Report No. 16333-CA Republic of Gabon Poverty in a Rent-Based Economzy (In TwVo oluniesi V(IUnIeW I: Sunnm irv June 27, 1997 [ Iurunia D)evelopiient, (,rouL) 1 Africa kpkion Document of the World Bank EXCHANGE RATES US Dollar CFA Franc 1 US dollar 1992 CFAF 264.7 1 US dollar 1993 CFAF 283.2 1 US dollar 1994 CFAF 555.2 1 US dollar 1995 CFAF 499.1 1 US dollar 1996 CFAF 514.0 1 US dollar 1997 CFAF 585.9 LIST OF ABBREVIATIONS CFAF:CFA franc CFD: Caisse Franqaise de Developpement CNGS:Caisse Nationale de Garantie Sociale CNSS: Caisse Nationale de Securite Sociale DAS:Direction des Affaires Sociales EDF:European Development Fund FIR:Fonds d'aide a l'Insertion et a la Reinsertion GPC:General Population Census HES:Household Expenditure Survey IMF: International Monetary Fund MSPP:Ministere de la Santi Publique et de la Population NGO:Non-Governmental Organization ONE: Office National de l'Emploi PPA: Participatory Poverty Assessment SME: Small and Medium-sized Enterprises UNDP:United Nations Development Program US: United States The Poverty Assessment (PA) of Gabon was prepared in close cooperation with the Government of Gabon and with donors active in Gabon. To monitor the work, the Government established an Inter-Ministerial Technical Committee, under the Ministry of Planning, with representatives of the main ministries and donors, as well as private citizens. The Committee met in December 1994 to discuss the general orientation of the study, and again in December 1995 and November 1996 to review drafts of the report. The report reflects written comments received from the Ministries of Planning, Finance, Health, Education, Labor, Social Affairs and National Solidarity, from the Economic and Social Council, the UNDP and the French Government's Cooperation office, as well as views expressed during meetings of the Technical Committee. Its approach follows the broad lines of a poverty reduction strategy produced by the General Planning Commission in 1996. It has benefited from discussions with the many people the World Bank team encountered during its preparatory missions. The Statistics Department of the Planning Ministry took part in preparation of the poverty profile. This report was written by Nadine Poupart (Task Team Leader) and Elsa Pilichowski (Research Assistant). Comments were received from Nichola Dyer Cisse (Country Economist); Andrew Rogerson and David Berk (Former and Acting Country Directors) and Lionel Laurant (Consultant). The report was formated by Anne Anglio. Vice President: Mr. Jean-Louis Sarbib Acting Director: Mr. David Berk Technical Manager: Mr. Ok Pannenborg Task Team Leader: Ms. Nadine Poupart TABLE OF CONTENTS INTRODUCTION --------------------------------------------- - - POVERTY PROFILE -------------------------------------------- --- vi Poverty trends, 1960 to 1994----------------------------------------------------------------------------------------- vi Urban poverty in 1993-94 ------------------------------------------------------------------------------------------- xi Poverty in the rural areas and the secondary towns --------------------------------------------------------------xiii THE FACTORS UNDERLYING POVERTY ------------------------ -------- xiv The dual economy--------------------------------------------------------------------------------------------------xiv The failure of social, health and education policies --------------------------------------------------------------xvi A POVERTY REDUCTION STRATEGY: GENERAL PRECONDITIONSIONS--- xx Introduction------------------------------------------------------------------------------------------------- - ---------- xx Including the poor in the growth ------------------------------------------------------------------------------------xx Laying the foundation for better governance ------------------------------------------------------------------- xxi SIX PRIORITY GOALS FOR THE ANTI-POVERTY CAMPAIGN - - xxii Objective 1: Reducing unemployment -------------------------------------------------------------------------xxii Objective 2: Raising incomes for small farmers ------------------------------------------------------------- xxiv Objective 3: Improving basic public health ---------------------------------------------------------------------xxv Objective 4: Rehabilitating the urban environment ---------------------------- ------------ xxvi Objective 5: Reforming Social Protection Policies ---------------------------------------------------------- xxvii Objective 6: Establishing a reliable statistics system-------------------------------------------------------xxviii ANNEX: Quantitative and Qualitative Data on Poverty y------------- xxix Summary INTRODUCTION With a Gross Domestic Product per capita of US$ 4,975, Gabon is one of the richest countries in Africa. Its wealth derives from its output of petroleum, manganese and wood products. According to 1996 estimates, the oil sector accounts for 79% of exports, 58% of government revenues and 42.5% of gross investment. The population of Gabon, which stands at just over one million, is highly urbanized: the two major cities (Libreville and Port Gentil) account for almost half the country's total population. The relatively high income per capita masks wide disparities in standards of living. Though poverty in its most acute forms (under-nutrition) is now rare in Gabon, most of its people remain very poor. Gabon's social indicators are comparable to those of several low-income African countries. The UNDP's 1996 Human Development Report places Gabon 46 positions lower in its ranking under the Human Development Index (120 out of 174 countries) than under the GDP-per- capita index (74 out of 174). The country's persistent poverty reflects the dual nature of its economy and its choice of development policies. These policies have tended to exclude most of the population from the' benefits of growth and have failed to diversify the economy or to improve its human capital. v Poverty in a Rent-Based Economy POVERTY PROFILE Poverty Trends, 1960 to 1994 By relative poverty Three relative poverty lines were selected as a measure of standards, 60% of poverty: the first set at the level of the minimum wage, the second Gabonese are poor. at 2/3 of average consumption, and the third at one dollar a day, the Thisfigure has extreme poverty line.' Estimates show that the number of people decreased only slightly living below the first two poverty lines in 1994 has changed little since 1960. The since 1960: from 87% to 83% and from 66% to 62%, respectively number of extremely (Figure 1). Using the extreme poverty line, on the other hand, poor people, however, suggests