Low oil prices and low revenue – Here’s Gabon’s solution…
Oil producing countries in Africa are experiencing major pressure due to the drop in price, whilst oil importing countries are benefitting economically.
According to “How we Made it in Africa”, the oil price has dropped rapidly over the past two years, going from $120 a barrel to $30 a barrel, where they expect it to remain below the $100 a barrel mark for the next few years.
The hardest hit oil-producing countries in Africa
The impact on oil producing countries has been severe, with the hardest hit in Africa being the two biggest oil producers, Nigeria and Angola, both of which have economies heavily dependent on oil revenues. Other countries suffering from lower oil revenues include:
Key producers in North Africa, including Algeria
[Source: How we made it in Africa]
How can oil-producing countries increase their revenues?
It is difficult to implement a new revenue-making strategy on a macro-economic level, especially when the country depends on the current status quo for its main survival. However, when experts are predicting that the oil price will be hovering at lower-than-usual prices, it forces oil-producing countries to consider other options for increasing their revenues.
Gabon tries new avenue for increasing revue
Gabon and Olam International Ltd are tackling the issue at grassroots level by encouraging young people to take a new avenue: farming. Gabon currently imports most of its food and with the decline in oil prices and subsequent decline in revenues, the agriculture sector needs to be tapped into if they want to reverse Gabon’s slowdown in growth,.
How will Gabon learn about farming and the agriculture sector?
Olam (a leading Singapore-based agri-business operating across 70 countries, supplying food and industrial raw materials globally ) has come to the rescue. In a bid to develop Gabon’s cash crops, Olam has offered the following:
Work with Gabon to develop 100,000 hectares (247,000 acres) of oil-palm plantations in the Gabon.
To send aspiring Gabonese farmers for agri-training courses in countries outside of Gabon, ranging from Morocco to Malaysia.
It is expected that large-scale investments in the agricultural sector, especially in palm oil and rubber, could potentially reverse Gabon’s slowdown in growth, according to the International Monetary Fund.
Additionally, from this initiative, about 2,500 Gabonese will be able to observe cocoa farming in Ivory Coast, train as bulldozer operators in Morocco or learn modern farming techniques at a palm-oil plantation in Asia, Gupta said by phone from the capital, Libreville. Olam has partnered with Gabon to develop 100,000 hectares (247,000 acres) of oil-palm plantations in the nation, which has a population of less than 2 million.
Olam is currently developing 50,000 hectares of arable land into an industrial oil-palm plantation in northern Gabon, according to country head at Olam’s Gabon unit. Once the farm is completed, an additional 30,000 hectares will be laid out for small-scale palm-oil growers. In a phone interview, he said “It’s about creating human capital.” [Source: Bloomberg]
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