2023-09-07 09:19:51
DIG/ International civil servant, specialist in financial systems and named African financier of the year 2017 by Financial Afrik magazine, the Gabonese Cédric Achille Mbeng Mezui gave an exclusive interview to the daily newspaper L’Union in which he gives his analysis of the political situation current situation and new opportunities that Gabon could seize to sustainably revive its economy.
The Union: Gabon has been experiencing a major change at the head of the country for the past week with the establishment of a Transition Committee for the Restoration of Institutions (CTRI). As an expert in financial systems, covering the entire continent, what does this change inspire you?
Cédric Achille Mbeng Mezui: I followed with great interest the change taking place in Gabon from Oyem during my annual leave last week. This is a courageous decision on the part of the military to restore hope to the democratic process in our country. In these situations, it is essential to send a strong signal to the national and international economic sector, as the President of the CTRI did by indicating that the country will respect its obligations, in particular by ensuring the service of the debt. The links between external and internal debt are close. It should be remembered that on the CEMAC public securities market, for example, financial institutions based in Cameroon are the leading investors in securities issued by Gabon. They provide nearly 600 billion compared to around 300 billion FCFA from local players. We must reassure them to avoid a widening of spreads (risk premiums) on Gabonese securities. On the international Eurobond market, our Eurobond which matures in 2025 saw its spread increase by more than 500 basis points in one week while the one which matures in 2031 saw its spread increase by 200 basis points (i.e. 2%). Clearly, we must avoid an increase in the costs of our loans.
That’s to say ?
Indeed, managing the expectations of economic agents is a fundamental factor in an open economy. If the CTRI takes measures deemed coherent by investors (local and international), this will promote credit (confidence). It is a priority to ensure that incentives move in the right direction for all stakeholders in the economic ecosystem. A virtue of markets is that they look to the future. Today they reward good behavior announced for the future. For example, they will reward a credible plan to reduce public deficits, the announcement of changes to public procurement procedures, measures targeting the performance of public enterprises, let’s say a coherent plan of reforms that can be implemented within a reasonable time.
We know that the country must initiate profound reforms in several sectors. In view of your experience, for the new authorities of the country, what are the priority reforms that could have a significant impact on the lives of Gabonese?
“To govern is to choose” said Mendes France. We should avoid embarking on too many reforms. The main agenda remains the overhaul of the regulatory body to guarantee transparent elections and the rule of law. I propose 3 families of reforms which have obvious knock-on effects on business financing, household purchasing power, employment and the quality of life of Gabonese people. These reforms have the merit of having a low financial cost and rapid implementation between a few weeks and a few months.
First, the finance law in Gabon should be given new credibility. Its random execution over many years led to numerous deviations in the functioning of the Nation. We finally have the opportunity to review the entire circuit from the preparation of our budget (finance law) to its execution. Serious shortcomings were observed as I noted in 2014 in my essay “Transforming Gabon – the panther or the squirrel scenario”. In simple terms, we must rethink the preparation of the budget so that it expresses the will and the ambition of the leaders to improve the lives of Gabonese. It is possible to set up a budget that is executable from January 2024. It is possible with a set of tools to allow its execution properly throughout the year and avoid the “famous” budget queues .
Another project that will need to be initiated before the end of the year to be completed in 2024 is that of “rebasing”. This is the change of a base year or the revision of the GDP of a country which is a rigorous exercise. The aim is to reflect major economic or structural changes over time, basic prices and inflation trends to ensure the accuracy of national statistics and economic performance data. The reality is that current data sheds little light on the Gabonese economy. “(…) Good statistics are essential to sensible and sound economic management, to good policies, and are as necessary to the nation as sound money and clean water” said Michael Scholar, 2007. CTRI could thus enable local and international actors to have access to more current and better quality economic information that best reflects the structures of the national economy and the level of macroeconomic aggregates. This reform has positive externalities for the economy as a whole. This is the prerequisite before embarking on mobilizing financing for structuring projects. This shortcoming has led to obvious weaknesses in the programming of investments.
What other reforms seem essential to you?
The other part of this reform concerns the organization of the Gabonese financial system to make it efficient. This affects points 4 and 5 of the 7 points announced by the President. There are close links between the reforms of the CNSS, the CNAMGS and the mobilization of long-term resources by the financial sector. It’s a coherent whole. Public financial actors, notably the FGIS and the CDC, should be reorganized for greater efficiency. This would stimulate the growth of long-term capital.
A third part of the reforms would be to improve the performance of current projects. Gabon’s project portfolios with many donors are poorly performing. Local skills should be mobilized through clear management processes and better coordination of project monitoring. In some cases, resources from already approved projects merit reallocating.
These are reforms which have positive and immediate externalities on the entire economy while sending a clear message to the donor community. These measures could have an impact on Gabon’s credit rating. These are realistic reforms with a low budgetary impact. They require more skills and good will. They may be effective during the transition period.
Are there priorities for infrastructure and the business climate?
The priorities are known and for many projects resources exist but the weak execution capacities do not allow them to be absorbed. It would not be appropriate to embark on all the construction sites. The President spoke about drinking water and I agree. The land agenda is critical for reforms because it has obvious knock-on effects on housing, the business climate and quality of life in general. Land is also a strategic area that contributes to the reappropriation of our sovereignty with regard to the current situation.
With the condemnations of international institutions, can Gabon fear seeing its various development aid programs, in particular IMF budget support suspended?
Gabon is not eligible for development aid. It is an upper-middle-income country. The international community ensures respect for and preservation of the rule of law as well as good governance. The CTRI should continue the consultations started and show that the national political class and economic actors adhere to its agenda. It is an ongoing dialogue that should be maintained. The IMF will have no interest in seeing a country default. On the other hand, the reforms set out above are likely to reassure the financial partners. The key to CTRI’s success is to rebuild trust.
(Source : L’Union)
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