Faced with the severe crisis affecting the extractive sector in Gabon, against a backdrop of marked drop in the price of raw materials (particularly manganese, but also of course oil, the country’s leading export product), a number of service companies are facing serious financial difficulties.
Much has been written about the receivership of the Moroccan company Satram, but more recently it is the SGS companies (owned by the Bongo family) or the French multinational Bolloré which are in difficulty. It must be said that many of their clients, namely the largest mining and oil companies active in the country, have found themselves forced to suspend their contracts while waiting to fully resume their activities.
These periods of adjustment are common in the extractive industries whose fate is closely linked to the price of a particular raw material. What is striking about the current crisis is the reaction of service companies who make at least unusual demands on their clients, whom they accuse of forcing them to fire. Some go so far as to demand payment of the salaries of their employees, which they say they are unable to keep.
Subcontractors in the extractive sector should be aware of the economic law which has always governed their profession. The mining and petroleum industries are cyclical and depend on commodity prices, traditionally characterized by high volatility. It should be noted that these companies charge the price of their services up to, at least, three times more expensive than in other sectors, precisely in anticipation of this volatility. So they wasted their fat years. Is it the responsibility of mining and oil companies if their service providers have mismanaged their cash flow?
More deeply, the extraordinary demands of the service companies reveal all that is wrong with the Gabonese extractive system. It is true that the global environment has deteriorated significantly, but certain ingredients specific to Gabon further worsen the situation, at three levels: a business climate in free fall, an economic culture based on assistance and a national policy. management of human resources unsuited to the economic realities of a country in competition with the rest of the world.
The difficulties of the business climate in Gabon weigh heavily on the performance of the extractive sector, as evidenced by a recent article published in Jeune Afrique: persistent uncertainties over the exercise of power at the top of the State, continued deterioration of the business climate, unfavorable fiscal policy, production quotas imposed by OPEC or even new CEMAC regulations on foreign exchange – which should apply from January 2021 to the extractive sector. All the ingredients are indeed united to provoke an unprecedented crisis.
This is where the question of the human resources policy has been inspired by the Gabonese government for decades. Gabonese laws, based on an archaic labor law copied from France in the 1960s, run counter to any adaptation to the commodity cycle. This labor code excessively protects employment, to the detriment not only of the agility of companies in the sector, but also of the creativity of their staff and the long-term dynamism of Gabonese talents.
If the problem is deep, the solutions exist. Of course, it is desirable that the Gabonese government regain some common sense. It can, for example, liberalize the labor market to allow companies to adapt in times of crisis, while offering professionals who find themselves on the job market to continue training. Above all, however, there is an urgent need to rethink the way in which players in the Gabonese economy seem to confuse extractive companies with insurance companies.