that poverty in its most extreme form has declined has declined significantly. In 1960, 66% of people were extremely poor, while significantly. in 1994 only 23% fell into this category. Extreme poverty declined most rapidly between 1968 and 1985, but its descent has since slowed. Graph 1: The Incidence of Poverty in Gabon Extreme poverty line = US$ I per person per day In 1960 In 1994 34% 4Population living below the poverty 23% line___________23 E3Rest of the 77% 56% population Poverty line 2/3 of average consumption In 1960 In 1994 34% 38% * Population living below the poverty line ORest of the 66% population 62% See Annex for a description of statistical sources. vi Summary Poverty line = minimum wage In 1960 In 1994 13% 17% U Population living a below the poverty line O Rest of the 87% population 83% Source: World Bank calculations The sharp decline in extreme poverty reflects the full employment that prevailed until 1986, generous wage policies in the public and para-public sectors, and significant private and public transfers during the oil boom of 1973-1985. While the oil boom had a major effect on reducing extreme poverty, its effect on reducing the overall proportion of poor people was limited. Income inequality is still high - the Gini coefficient is 0.45 Causes of persistent for the two major cities, probably much lower than for the country poverty: disparities in as a whole - but this factor cannot by itself explain the persistence income and living of poverty. conditions. vii Poverty in a Rent-Based Economy Other disparities are equally significant. Living conditions are much better in the centers of economic activity (Estuaire, including Libreville; Ogooue Maritime including Port-Gentil; and Haut-Ogooue with Franceville and Moanda) than in the other provinces (see Graph 2). Graph 2: Disparities in Living Conditions Between Centers of Economic Activity and other Provinces | Centers of activity * Other Centers 70% 60% - 50% 40% - 30% 20% 10% 0%/ 3 S o Xv z Source: General Population Census, 1993 Information gathered during the General Population Census (GPC) of 1993 shows that Ngounie, Nyanga, Ogooue Ivindo and Ogooue Lolo are the most disadvantaged provinces in terms of housing (an important factor in public health and well-being in a high-rainfall country like Gabon), literacy, and access to potable water. Estuaire and Ogooue Maritime appear relatively well off in these respects. viii Summary The overall rate of illiteracy is relatively low, and there is Although illiteracy is little gender difference (28% for men and 34% for women). Yet in relatively low Nyanga, Ngouni6 and Ogooue Lolo, this rate approaches 50%, and nation-wide, there more than a third of the population has never been to school. are great disparities Illiteracy rates are lowest in the more economically advanced coastal among the provinces of Estuaire and Ogoou6 Maritime (18% and 21% provinces. respectively), although the absolute numbers of illiterates in these areas are higher, because of the larger population (see Map 1 and Map 2). Map 1: Proportion of Literate Men Map 2: Proportion of Literate Women utamto 4%)Por- e m ooue- M ilesC Miles _ 61 71 43 a 52 s [ | ~~~71 i77 ia o il l | _ Woieumi M n J t e ~~~~~~~~~~~~~Ogoo ni Miles Miles Source: GPC 1993 IX Poverty in a Rent-Based Economy Access to potable Access to safe drinking water is still a crucial problem in water is highly Gabon and is a serious public health concern. According to the uneven among GPC, 34% of people have no access to potable water, yet this figure provinces and income masks wide inter-provincial disparities. While 15% of people in groups. Libreville and 46% in Port Gentil are without safe drinking water, the proportion is much higher in the rest of the country, reaching 80% in Nyanga and Ngounie. In Ogooue Ivindo, Woleu Ntem and Ogooue Lolo, rivers and lakes remain the primary sources of water (see Map 3). In cities, 21% of households rely on public standpipes or rainfall for their drinking water, and 36% must buy it from a neighbor or a vendor, who may restrict access and charge high prices. Map 3: Access to Potable Water Proportion of households (%) with access to potable water I 3,~~~~~~1,031, eI~a-~Nte~ 20.3A53,3 Librei 1i 1 G! | | | y l 1 | e ~~ue Miles 0 so 100 Source: GPC, 1993 x Summary Urban Poverty in 1993-94 Nearly 20% of the population (or about 96,000 people) of Nearly 20% of Libreville and Port Gentil live below the urban absolute poverty line, inhabitants of the estimated at CFAF 29,000 (about US$ 58) per person per month.2 two largest cities are This means that one fifth of the inhabitants of the two largest cities unable to meet their cannot meet their minimum nutritional and other basic needs basic needs. (housing, clothing). The minimum wage, which is set at CFAF 64,000 (about US$ 20) per month, is a fair approximation for the relative poverty line, which was set at one-quarter of the average income level. In Libreville and Port Gentil, 25% of the population lives below this poverty line. Poverty and the Lack of Jobs The Household Expenditure Survey of 1994 identified two Poverty afflicts types of poverty. Some households are poor because the family head families where the has a very low income that is not fully supplemented by transfers head is unemployed from relatives or friends. Forty-one percent of the heads of or retired, as it does households below the absolute poverty line have no job or are retired extendedfamilies (see Box 1). Unemployed female heads of households are especially that take in jobless vulnerable in this respect. relatives. Box 1: Life for a Young, Unemployed Family in Libreville I left high school two years ago. I have a wife and two children. Our house belongs to my father (...) Besides my wife and the two children, we have six other people living with us (...) I have no job and no work skills. I get by doing odd jobs, as a laborer or painter and such. But I can't always find work, and some days we go without eating (...) When life gets too hard, our neighbors from our same ethnic group help us out. My older sister and my mother (...) send us food and a little money and drugs, too, since we are often sick with malaria, diarrhea, and skin diseases, because of all the dirty water around us (.. )"I Source: Participatory Poverty Assessment, June 1995 Poverty also afflicts families belonging to the "middle class," where the head may be an employee in the public, para-public or private sector, or an independent worker. For family or ethnic solidarity reasons, these households may take in people who have no work, and support them from the earnings of the household