Gabon – breathing new life into the cocoa sector

More of the article

It is hardly surprising therefore that several private sector participants are looking to take advantage of these positive circumstances. A copy of an internal document dated end-November 2018 from the BCPSGE (Bureau de coordination du plan stratégique Gabon emergent, Coordination Office of the Emerging Strategic Plan Gabon) which RESSOURCES was able to access, refers to the T-Vision Cocoa Project, a $20 million initiative (approx. €17.69 million), driven by 55 Africa Fund I, (a Luxembourg RAIF), which intends for the plantation and highly innovative intensive-horticulture of 1,000 hectares in the Woleu-Ntem region, Gabon’s traditional cocoa cradle. With this size of investment, the type of exploitation is clearly detailed as « intensive, professional, industrial production ».

Nestlé too has an eye for a business opportunity and in its report (c.f. above) it too looks to position itself by emphasizing its « expertise in pioneering agricultural revivals with financial backing from the global deployment of several Nestlé cocoa and coffee sector plans (Nestlé Cocoa Plan, and Nescafé Plan) ».

Cocoa Transformation

To be fully successful this industry revival cannot content itself with just augmenting bean harvest volumes. As with other commodities, the key to full circle cocoa success lies physically elsewhere. Cocoa beans grow in the South whereas they are frequently processed, transformed, and consumed in the North.

« Without transformation, there is no added value », explains Théophile Mutoni, analyst at investment firm African Alliance, headquartered in Kigali, and who also remarks that «  […] vertical integration of the value chain translates into less of an impact from raw material price volatility (which is historically high in the cocoa market, c.f. graph below) » .

Le cacao, une matière première aux cours volatils (évolution depuis 1970, en US$ la tonne/NYMEX)
Cocoa significant price volatility (Price changes since 1970, expressed in $US per tonne/NYMEX) . Source : Macrotrends

The Cocoa Barometer is a biennial cocoa sector report that is published and funded by a global consortium of civil society organizations including Oxfam, Südwind Institut, Public Eye and others. The study remarks that cocoa producers only receive on average 6.6% of the income generated from the total value chain, or mere crumbs.

Given how inequitably the (chocolate) ‘cake’ is being divided, one solution stands out, and that is to increase cocoa transformation at local level in order to optimize in-situ value added. For this to actually happen, additional cocoa transformation should be able to rely on higher local consumption levels, which « is a long-term approach, primarily based in better communication and information, and which is no easy undertaking », admitted Emmanuel Mba.

Driving change forward

Although a number of private sector initiatives are being undertaken to maximize value from local cocoa production (c.f. RESSOURCES Extracting Value article Les Chocolats gabonais de Julie), they are few and far between, and lack any real economic impact. There is certainly real potential for Gabon to make significant gains, but this depends on if any real momentum can be harnessed to drive the process forward. The more that product transformation can take place locally, the more domestic employment can be generated, and jobs are greatly needed in a country where 20% of the active labor force is unemployed and almost one quarter of the population is living on less than $US 3 per day (approx. €2.65).

Gabon is thus at a crossroads and has to succeed with its industry diversification measures if it wants to really overhaul its outdated economic model. This challenge will doubtless take a generation to meet, but the seeds of change have been sown. The African Alliance is optimistic and wants to believe that « the process of transitioning Gabon from a rentier model towards a more productive model has already commenced ». Now we have to hope that the nation’s cocoa industry can participate.