Could Gabon Be on the Forefront of Africa's Next Big Oil Boom?
WHY YOU SHOULD CARE
This Western African nation’s success or failure could dictate Africa’s palm oil plans.
By Laura Secorun Palet
Sitting on the terrace of his presidential palace overseeing Libreville’s beachfront avenue, Ali Bongo contemplates the growth of Gabon’s capital. “Everything you see today wasn’t here 10 years ago,” says Gabon’s 59-year-old president, sporting a perfectly tailored camel suit and a gleaming Rolex watch.
Libreville’s expansion has been fueled by Gabon’s decade-long boom in oil production. But with oil prices plummeting and reserves declining, the central African country is scrambling to find a less volatile source of income. Bongo’s solution? Palm oil. Gabon’s government has partnered with agricultural giant Olam to set up the largest palm oil plantation in Africa — over 82,000 hectares. The move promises to generate thousands of jobs, millions in revenue — and some serious controversy.
Nobody doubts the country needs to diversify its economy. Despite being a middle-income nation with fewer than 2 million citizens, poverty remains high and youth unemployment is at 36 percent. Employment is the only way to bring the country’s people out of poverty, says Bongo, who is keen to deliver results after his 2016 re-election was marred by accusations of fraud and violent street protests. But palm oil comes with its own set of ghosts. After decades of mass production in Malaysia and Indonesia, the industry has become synonymous with deforestation, labor exploitation and chimpanzee murder. Showing Gabon can do better will be no easy feat.
I refuse to hear that sustainability and economic progress are incompatible.
Ali Bongo, president of Gabon
Enter Olam’s CEO, Gagan Gupta. Based in Singapore, Olam is a giant multinational operating in 70 countries selling commodities like coffee, cocoa, rice and cotton. But Gupta’s small corner office feels like that of a high school baseball coach, with walls covered in motivational slogans like “We always strive to do the right thing” and “We dare to dream.”
“Growing palm oil does not need to hurt the environment or the workers,” Gupta says with enthusiasm. “We are proof of that.” The young CEO says Africa is the perfect place to show this can be done because it hasn’t inherited the painful practices of Southeast Asia and the oil palm is native to the continent.
Using foreign multinationals to help foster Gabon’s development is a “win-win,” argues economic analyst Emmanuel Leroueil, head of Central African operations for the Performance Group consultancy. The Gabonese government obtains access to Olam’s deep pockets and agricultural know-how while the multinational gets priority access to a new market. “It is an innovative model but it is proving successful,” says Leroueil.
Yet there is something standing in the way of Gabon’s palm oil dreams: trees. The country is the size of the U.K. and over 80 percent of it is covered in dense tropical forest, which is not only a major carbon sink but also home to hundreds of endemic species — including many protected ones like forest elephants, chimpanzees and pangolins. A diverse and fragile ecology is something many other African countries investing in palm oil — such as Cameroon, the Central African Republic, Ivory Coast and the Democratic Republic of the Congo — also share, which is why Gabon’s experiment matters way beyond the borders of the small nation.
Olam and the government say preserving the environment is their biggest priority. The company’s palm oil plantations are the first in Africa to be certified as “sustainable” by the Roundtable on Sustainable Palm Oil, and Bongo is adamant about Olam’s activities not hurting Gabon’s precious biodiversity. “I refuse to hear that sustainability and economic progress are incompatible,” he says. “We have planted thousands of hectares of palm oil without touching our forest!”
That’s not exactly true. Visiting Olam’s 20,000-hectare palm oil plantation in Awala, a couple hours’ drive inland from Libreville, signs of logging are everywhere. Huge piles of timber stand by the side of dirt roads. Among the palm trees, one can still see the muddy tracks of bulldozers. When asked about it, Olam admits to chopping trees to make room for the plantations but says they make up for the loss by identifying and protecting the most biologically rich stretches of the forest — what they call “High Conservation Value” areas.
Not everybody buys into this theory. Marc Ona Essangui, a renowned activist and executive secretary of the Gabonese NGO Brainforest, says “sustainable palm oil” is an oxymoron. Essangui insists that “Olam is cutting down more trees than they’re allowed to, and their pesticides are filtering into the water stream of neighboring communities.”
Despite the ecologist’s criticism, Bongo is committed to seeing Gabon become a palm oil pioneer. So far, the industry has already generated 7,700 jobs for locals and, despite the drop in oil revenue, the World Bank estimates the country’s economy will continue to grow at a yearly 5 percent — thanks, in part, to palm oil.
Meanwhile, investors are slowly buying into the idea of Africa as the next palm oil frontier. Two-thirds of the vegetable oil used in sub-Saharan Africa is already palm oil and consumption is expected to grow up to 10 percent annually. Sierra Leone and Benin are also investing in its production, trusting the continent can go from buyer to exporter. Gabon’s example, whether good or bad, could set the tone for a new kind of oil rush.