head. The average food intake of members in such households falls below minimum requirements. =hese figures were calculated from the 1994 Household Expenditure Survey. For details on the definition of ,solute and relative poverty lines, see Annex. xi Poverty in a Rent-Based Economy Thus, in Libreville, "middle-class" households have more poor people, in absolute poverty, than do lower-income households. The impoverishment of the middle class as a result of caring for younger unemployed relatives could strain the strong sense of family solidarity that now exists. Having no job -either because of unemployment or retirement - is a key factor underlying poverty in the two major cities. Thirty percent of the active urban population under the age of 26 is unemployed. This figure reaches 38% in Port Gentil and 46% in Moanda. Unemployment threatens to rise further, as jobs in public and parastatal sectors contract, and as new job creation fails to keep pace. An Unhealthy Urban Environment Rural exodus and the The prosperity generated by oil revenues, combined with degradation of living harsh living conditions in the interior, has led to an influx of people conditions in the cities into the country's major urban areas over the last 20 years: Port have exacerbated Gentil (forestry, wood, oil), Moanda/Franceville (mining) and urbanpoverty. Libreville (government, commerce, banking and other services). At the same time, education policy at the secondary school level has drawn young people to the bigger cities, where they have tended to remain. About 80% of the population of Libreville now live in under-serviced neighborhoods or shantytowns. In the absence of any urban development policy, new residents have settled as squatters on land that is difficult to access and service, often steeply sloping or subject to flooding, and totally lacking in drainage facilities. There, poor living conditions, lack of sanitation, insecurity of tenure, substandard housing (nearly 70% of Libreville's poor families live in shacks built of boards or other makeshift materials), isolation from urban facilities and services - to which must be added unemployment since the crisis of 1986- are the major poverty factors in Gabon's cities. During the June 1995 Participatory Poverty Assessment (PPA) in Libreville, 40% and 34% of respondents cited isolation and unhealthy living conditions as their first or second most important concern respectively. xii Summary Poverty in Rural Areas and the Secondary Towns There are no data available on household income in rural Ruralpeople live in areas and secondary towns. It is clear, however, that rural life is very severe deprivation. harsh. People in the rural areas are isolated, with only limited access to potable water, health services and education. Because most villages are isolated, small producers have little chance to market their output (from farming, fishing, hunting). As a result of their rudimentary tools and ignorance of modem farm inputs and techniques, agricultural productivity is very low. According to PPA results, health and education are the prime concerns of rural dwellers. Residents of secondary towns worry most about the lack of urban amenities (in particular, drinking water, electricity, proper roads). These towns, whose small populations are mainly subsistence farmers, suffer especially from lack of infrastructure and social services. xiii Poverty in a Rent-Based Economy THE FACTORS UNDERLYING POVERTY The Dual Economy Inequality and poverty are related to a number of structural imbalances in the Gabonese economy: * Returns on capital are higher than returns on labor. This means that businesses tend to be capital-intensive, and the relative productivity of Gabonese labor is low. * There is little domestic trade between the three centers of economic activity and the rural economy. Growth in the extractive industries has done little to stimulate the agricultural sector, dominated by subsistence farming. Economic policies Economic growth in Gabon has been based on the export of have encouraged the raw materials (forestry, manganese and uranium, and oil). Policies rise of a dual for investing the proceeds from these exports have focused on economy. Rural capital goods, encouraging the rise of a dual economy. This has areas have been produced a modern enclave-type economy, dominated by the oil marginalized. industry and by large companies, while the farm sector has become increasingly marginalized. In 1995 the GDP share of agriculture, livestock, fishing and hunting was only 6%. The rural areas and their small towns remain dominated by the traditional economy, and have few links to the growing modem sector. The decline in the output of tradable goods (particularly agricultural goods) is a characteristic phenomenon of other oil economies (see Box 2). Box 2: How the "Dutch Syndrome" Applies to Gabon The rapid growth of Gabon's oil sector generated a number of distortions in the country's economy that are referred to as the "Dutch Syndrome." In such a situation, identified for the first time in Holland in the early 1970s, the "rent" derived from oil exports stimulates private and public demand, which shifts the structure of relative prices in favor of non-tradable goods, where local supply becomes insufficient. This leads to a contraction in the non-oil sectors that produce tradable goods (essentially small-scale farming) and to an expansion of sectors where output is not tradable (services). Exacerbated by inappropriate investment programs and an over-generous wage and income policy, as in Gabon, this has led to the impoverishment of agriculture (accompanied by an exodus of rural workers to the urban centers), rising imports and a swollen services sector. xiv Summary A Fragile and Crisis-prone Economy Successive oil booms, and the resulting creditworthiness that Economicpolicy Gabon enjoyed in international financial markets, led the Government has not created the to adopt an expansionist economic policy, focusing investment on conditionsfor infrastructure and on the public and parastatal sector. Although growth balanced, long- in the public sector led to short-lived full employment, the policy term development. entailed a rapid build-up of public debt and increasing distortions in the economy, without sufficient attention to reducing the shortage of skilled manpower and the isolation of the traditional sector - the underlying structural weaknesses of the economy. Starting in 1986, when the ranks of young and unskilled The economic workers were growing, the collapse in oil prices imposed severe limits crisis of 1986 on investment opportunities and on