Chinese firms help Gabon progress

On the outskirts of Libreville, where women sell fresh fruit beneath palm trees and beach umbrellas, time seems to stand still.

Locals carrying baskets and boxes on their heads amble along in the stifling afternoon heat that blankets the Gabonese capital. Traffic slows to a crawl on narrow streets hemmed in by dilapidated buildings whose architecture reflects the country's French colonial history.

Like the wild-haired children who flop listlessly in the lee of whitewashed walls, it is as if progress has run out of steam here and staggered off to find a patch of shade.

In the decades after the slump in oil prices in the 1980s hit Gabon's petroleum-reliant economy, it was like this everywhere, locals say. National momentum slowed, and the country even began to slide backward under the weight of debt.

Infrastructure that was already inadequate became run down, and plans for new infrastructure and upgrades were delayed and delayed again.

The neglected suburbs on the periphery of the city are a reminder of what was once the norm, and what might always have been, if China had not come to Gabon.

In the past decade, Libreville's city center and coastal areas have been rejuvenated, and China's hand in making that happen is everywhere to be seen. The contrast between the old urban areas on the fringes and the city center is profound.

The once static skyline of the central business district is now populated by cranes, each one hanging eagerly over buildings under construction.

The city's foreshore is now a massive construction site, fenced in with billboards that are plastered with images of the swish hotels and marinas and shopping malls and skyscrapers to come.

The developers' logos are displayed in French, but this is merely a courtesy, a translation of the Chinese characters that loom larger still. Names such as China Harbor Engineering and Sinohydro stand out against the collage of faded posters from last century advertising products from Paris.

In a walled compound on the outskirts of the capital, just off a rutted dirt road, Yang Yi pores over a map of the country. He taps Libreville, where more than a third of the country's 1.6 million residents live. His finger moves south, to where Port-Gentil, the second-biggest city, and the country's only deepwater harbor, straddles the coast.

There has never been an overland route that connects the two centers of population and commerce. Hundreds of kilometers of seemingly impassable jungle and marshland stand between them.

Yang, chief business representative in Gabon for the state-owned China Road and Bridge Corporation, says that is about to change.

In March, CRBC began work on the first stage of a road and bridge project that will eventually unify Gabon. Few feats of infrastructure past or present can match its potential impact on the country.

"For years Gabon has dreamed of this," Yang says. "Before, the only way to get to Libreville from Port-Gentil was by boat or by plane. The ships are slow and unreliable. The flight costs almost as much as flying to a neighboring country. Port-Gentil is the center of the oil and gas industry, and the country depends on that industry. This project, our project, is the most important project happening in Gabon right now."

Worth $600 million, 95 percent of the funds needed for the road's construction were financed by a 20-year, Chinese government loan with just 2 percent interest. It is goodwill, but it is not charity, Yang says. His company is making a decent profit.

"Gabon has wanted and looked at this project for 20 years, but they couldn't get it started. Companies from the US and EU did studies, but their prices were higher and they did not offer financing. We came here and offered a reasonable solution."

In the lounge of an upmarket hotel in downtown Libreville, former university lecturer turned investment consultant Ezzel Jebbari meets a procession of clients from all over the world, including some from China.

The word in local business circles is that the Moroccan-born economist has the ear of Gabon's president, Ali Bongo Ondimba, and Jebbari does not deny it.

China has brought much needed change to Gabon, he says, adding that the developing relationship is mutually beneficial.

"I'm an economist. The Chinese are not losing money here, even on a loan with 2 percent interest. Now, a loan with 2 percent interest, you can't get that anywhere in the world. Even If you go to the World Bank and IMF, you can't get this.

"At the same time, this is a big opportunity for them (China). They need new markets and they need to help their companies. It's a good opportunity for China, but also a good opportunity for us."

But despite the clear benefits in employment, infrastructure development and knowledge transfer that Jebbari says Chinese investment has wrought, not everyone is ready to welcome the new players with open arms.

Sinohydro's spokeswoman in Gabon, Li Xiaoteng, is among those who think the relationship needs work. The Chinese state-owned utility giant she works for has completed, or is now working on, projects in Gabon worth about $1 billion; including a hydro power station 700 km outside the capital that came online last year. When construction of the power station was finished, the Chinese handed it over to a French company to run the plant, she says.

"Because of cultural differences, people here don't trust us," Li says. "We build it, and then we hand it over."

Jebbari concedes there have been some concerns about Chinese investment in Gabon, but he argues this attitude is fast fading, from the top down.

More than anything, practicality is trumping prejudice, he says.

"The most important thing about the Chinese is they deliver," he says.

On a construction site that dominates Libreville's foreshore, Wissu Ipemboussou feels the same.

The 26-year-old engineer is one of about 100 locals employed by China Harbour Engineering Company, which is about halfway through a 350,000 sq m land reclamation project worth $120 million that will transform the coastline, and eventually become the bedrock of the city's new business and entertainment district.

Ipemboussou, who used to work for a French engineering company, says Chinese companies are earning an increasingly good reputation based on solid results.

"For 50 years (after independence), we had Western companies here in Gabon," he says. "Nothing changed. Now, China is changing everything. With Western companies, if the government could not pay, the work stopped. Chinese companies finish the job. It means Western companies now have to do better and be better. Either way, it's better for Gabon."

