The country began efforts to increase the presence and participation of local firms in the hydrocarbons sector in 2011 with the introduction of its Local Content Law, following a comprehensive assessment of the domestic industry and study of international best practices.
Another key legislative feature is the definition of indigenous companies as entities registered in the country that are at least 60%-owned by locals and where Gabonese employees comprise at least 80% of the workforce. Such companies are preferred by the government in awarding rights for the exploitation of marginal fields. They are also subjected to a lower corporate tax rate and are provided concessionary terms for the import of equipment and machinery. An example is Stream Oil Owali, a 100% Gabonese-owned company that operates marginal on- and offshore assets in Port Gentil that had been divested by TotalEnergies and Perenco.
This has yielded a twin benefit for the domestic industry. First, international oil majors that wish to operate marginal oil fields in Gabon must engage domestic firms, thereby generating employment opportunities and service contracts for Gabonese workers and firms. Secondly, it encourages local companies to adopt the latest technologies required to reverse declines in production in mature oil fields, helping them to acquire the technical and digital skills needed to move up the oil and gas value chain. To facilitate this, the government has implemented a series of innovative local content initiatives, including the creation of a fund to finance local companies in the hydrocarbons industry. The fund provides financial support to local companies to help them compete with international companies for industry contracts. The government has also been working on developing a database to monitor the progress of local companies in the industry.
Demographics are a major factor driving the country’s local content policies. Gabon boasts a fast-growing population, with more than 50% of its citizens below 16 years of age. While the Gabonese economy scores higher than its regional peers in female workforce participation, the unemployment rate among women is still twice as high as among men. Despite its sizable youth population, a lack of technical expertise widens the skills gap and it is estimated that two-thirds of all vacancies for Gabonese workers remain unfilled. Historically, the public sector has employed more than half of the country’s workforce, but ensuring employment for future generations requires the expansion of the private sector and higher female participation in the workforce.
But plans are afoot to address these issues, with the oil and gas industry at the heart of the solution. Authorities are implementing affirmative action policies to increase the participation of women and youth in the industry, including granting scholarships to female students to study engineering and other STEM-related fields. The government is also developing and subsidizing vocational training programs to equip job-market entrants with the necessary skills to work in the industry. Incentives are also being offered to companies working in logistics and infrastructure to help develop skills in ancillary services. These efforts are set to dramatically improve Gabon’s importance as a regional logistics hub and trade conduit.
All this and more will be further unpacked in Energy Capital & Power’s upcoming market report, Energy Invest Gabon. Keep following for more information about this exciting report!