the demand for labor. Urban impoverished dwellers suddenly found themselves jobless and poor. Structural urban residents. problems combined with cyclical problems to exacerbate poverty. The results of the PPA suggest that rural people also suffered Ruralpeople also the effects of the economic collapse, as private transfers from the cities sufferedfrom the declined. At the same time, the social security system that the State had decline in introduced to help the poorest segments ceased to function. Education transfers. spending has been falling in relative terms since 1986. Health spending, however, has continued to grow. This crisis revealed the fragility of the economy and the need to In the face of this diversify its sources of growth. In 1994 the Government undertook a crisis, government thorough reform of its economic management, seeking to take economic policy advantage of potential gains in competitiveness implied by the 50% was radically devaluation of the CFA franc (12 January 1994) and at the same time to altered in 1994. allocate more equitably the revenues flowing from the oil, mining and forestry sectors. The Government's new strategy starts from a redefinition of the The reform is respective roles of the State and of the private sector in the economy. aimed at making The authorities have clearly stated their intention to withdraw from the economy more direct intervention in industry and commerce. They have committed competitive, while themselves to enhancing the supply of priority services, in particular to enhancing the making education and health services more accessible and efficient. provision of social On the budgetary front, the Government has launched an austerity services. program, to bring the level of overall public spending into line with revenues. In institutional reform, it has undertaken to make spending more efficient and transparent and to improve the performance of the public service. xv Poverty in a Rent-Based Economy The Failure of Social, Health and Education Policies The Social Security System Gabon had instituted Gabon is unique in Sub-Saharan Africa in providing since a costly system of the early 1980s social security for everyone, including the poor. social securityfor This policy has turned out to be costly. The Government, through everyone... the Ministry of Social Affairs, was determined to: * provide family allowances and free health care for poor Gabonese citizens (those below the minimum income), particularly in rural areas, through the National Social Insurance Fund (CNGS); . provide financial and moral support to targeted vulnerable groups (orphans, the disabled, widows, the poor elderly), through the Department of Social Affairs (DAS); - provide social security for private-sector employees and their families, through the National Social Security Fund (CNSS). ... but with the Since 1986 insufficient funds for the social security system economic crisis the have failed to provide a safety net for the poor and vulnerable. Due system has broken to shrinking government revenues, funding for social security has down. virtually dried up. The budget for the National Social Insurance Fund has been reduced by half, and poor citizens no longer receive welfare payments. Budget shortfalls for the Bureau des Aides et des Secours have made it impossible for the Department of Social Affairs to provide its planned levels of assistance. The economic crisis has also severely compromised the financial health of the National Social Security Fund. The number of contributors has fallen, while the number of retirees is rising. The old-age security component has been in deficit for three years: many people who paid into the insurance fund are receiving no payments. Today, the poor have little hope of security. In the cities, they must rely for the most part on the solidarity of the extended family system. This entails a gradual decline in living conditions for the entire household. In rural areas, migration seems to be the main strategy for survival. Cooperative movements offer some hope of financial assistance, but these are still very limited in scope. xvi Summary Health and Nutrition No data are available on the pattern of health problems such as Health is the between urban and rural areas, or among different socioeconomic priority problem groups. Nevertheless, experts agree that public health indicators are for 95% of rural worse in rural areas, including the small towns, and in the shantytowns dwellers and 57% of the three major cities. Health is the priority concern for 95% of rural of residents in the dwellers who responded to the PPA, and for 57% of the residents of secondary urban secondary urban centers. centers. Despite undeniable progress since Independence and the high Despite high levels level of public and private spending on health (US$ 172 per capita in ofpublic and 1994, compared with an average of US$ 14 for Sub-Saharan Africa), private spending Gabon's public health indicators are mediocre. The country's on health, Gabon's demographic and epidemiological profile ig still typical of a poor demographic and country (see Table 1). Life expectancy is low, and gross rates of epidemiological mortality and of maternal mortality are very high (the latter as high as profile remains 600 per 100,000 live births in some regions). Morbidity is still mainly that of a poor caused by parasitic and infectious diseases: malaria, acute respiratory country. ailments and intestinal diseases are the main afflictions reported for children under 5 years of age. Nutrition has become a public health problem: more than 11% of babies weigh less than 2,500 grams at birth. Table 1: Demographic Indicators for Gabon and Selected Countries in 1992 Gabon Ghana Cameroon C8te Costa South Brazil (1993) d'Ivoire Rica Africa Population (thousands) 1,014 14,875 11,739 11,902 2,807 35,919 150,368 GNP per capita (US$) 3,600 390 960 750 1,900 2,530 2,680 Life expectancy at birth (years) 52.9 54.6 57 52.4 75.2 62.0 66.2 Gross mortality rate per 1000 pers 15.6 12.7 11.8 12.2 3.8 9.3 7.3 Infant mortality rate (per 1000 live 99 84.7 88.3 94.6 16.8 65.6 57.5 births) Mortality rate under 5 years (per 155 136 125.6 135.2 20.2 89.8 68.8 1000 live births) Sources: Gabon, Ministry of Public Health and Population and World Bank, Social Indicators of Development 1991-92 xvii Poverty in a Rent-Based Economy The failure of the The imposing array of health facilities is unfortunately health system ineffective, due to lack of competent staff, materials and basic reflects previous medications. Yet every year, Gabon spends some CFAF 10 billion to health policies, import drugs (more