Asian Crisis Brings Turmoil to Gabon's Timber Industry

***********************************************

WORLDWIDE FOREST/BIODIVERSITY CAMPAIGN NEWS

***********************************************

Forest Networking a Project of Ecological Enterprises

http://forests.org/ -- Forest Conservation Archives

http://forests.org/web/ -- Discuss Forest Conservation

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.

*******************************

RELAYED TEXT STARTS HERE:

Title: Asian crisis brings turmoil to Gabon's timber industry

Source: Reuters

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)

###RELAYED TEXT ENDS###

This document is a PHOTOCOPY for educational, personal and non-

commercial use only. Recipients should seek permission from the

source for reprinting. All efforts are made to provide accurate,

timely pieces; though ultimate responsibility for verifying all

information rests with the reader. Check out our Gaia Forest

Conservation Archives at URL= http://forests.org/

Networked by Ecological Enterprises, gbarry@forests.org