According to Gabon government figures, China is still ranked as only the country's No 5 trading partner, behind the United States, the European Union, Australia and Malaysia.

Former colonial power France still looms large in Gabon, both in the affections of local people, and in trade and investment. About 10,000 French citizens still reside in country, and 300 French companies maintain a local presence.

But while China is still a relative newcomer in terms of foreign direct investment, Jebbari echoes Ipemboussou, saying that simply by virtue of entering the market in Gabon, Chinese companies have created increased competition that is forcing all foreign investors to offer better deals.

"It's very good for Gabon, it's good for Africans and it's very good for the Chinese," Jebbari says. "We have lots of investors now, lots of competition, and we need to be smart in choosing the best."

Chinese entrepreneur Xu Gongde, who has run a string of small businesses in Gabon for 27 years and employs about 700 locals, agrees the competition is good for the country but tough on those trying to break into the French-dominated market.

"Right now we cannot compete with the French in Gabon," he says. "This is a former French colony; their culture, their language, it's all from France. The government officials are French educated. They have most of the good resources and they have already taken the better projects. China is developing here, but it will take some time."

Sinohydro's director in Gabon, Zhang Chunxiang, says Chinese companies need to find new, international markets. He is open about the commercial advantages that come with financial backing from the Chinese government, but says immediate profits are not always forthcoming.

"Yes, we use low-interest loans to boost Chinese enterprises in Africa," he says. "But for Chinese companies, we need a longer-term vision."

Zhang says Sinohdryo aspires to attain a level of recognition and trust in Gabon that will bring the company both construction and service contracts.

"The operational side of things is much more profitable than construction. The profit margin is about 20 percent. In construction, it's about 5 percent. In China we operate many power stations, but in Africa the French operate our power stations."

Zhang, who is convinced China will increasingly win service contracts in Africa, says the key to the Chinese strategy is patience.

"Chinese companies need to go out into the world. The first step is to work hard. Then after that, we move up. It's going to take some time. We'll just work hard and keep trying to proveourselves so we can move up. Localization is our goal. We want more projects so people can know our company. We want to get on an equal footing with the Western companies."

Jebbari says Sinohydro's approach is a long-term gambit that just may work."Chinese companies know how Africans think now and, most of all, they are very patient. I dealt with an American businessman who said to me, 'Time is money.' I said to him, 'That is in America.' In Africa, you have to be patient. The Chinese have this patience. They have learned a lot."

But in the short to medium term, all stakeholders acknowledge Chinese companies still have a long way to go.

An immediate hurdle all Chinese companies say they face in Gabon is a critical shortage of skilled labor, and reluctance on behalf of many locals to undergo training. This is even though government statistics show only about 250,000 people among the country's 1.67 million population, half of which is aged 20 years or younger, has formal employment.

Government regulations stipulate 30 percent of China Road and Bridge's workforce must be locals.

"That's only on the condition we can find the skilled local workers we need," Yang says. "We can't."

Sinohydro's biggest challenge also is human resources, even though it has tried to tackle the problem proactively, Zhang says.

"We have a lack of skilled people. We offered to train some local people to become technicians with us. Only 20 local people arrived on the first day (of the course). After five days, only five were still there."

Aviation Industry Corporation of China is another company that is trying to tackle the skills shortage in Gabon. It has signed an agreement to establish three trade schools that will provide about 4,000 locals a year with qualifications to operate manufacturing, construction, and agricultural machinery.

AVIC's Vice-President, Liu Jun, says his company believes a skilled workforce is the foundation for successful nation building. A similar initiative AVIC launched in Kenya in 2009 has provided employment to 1,500 graduates, and the company is now in talks with the government there to massively expand the school to cater to as many as 20,000 students a year.

Liu is open about the fact that African students learn on Chinese machinery, which in turn is expected to boost the sale of Chinese-made equipment. But he maintains this will lead to further mutual benefits because AVIC will consider setting up spare-parts manufacturing centers for Chinese equipment in Africa if the demand is there. That means more local jobs, he says.

"This is not pure donations or charity," Liu says. "It is a business. We believe we use the power of commerce to help people."

While healthy revenue from Gabon's resources sector means it is classified as a middle-income nation, the disparities between town and country, and rich and poor, are enormous. The figures from the World Bank show per capita national income is $14,090, but the wealth is concentrated, and almost a third of the population still live in poverty.

Knowledge transfer is one of the best ways China can help Gabon's disadvantaged raise their standard of living, Jebbari says.

"Like any investor it (China) wants to make money, but it also wants a transfer of technology and knowledge so Africans can learn how to do things. The Chinese have the capacity to help Africans and African countries reach the point that we want to reach."

The 93 km section of road CRBC is building from Port-Gentil is only the first phase of a planned two-stage development. More cash and another 270 km of blacktop will be needed to link up the initial stretch with the national highway that leads to Libreville. But the plans are drawn up, and Yang believes completing the challenging project on time will help his company secure the contract for stage two.

In Yang's opinion, building bridges culturally and commercially can be achieved by doing a good job of building them, literally.

"We will be building the third and fourth-longest bridges in Africa to finish stage one of the project, both over marshland, both around 5 kilometers long.

"Gabon will make up its mind about us depending on what we build. It will all come down to the results."

Contact the writers at josephcatanzaro@chinadaily.com.cn