Gabon was hit by the oil price slump. Its fiscal and external balances tumbled and the previously high levels of foreign exchange liquidity followed. The political crisis that erupted after the presidential election in 2016 made things worse as worried investors triggered capital outflows.

Membership in the CFA franc currency partnership had a complex impact. On one hand, the peg to the French franc protected Gabon from a free fall of its exchange rate and inflationary pressures. Then again, it took its toll on competitiveness. Local corporates were exposed to increasing competition from companies in countries with devalued currencies.

This bad economic momentum had political consequences. The August 2016 elections were highly controversial as incumbent Ali Bongo won by a small marginby getting 98% of the vote in his home province. His challenger, Jean Ping, and other opposition parties contested the results and boycotted the December 2016 (lower parliamentary chamber) elections, which decreased the legitimacy of political institutions.

Scarcer policy options implied several deteriorations of the business climate. With lower FX reserves (1.8 months of imports currently, compared to 10 months in 2015), debt payment was made increasingly difficult. The rule of law deteriorated as well, with several threats reported on the protection of foreign investors.

The business environment is now among the worst in the region, with serious impediments to strong, sustainable growth. The World Bank’s Doing Business 2019 survey ranks Gabon 169 out of 190 countries assessed, below Comoros, Afghanistan and Burundi but above Angola, Bangladesh and Congo Republic. The survey suggests Gabon is weak in terms of registering property, and trading across borders, and makes the life of taxpayers quite difficult. Moreover, the protection of minority investors is weak and access to power is a key bottleneck. Contract enforcement and insolvency resolution can be expensive and time consuming.