than US$20 per capita per year). The inefficiency inappropriate of the health system stems partly from policy choices and strategies of resource the past, which allowed the growth of parallel health systems without allocation and proper planning and coordination. The result is a system that is over- inefficient built, with duplication of capacity in some parts of the country and no spending. facilities in others. The resource allocation does little to promote efficiency. The high cost or lack of medications and the poor quality of public health services place the poor at disadvantage: their only alternative is to resort to traditional healers. Education Despite the high Gabon has increased its levels of spending on education level of education considerably since Independence. The gross rate of primary school spending, the enrollment (142% in 1995-1996) is among the highest in French- system is speaking Africa, and the participation rate for girls is as high as for inefficient and ill- boys. Today, however, although Gabon spends far more money per suited to the pupil than most other African countries (US$ 337 per student at the demands of the primary and secondary levels in 1994), the system produces poor labor market. results at every level of instruction. It is also inefficient: the net enrollment rate is about 86%, the repeater rate is higher than 30% at all grades, and in 1994-95, the national school drop-out/expulsion rate was 19%. In secondary education, the gross enrollment rate is 53% for the first cycle, but the net rate is only 15%. In the second cycle, these rates are 16% and 5% respectively. The education level of the population is inadequate seen against the demands of the labor market. Urban school The distribution pattern of teachers and infrastructure among classes are school districts does not permit high quality teaching. Problems differ, overcrowded: however, between urban and rural areas: rural areas lack infrastructure. . In urban schools, the major problem is overcrowded classes, reflecting a shortage both of classrooms and of teachers. The schools have tried to cope with this overcrowding by increasing the use of double shifts (which are now in place in more than 20% of the schools in Libreville). This results in cutting back the number of hours of instruction offered to pupils. * In rural areas, the poor quality of school construction and lack of equipment make learning physically difficult. Conditions are aggravated by the need to teach several grades of pupils at once, because of teacher shortages or absenteeism. xviii Summary Figure 3: Relationship between Education of Household Head and Monthly Urban Household Income, by Quartiles 90% 80% _ 70% _ 60% - _ 50% _ 40% * _ 30% - _ 20%- g1 -_ 0% -' No diploma Primary and University secondary degree diploma |Bottom quartile OLower-middle quartile OUpper-middle quartile *Top quartile Source: Household Expenditure Survey, Libreville and Port Gentil, 1994 Note: The bottom quartile represents the poorest 25% of households. The top quartile represents the richest 25% of households. Incomes of household heads are a function of their levels of The shortcomings of education (see Figure 3). Illiteracy is a major barrier to well-paid the system affect the employment. The poor suffer the most from the system's poor most acutely. shortcomings. They are more likely to drop out of school before completion, they attend inferior schools where teachers are often absent, and they have more difficulty in obtaining text books and other teaching materials. Although they may willingly devote a significant part of their income to school expenses, they are the least able to make up for the weaknesses of the public education system by turming to private schools, and their family environment is likely to be less conducive to learning. After a few years, they may lose whatever reading and writing skills they have acquired from their primary schooling. The poor make up the bulk of the country's illiterate population. xix Poverty in a Rent-Based Economy A POVERTY REDUCTION STRATEGY: GENERAL PRECONDITIONS Introduction A poverty reduction program must include specific measures targeted at the most disadvantaged groups: it also requires actions to provide a more favorable overall environment. The Government's recent moves to re-orient its goals, in the wake of the CFA franc devaluation, must eventually lead to efforts to diversify the economy, modify the State's presence in the economy, and lay a more solid basis for sound governance. Including the Poor in Growth Diversifying the Growth can no longer rely on the oil sector alone, because economy. this does not offer sufficient employment opportunities. While the elasticity of employment relative to non-oil GDP is positive, growth in the oil sector does little to increase demand for labor in the rest of the economy. If employment is to be increased, and the economy's vulnerability to external shocks is to be reduced, the Government must diversify the economy and disengage the State from industry and commerce, while encouraging the growth of the private sector and promoting competition. This will mean giving priority to the industries that have a high coefficient of demand for unskilled labor. Agriculture and farm product processing, the wood industry and fisheries are all sectors with good job creation potential. Redefining the role of A programmed effort to disengage the State from the the State, to target industrial and commercial sectors of the economy, with donor more effective support support, should help to enhance competition and develop the private for priority sectors. sector, thus stimulating demand for employment in private businesses. Withdrawal by the State will also free public funds to finance activities that will directly benefit the poor. Priority sectors for public attention include water supply, primary health care, primary and secondary education, rural and urban transportation, other urban infrastructure, agricultural services and social programs. xx Summary Among priority sectors, better basic social services (in particular education and health) will enhance the well-being of the poorest groups (and those who are not poor), raise their productivity, lower labor costs and improve the competitiveness of the Gabonese economy. Laying the Foundation for Better Governance The disappointing results to date in the priority sectors derive, Providing adequate not from the level of resources devoted to them but from the resources and inefficient management of those resources. Under its 1995 managing them more agreements with the IMF, the Government committed to