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China-reliant Gabon finds oil-free, green future in its forests

Most countries sent their finance ministers and central bank governors to the IMF's spring meetings in Washington, but Gabon - the tiny country on the west coast of Central Africa - sent its environment minister.

"They said this has never happened before. Gabon is just different," said Lee White, whose portfolio includes forests, oceans and climate change, after the meetings. "We spent a lot of time talking about climate financing."

With more than 60 per cent of its revenues coming from oil and manganese ore, Gabon is hoping to replace its petroleum income by strategically positioning its forests, which cover more than 80 per cent of the country.

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In 2019, more than 60 per cent of Gabon's US$6.43 billion in exports went to China, followed by Singapore, South Korea, Malaysia and India. Crude petroleum made up about 66.9 per cent, followed by manganese ore at 20 per cent. Sawn wood and veneer sheets accounted for just 8 per cent of overseas trade.

When Covid-19 struck in 2020, Gabon's exports fell to US$4.34 billion, according to the Observatory of Economic Complexity. China remained the country's biggest destination for its crude petroleum, minerals and wood products.

Gabon's former president Omar Bongo Ondimba predicted a future without oil and implemented drastic measures to strike "a balance between conservation and exploitation of timber".

These included laws creating 13 national parks, which led to the cancellation of more than a million hectares of forest concessions.

When Ondimba, the country's second president who took office in 1967, died in 2009 his son Ali Bongo was elected. His first act was to ban the export of timber logs, from January 2010.

"When he banned logs, everybody said he was mad," White said.

Then French president Nicolas Sarkozy flew to Libreville to protest against the ban, which led to the closure of many French-owned companies in Gabon.

It was not until White joined the ministry in 2019 that the export ban was rescinded, but with a requirement that companies process the wood before exports. The intention was to shift Gabon from a source of cheap raw materials to a supplier of finished products.

Former president of Gabon Omar Bongo Ondimba implemented drastic protection measures for the country's forests, including 13 national parks. Photo: EPA alt=Former president of Gabon Omar Bongo Ondimba implemented drastic protection measures for the country's forests, including 13 national parks. Photo: EPA>

White said cutting trees to export them as logs would take forestry to just 8 per cent of the economy. However, 92 per cent of the forest economy lies in the transformation of timber into furniture, tables, doors, plywood, and veneer sheets.

"The way we do it is to create a balance between conservation and sustainable development. Currently 22 per cent of our land is protected while 27 per cent of our ocean is protected," he said.

"This way we made the forest more precious."

White said earnings from Gabon's forest economy had quadrupled since the requirement was introduced - from US$250 million a year to US$1 billion a year.

Gabon, with a population of about 2 million people, is in a small league of six or seven countries that absorb more carbon dioxide than they emit, making them "carbon sinks". Also in the club are Guyana, Suriname, the Republic of Congo, Bhutan and Papua New Guinea.

Since it is helping to curb the worst effects of climate change, Gabon believes high emitters such as the United States, China and many European countries should offset their carbon emissions by paying it to keep its forests intact.

Last year, the Norwegian fund Central African Forest Initiative (CAFI) paid Gabon US$17 million to do just that, in the first tranche of a US$150 million deal with the UN-backed fund.

Libreville also passed a law last year allowing Gabon to trade carbon credits. The country estimates its rainforest sequesters roughly 140 million tonnes annually, making it a net absorber of more than 100 million tonnes of carbon each year.

Gabon is a "carbon sink", absorbing more carbon dioxide than it emits. Photo: Jevans Nyabiage alt=Gabon is a "carbon sink", absorbing more carbon dioxide than it emits. Photo: Jevans Nyabiage>

Gabon has recently started wooing tourists to its national parks, building eco-tourism villages and promising visitors forest elephants, gorillas and buffalo in one area called the "Last Eden".

The country is home to several threatened animal species, including forest elephants, leopards, buffalo and giant pangolins. It also has the Kevazingo tree, said to provide the hardest and most expensive wood, which is protected from logging and exports. The Okuome tree, on the other hand, is widely used for making plywood.

At the centre of Gabon's forest economy are a dozen Chinese companies that own forest concessions and more than 30 others that process the wood. They tend to control the whole supply chain - felling trees from their concessions which they then transform into timber products.

The Chinese companies, operating more than 6 million hectares (14.8 million acres), account for more than half of Gabon's commercial logging areas, controlling about 40 per cent of concessions.

"A lot of the time Chinese companies have bought forest concession rights from Gabonese companies," White said.

To accelerate investments in timber processing industries, Gabon has set up special economic zones in partnership with Arise Group, offering several tax incentives for investors.

The Nkok special economic zone - about 30km (18 miles) east of Libreville - houses 88 companies, out of 115 registered to do business there. One third are Chinese-owned, while others have investors from India, Turkey and Malaysia.

Indian companies, which are the second-biggest group of investors in wood processing at the Nkok zone, do not log or own forest concessions but instead buy their timber from other firms.

In contrast, European companies concentrate on logging and sell their wood to other companies for processing.

Mohit Agrawal, deputy director general at Gabon Special Economic Zones, said the next major focus was to make furniture for export through its Akiba brand.

Agrawal said the zone was wooing companies, including Chinese firms, to set up furniture factories for export. So far, businesses in the zone had invested between US$700 million and US$1 billion, while the developer had invested US$500 million, he said.

While China is Gabon's biggest market for wood, it also exports to Europe. Shuang Sheng Wood, one of the Chinese companies operating from Nkok, processes veneer sheets for India, Europe and the US.

Zedd Xu, manager at Shuang Sheng Wood factory, says his operation in Gabon employs hundreds of workers. Photo: Jevans Nyabiage alt=Zedd Xu, manager at Shuang Sheng Wood factory, says his operation in Gabon employs hundreds of workers. Photo: Jevans Nyabiage>

Shareholder and manager Zedd Xu said the company had invested US$20 million in the factory, which started operations in 2020 and has 300 workers. Gabon's abundant Ukuome tree logs "is good for the wood business," he said.

"We used to import wood to China from Guinea and Equatorial Guinea but since restrictions on exports were imposed, we decided to set up a company in Gabon near where we can get raw materials."

Xu and his fellow investors have two other companies within the Nkok special processing zone and are building another timber factory - known as African Elephant - which they say will be Gabon's biggest plywood factory, able to process 40,000 cubic metres (1.4 cubic feet) of logs.

"We plan to buy forest concessions to supply our factories," Xu said.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2022. South China Morning Post Publishers Ltd. All rights reserved.