Asian Crisis Brings Turmoil to Gabon's Timber Industry
11/22/98
OVERVIEW & COMMENTARY by EE
The Asian economic crisis has also brought a respite for African
rainforests. For how long, is anyone's guess. Gabon's timber
industry has been hard hit.
Now is the time for the nations and peoples of the Earth to reappraise
the wisdom of commercially logging the world's remaining old-growth
forests. And time for the rich nations to pay developing countries to
forgo such development. It is not unthinkable that the world can
choose to not destroy the last great forest ecosystems, and in so
doing, help to ensure planetary ecological cohesion and survival of
most of its forms of life. I would much appreciate you sharing your
thoughts regarding the mechanisms for bringing about such change, at
the Forest Discussion Page: http://forests.org/web/
g.b.
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Title: Asian crisis brings turmoil to Gabon's timber industry
Source: Reuters
Status: Copyright 1998, contact source for permission to reprint
Date: November 16, 1998
Byline: By Tony Lawson
LIBREVILLE, Nov 16 (Reuters) - Gabon's state timber company, the
Societe Nationale des Bois du Gabon (SNBG), is facing an uncertain
future, burdened by a mountain of debt and a sharp slump in sales due
to the economic crisis in Asia.
In 1997, Gabon produced 2.7 million cubic metres (95.35 million cubic
feet) of logs, with Asia taking around 60 percent.
In the wake of the Asian crisis, the SNBG, which has traditionally
held a monopoly over timber exports, has had to cut back production
targets by some 30 percent in an effort to shore up the market.
Forests Minister Andre Dieudonne Berre expressed "the concern of the
government and his department at the poor sales of Gabonese wood" at a
tense meeting with industry executives late in October and a reform of
the sector is on his agenda.
That, however, does not solve the immediate problem.
In a deal agreed with the SNGB, banks have set up new accounts for
foresters to allow them to continue to operate.
"Forestry operators have to open these accounts and draw a line under
their liabilities...We're going to find a way to reimburse our debts,"
said Adrien Nkoghe Essingone, SNBG's new managing director in
October.
He accepts, however, that this does not satisfy the lumber firms.
"What the forestry operators want is fresh money, and we simply don't
have any," he said.
LIBERALISATION BEGINS
The SNBG is majority owned by the government with 51 percent, the
remaining 49 percent shared by forestry operators.
There is talk of plans to sell off part of the government's stake, but
no details on the percentage have been released.
In the meantime, the SNBG has introduced a series of measures this
year to stem its losses.
In April, it halted purchases of ozigo wood and then, in July, of
okume, when stocks of these main Gabonese species built up because
of the steep decline in Asian log purchases.
In September, okume and ozigo exports were liberalised when the
governement authorised the private sector to export a limited amount
to countries other than the SNBG's "traditional markets," which
include Europe, Turkey, Morocco and Israel.
Before, the SNBG held the monopoly on okume and ozigo exports, which
represent around 70 percent of Gabon's total timber exports.
TIMBER VITAL FOR ECONOMY
Oil may be Gabon's main export and the source of its relative wealth,
in African terms, but the timber sector is also a vital part of the
economy.
Excluding oil, it represented 52 percent of export earnings, in 1997.
Forests in Gabon cover 20 million hectares (49.42 million acres) and
the forestry sector employs 28 percent of the working population,
making it the second biggest employer after the state.
As the Asian crisis has unfolded, forestry operators have been obliged
to lay off workers and many are experiencing severe cash flow
difficulties.
Debts owed by the SNBG have piled up.
"Today, cumulative financial losses have reached around 20 billion CFA
francs ($36 million), which...is financially strangling forestry
companies," said one senior timber industry official, who declined to
be named.
This situation undermines SNBG's very raison d'etre and further
undermines its tattered reputation.
Founded in 1976, the SNBG was set up to buy okume and ozigo from
foresters, ensuring them the highest possible price and keeping a
tight control on quality for the export markets.
"Like many other Gabonese state companies, the SNBG has been largely
considered a parasite since the 1980s, with excessive budgets which
are wasted away by useless investments," the timber industry official
added.
FORESTRY OPERATORS FIGHT BACK
Many forestry operators are now refusing to supply timber to the SNBG
as they no longer believe they will be paid for it.
They have demanded that the ministry of water and forests provide them
with a letter of guarantee, certifying that they will be paid for
their delivieries within a 60-day period.
This stalemate is jeopardising a plan that has been devised to help
the SNBG pay its suppliers.
The SNBG had agreed with its creditors to buy 20,000 cubic metres of
logs in September, 45,000 in October, and 50,000 in November and
December, which with existing stocks would have amounted to 185,000
cubic metres by the end of the year.
However, foresters only sold around 11,000 cubic metres to the SNBG in
September and continue to defy the government's pleas to supply their
wood.
Many larger forestry firms would be happy to see the demise of the
SNBG, but smaller companies want it to stay, if only for its price
guarantee role.
"We would be at the mercy of powerful companies with financial means,"
said Bertrand Deflandre, owner of a small forestry company, InterBois.
"For us, the smaller operators, it's in our interests that the SNBG
stays. With better management and a guarantee on prices and
quantity, obviously."
($ - 550 CFA francs)