a series of efficiently. reforms aimed at improving budgetary procedures and making operations more transparent. The Government has undertaken a public expenditure review process, with the support of the World Bank, intended to improve the allocation of budget resources within and between sectors, so that there will be sufficient funding available for priority services to the poor. These efforts will be key to the success of the poverty reduction strategy. Finally, Gabon has undertaken measures to improve Reforming the public performance in the public service and to contain its costs, by placing service. limits on the size of the public payroll, preparing staffing plans, and introducing a performance-related system of salary increases. These steps should be accompanied by measures to enhance supervision of officials involved in budget implementation. Public participation is a key element in promoting better Encouragingpublic management of public resources. Community participation, participation. involving users directly in the provision of public services, is almost nonexistent in Gabon and must be encouraged. The emergence of NGOs also should be facilitated. Their flexible structures can make them more effective than the public administration in providing help to the poor. Some NGOs are already in operation, but others need support in the form of training. The NGO umbrella organization needs to be strengthened, to fulfill its task of coordination and intermediation. This organization should also institute a system of quality control for new NGOs (similar to the role of law or medical societies). Once they are properly equipped and established, NGOs should be integrated at every stage of projects financed by the Government and donors. xxi Poverty in a Rent-Based Economy SIX PRIORITY GOALS FOR THE ANTI-POVERTY CAMPAIGN Box 3: What the Poor Hope For During the PPA interviews, people talked of their hopes and desires for improving their living conditions. In urban areas and in the villages, improvement means providing the basic services and infrastructure needed to deal with priority problems (see Chapter 2). Most of the people interviewed thought it was up to the Government to invest resources in this area. Yet some people expressed doubts about whether this survey would be of any use, or whether it would turn out like so many previous surveys in which they were invited to "speak up and make suggestions, and then nothing happened, just promises." Some said that people facing similar problems should show greater solidarity and should work together to develop their village or their neighborhood. The ability of people in Libreville and in the secondary towns to improve their circumstances depends, however, on finding a job (55% of responses in Libreville, 41% in the secondary towns). Unemployed people (or those with unemployed children) in the capital and in other centers insisted on the need to create SMEs or larger businesses and to open vocational training centers for youth. Village dwellers were less likely to demand local job creation: 30% of responses, mainly from young people or their grandparents, who disliked the idea of seeing the youngsters leave for the city. "In the village, there is no work, and that is the problem all over Gabon - that's why people are leaving the rural areas.' In Libreville, fewer respondents thought of seeking financial or material help (28% of responses), compared with the secondary centers (42%). In the rural areas, people who have no intention of leaving their village want mainly material assistance in the form of equipment (chainsaws for clearing brush or cutting trees to build houses), or support in the form of credit to undertake projects. They also want social assistance, such as CNGS (Caisse Nationale de Garantie Sociale) used to provide for the poor. When asked about their children, the best thing that parents can think of for thiem is a proper education and a better chance at a steady job. But when asked what they expected for the future, some parents feared that their children had little prospect of a better life, because they were "children from poor families" or because they too will suffer from the country's continuing economic crisis: "Yesterday it was the devaluation, today it's the VAT, what will it be tomorrow?" Source: PPA, June 1995 Objective 1: Reducing Unemployment Developing the Private Sector Improving the Development of the private sector (which is now being investment climate, discussed under the privatization and private sector development offering micro-credit project) and of SMEs will require the disengagement of the State and cutting red tape and the emergence of a climate propitious to business. Steps to this to encourage new end should include: businesses. revise and implement the revised Investment Code and Sectoral Codes (mining, forestry, oil), as well as the Labor Code (amendment now underway), to encourage new investment in the country; xxii Summary * assist NGOs and other private organizations to develop micro- credit facilities. Such programs should stress management training and simplified loan administration procedures. The African Development Bank is currently financing a microcredit program targeted at women. It includes a large training component. * reduce the complicated, time-consuming and costly formalities that must now be completed in setting up a new business. Making the Education System more effective A strategy is needed for the education sector so that Adopt a strategyfor education policy becomes more than just an annual budgeting the education sector. exercise. The strategy should identify priority objectives and should include a means for evaluating progress. As part of this effort, an in- depth reform of technical and vocational training is called for, to build consultative and feedback links to business, and thus ensure that the needs of the economy are reflected in the design of training programs. One main reason for the high drop-out rate among Provide better access mandatory school-age pupils is the cost of education to poor to educationfor the families. To reduce these costs, all parties (the Education Ministry, poor, by reducing the parents' associations, teachers' unions, etc.) should be involved in a cost of schooling. study on ways to help poor families send children to school, without generating exorbitant operating costs for the system. In urban schools (in Libreville and Port Gentil) one main Limit multiple obstacle to quality instruction at the primary and secondary level is repeaters as an overcrowding in the classroom. Short-term measures to address this immediate