerging Gabon Strategic Plan, an SEZ framework was legislated in 2011, with the first SEZ built at Nkok, which is around 30 km east of Libreville. “Usually it takes more than a decade to conceive and scale up SEZs, but we have achieved that in Gabon in half the time,” Jasveer Singh, business head of the Gabon Special Economic Zone (GSEZ), told OBG.

Scaling Up

The Nkok SEZ is run as a public-private partnership between the Gabonese government and Singapore-based Olam International for a total investment of $488m. It was set up through a CFA29.5bn (€44.3m) financing agreement with Ecobank and the Development Bank of Central African States. Olam’s own initial investment in the project was $240m. The Nkok SEZ started production in 2014, and, according to the GSEZ’s April 2016 monthly review, 95 companies are working in Nkok, of which 57 are industrial firms. The remaining investors include 11 residential and 23 commercial enterprises, which have acquired land but have not yet started construction, as well as four facilities service companies. According to GSEZ figures, 80% of the 600 ha in the SEZ has been sold and there are 22 industrial firms already operational, with a further 32 in the construction stage. While World Bank figures show that it can take up to 103 days to register property in Gabon, the GSEZ is promising to complete land ownership formalities within seven days, while businesses that pay in full can expect to receive their title in an average of 30 days. Total planned investments are around €1.8bn, but as of late 2016 just €378m had been completed, largely in sectors such as timber processing, steel making and chemicals.

Supportive Structures

A total of $488m (€439.9m) has been invested in infrastructure to support the Nkok SEZ, according to a February 2016 press release from the Administrative Authority of Nkok. “Logistically the Nkok SEZ is strategically located. It is the only place in Gabon that has direct access to national highway N1, the Transgabonais Railway and a waterway leading to the main sea port,” Singh told OBG. Goods will have access to the maritime port at Owendo by road (35 km), rail (21 km) and river (18 km).

A host of new facilities dedicated to Nkok tenants are under construction. A 230-metre dock is close to completion, with a 3.5-metre deep quay with capacity for 1000-tonne barges. In addition, there is 120,000 sq metres of storage, a 1500-twenty-foot-equivalent-unit (TEU) container terminal, with plans to be extended by 3500 TEUs, and a timber yard. The zone also has its own electricity supply, water production and a wastewater treatment plant. A dedicated 70-MW power plant near Libreville supplies energy through a 24-km, via a 90-kVA, high-voltage electricity transmission system with an onsite receiving station. Two water reservoirs have combined daily capacities of 6m cu metres, and a water treatment plant has a 5m cu metre capacity.

Tax Breaks & More

Investors who set up in the SEZ pay no tax for the first 10 years, after which there is a five-year phase-in period at 10%. No taxation or other penalties are incurred for repatriating funds, awarding dividends and holding property. In addition, importing industrial equipment is duty free. In comparison, companies operating outside of the SEZ pay up to 35% in corporate income tax, up to 18% in value-added tax and up to 11.25% in land taxes on built properties. According to a 2015 report by international consultancy EY, land costs $100 per sq metre in the Nkok SEZ’s industrial zone, $120 in the commercial zone and $130 in the residential zone. The main condition for receiving these benefits is that a minimum of 75% of goods must be exported. In terms of inputs, electricity is offered at subsidised rates and companies operating in the Nkok SEZ are not required to cap their foreign workforce size.

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The Report: Gabon 2016

Industry & Mining chapter from The Report: Gabon 2016