Date first published: 07/09/2023
Key sectors: oil and gas, all
Key risks: political instability, economic, business risks
Risk development
On 30 August military officers announced during a televised address that they had seized power and placed President Ali Bongo under house arrest just hours after the Gabonese Election Centre (CGE) announced Bongo as the winner of the 26 August general election. The junta described the vote as not having met the conditions for a transparent ballot, adding that the poor state of governance was among the reasons for the coup. On 4 September General Brice Oligui Nguema was sworn in as the transitional leader. The coup in Gabon is the latest in a series of military takeovers across the continent in recent years.
Why it matters
The coup was driven by an internal power struggle between Nguema and the Bongo family, not a desire to enact systemic change. The coup can be seen as a calculated move by the military and Nguema to gain control of the state apparatus rather than to reverse perceived democratic backsliding. Nguema’s decisions to appoint himself as transitional leader, cancel the election and not hold an election re-run suggest that the coup was carried out for personal self-interest. Therefore, there is a moderate likelihood that Nguema’s presidency will be a continuation of the Bongo rule, defined by high levels of corruption and business friendly policies in the oil and gas sector.
Libreville is a member of the Organization of the Petroleum Exporting Countries Revenue (OPEC). In 2020 the oil sector accounted for 38.5 per cent of GDP and 70.5 per cent of exports – despite efforts to diversify the economy. Given the country’s heavy reliance on the oil sector, no major policy shifts such as nationalisation or the expulsion of Western companies are expected. While the military has leveraged anti-French sentiment, this was largely done to drive popular support for the coup on the ground.
While the full impact of the coup has yet to be realised, the putsch could have implications for financial markets. Most notably, the government recently negotiated a “debt-for-nature” exchange, converting US$450m of its debt into an environmentally conscious blue bond. The future of this commitment under a military administration – as well as the impact of potential sanctions on interest rate payments – remains unclear. These uncertainties led to an immediate depreciation in the value of the country’s Eurobonds following the coup.
Background
Unlike recent coups across the Sahel, Libreville is not facing significant security challenges. Moreover, the country was considered politically stable before the putsch and was classified as a middle-income country – albeit an extremely unequal one with approximately one-third of the country living below the poverty line.
Therefore, the coup was driven by factors such as self-interest by the military; questions over former president Bongo’s ill health; tensions between the military and the Bongo family – as the rapid rise in the government of former president Bongo’s eldest son, Noureddine Bongo, suggested he was preparing to succeed his father; and the contagion effect of other recent successful coups on the continent.
Risk outlook
During Nguema’s swearing-in ceremony he promised to restore civilian rule after an unspecified period and called for a constitutional referendum and reform of the country’s electoral and penal code. However, Nguema’s recent actions suggest that he intends to take a page out of the putschist playbook; by appointing a transitional government, negotiating with international stakeholders and delaying the transition period for as long as possible before holding elections, which will see the military play a prominent role in government.