way to problem should include placing limits on the right to repeat a year enhance the quality of more than once. teaching. xxiii Poverty in a Rent-Based Economy Over the medium and From a medium-, and longer-term perspective, existing long run, expand capacity at the junior high school level is not sufficient to cope with enrollment capacity the enrollment demand generated by legislation that makes school at the junior high attendance mandatory between the ages of 6 and 16. The number of school level. junior high schools will have to be increased, as will the number of teachers. To avoid expanding the public payroll, education policy should encourage the growth of private educational institutions at the secondary level, allow for greater use of contracted teaching personnel, and fund such contracts through reductions in salary expenditures in areas of lower priority for the anti-poverty campaign. Reform the A more effective education system will require reforms to curriculum. school teaching programs to equip young people for the demands of the labor market and to instill in them a spirit of enterprise. Bring drop-outs back Literacy programs should be launched for people who have into the education fallen through the cracks in the education system. Special courses system. should be given to attract back to the system those who have dropped out at the primary level. Objective 2: Raising Incomes for Small Farmers As the State withdraws from the agro-industrial sector, it should be able to finance activities to increase the incomes of small farmers. Disengagement should include a policy to liberalize pricing and suppress monopolies (the Coffee and Cocoa Fund, for example). Enhance Small Farm Incomes Through a Selective Regional Approach In areas with In areas well served by transportation, marketing farm adequate transport products is not a major problem. There, enhancing the productivity services, focus on of small farmers could raise poor people's incomes. Productivity can enhancing be improved through training, extension services and research into productivity the needs of small-scale producers, and by giving them access to credit (almost non-existent today). Gabon could draw lessons from successful experiments elsewhere with micro-credit, and adapt these to its domestic situation. NGOs could serve as intermediaries for channeling such credit. xxiv Summary Where transport services are weak, the problems of bringing When transport produce to market are a major constraint to improving incomes services are weak, among the rural poor. An inter-modal transport strategy and a develop rural markets program of priority investments (now underway) could provide and improve better transport facilities for farm goods and result in lower food transport. prices in urban markets. Marketing could be improved at the village level by organizing and constructing weekly marketplaces. In isolated areas with poorly developed transportation links, In isolated areas, the investment costs are high in relation to benefits, because the emphasis should be population is so thinly scattered. Here, efforts to combat poverty on providing basic should take the form of modest investments directed at improving social services. the supply of basic social services: safe drinking water, primary health care, basic education. Diversifyz Income-generating Opportunities It is difficult to induce businesses to locate in the interior of Rethinking regional the country, in areas more or less isolated, without creating development policies. economic distortions. But the Government could help by removing some of the obstacles that now discourage companies from setting up in these regions, by ensuring the supply of basic services and infrastructure related to such essentials as water supply, health systems, education and basic infrastructure. Objective 3: Improving Basic Public Health A Preventive Health Policy Vigorous efforts to expand safe water supply, which have Extend the water already reached 66% of the population, should be continued. In supply system and rural areas and small villages, the village water program could be conduct hygiene reinforced by involving the local communities (now underway). In campaigns. urban areas, the network of public standpipes should be intensified, and retail prices for water should be set at affordable levels. Information, education and communication campaigns (IEC) would help people to understand the effect that poor conditions of hygiene have on their health. xxv Poverty in a Rent-Based Economy Supply and Cost of Drugs Make drugs available The Gabonese Government should: (i) revise its and affordable for the pharmaceutical legislation and bring it into line with its primary poorest groups. health care policy; (ii) step-up drug inspection; (iii) adopt a list of essential drugs for health facilities; (iv) encourage greater use of generic drugs; and (v) promote competition among public and private suppliers. These measures would make medications more accessible and affordable for the poor. Make the Health System More Efficient Design a sectoral A sectoral strategy should be adopted for improving strategy. management in the health sector. This should set priority objectives for public health spending, determine the tasks of the private and public sectors, and provide for the assessment of progress towards these objectives. Implement Order Political will must be exerted if results are to be 001-95. commensurate with the level of expenditure in the health sector. Order No. 001-95 contained measures to improve management in the sector, but the decrees to put it into effect have not been issued. These measures include decentralizing administration and drawing up a health facilities map for the country. The Government should also introduce new regulations and procedures to promote diversity, complementarity and competition among the providers of health care. Objective 4: Rehabilitating the Urban Environment Complete the To improve living conditions for the poor in the country's development of a major cities, a coherent sectoral policy is critically important. That sectoralpolicy. policy should avoid large-scale urban development schemes, in favor of selective, targeted action. Improve urban Overcoming unsanitary urban conditions will require the sanitation conditions building or rehabilitation of the main collector systems and drainage through the use of canals for waste water, setting up an effective garbage and solid labor-intensive waste removal system, rehabilitating public spaces and private technologies. concessions, and treating living quarters, inside and out, with insecticides. These measures should be designed on a modest scale, using labor-intensive technologies and appealing to beneficiaries to share the initiative and responsibility. xxvi Summary Procedures for delegating the management and contracting of Change procedures public works should be adopted, using the AGETIP system [Public for contracting and Works and Employment Executing Agency], as a model. Through managing public this, local SMEs can bid for and undertake drainage, sanitation and works. road-building projects, performing to modest standards and disrupting as few people as possible. Gabon currently lacks any system of urban taxes and Adopt new improvement charges for regulating human settlement in and around regulatory and tax urban areas. instruments. As to the land tenure system, property law should be Reform urban reformed to disengage the State from land management, to free the property law. supply of building lots and to establish a modem real estate market. Objective 5: Reforming Social Protection Policies Gabon no longer has an assured social protection system for its poor. This should be addressed through the following measures: Government efforts should focus exclusively on people who Concentrate cannot take advantage of the opportunities the economic system has government to offer (elderly, disabled, orphans). It may be more effective and assistance on those less costly to provide aid in kind rather than in cash. When it comes who are now to the operational work of implementing such policies, the DAS excludedfrom the (Department of Social Assistance) should rely as much as possible on system. NGOs, and should limit itself to coordination. While the mass of the unemployed can only be absorbed over Focus efforts on the longer run, as the economy diversifies, market mechanisms start integrating the able- to work, and education policy bears fruit, there are realistic bodied into the possibilities for short-term relief measures such as: undertaking economy. labor-intensive public works, providing micro-credits for small entrepreneurs, introducing a social component into the privatization program, and offering training for unskilled workers and the unemployed. AGETIP-type projects could help to create jobs: this would improve the infrastructure in under-serviced neighborhoods. In strictly rural areas, the emphasis should be on improving access to essential services such as drinking water, primary health care and quality education at the elementary level. xxvii Poverty in a Rent-Based Economy Provide adequate More efficient management would allow the Government to funding. free resources for social safety nets. Budgetary allocations to the DAS and the FIR should be increased. Reform the social The CNSS needs to be restructured to provide a viable social security system security system. This would have a direct effect on the numbers of poor, for example, by taking proper care of pensioners who, despite their past contributions, today receive no pension and have sunk into poverty. Objective 6: Establishing a Reliable Statistical System Conduct a national Current knowledge on the geographic distribution of survey on household services and facilities is sufficient to provide a basis for determining incomes and living priority poverty reduction action. Yet in the medium term, a more conditions. targeted reallocation of spending will require a more detailed understanding of what characterizes the poor, where they live and what access they have to economic and social facilities. To that end, a nation-wide survey of household living conditions should be conducted. This has been done elsewhere in Africa. Such a survey would help the Government to better target its safety nets and to adopt a regulatory framework in favor of the poor. The survey could be complemented by a "Demography and Health" like survey to gain a better understanding of the state of public health in the country, and to monitor its trends. xxviii Summary ANNEX Quantitative and Qualitative Data on Poverty Complete data are not available for producing a proper poverty profile. While existing data can be used to assess incomes for people living in Libreville and Port Gentil, these provide no detailed information on household incomes at the national level. It is thus difficult to judge the situation of poor people living outside the two major cities. The General Population Census (GPC) and the Household Expenditure Survey (HES) This study relies mainly on results from the 1993 General Population Census (GPC) and the 1994 Household Expenditure Survey (HES). The GPC covers the entire population, although the data it offers relate mainly to demographics (population distribution by age, sex, region, rural/urban, level of education, occupation, employment status, and housing). The HES covers only the cities of Libreville and Port Gentil; its sample is limited to 412 households, and it does not allow comparisons with the period preceding the CFA Franc devaluation. Both surveys were conducted by the Department of Statistics of the Planning Ministry, with help from the United Nations Fund for Population Activities (UNFPA) and the French Government's cooperation program. Defining Poverty lines In the absence of a national household survey, the methods used to estimate poverty at the national level are approximate and only allow trends to be discerned. For this study, different statistical methods were used, with estimations based on household consumer expenditure data drawn from the national accounts. Three poverty lines were defined at the national level: the first set at the minimum wage, the second at 2/3 of average consumption, and the third at one dollar per day. This last line represents the extreme poverty line. The HES allowed both absolute and relative poverty lines to be set for urban areas. The absolute poverty line is defined as the income required to meet minimum nutritional needs, and a minimum of other basic spending (mainly clothing, housing and transportation). This level is estimated at CFAF 29,000 (about US$ 58 in 1995 prices) per person per month. The relative poverty line was set at one-quarter of average income. The minimum wage, which is CFAF 64,000 (or about US$ 120 in 1995 prices) per month, is a fair approximation of this line. Participatory Poverty Assessment (PPA) These data were supplemented with the results of a Participatory Poverty Assessment (PPA) conducted in June 1995 among poor people living in Libreville, in a few towns of the interior (Minvoul, Mouila and Makokou) and in nearby rural areas. The PPA reports how the poor themselves view their living conditions. xxix