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Olam: on site production and processing.

Agribusiness is the alternative to depending on mining and oil. The sector has huge potential. Already, the partnership with Olam has borne its first fruits.

Gabon is not all about black gold. The Singaporean company, Olam, has made steady progress on developing the country's agricultural potential, and after five years the results are there for all to see.

At the 70,000 rubber plantation at Bitam, 100km from Libreville, a total of 12,000 acres have been newly planted, with the creation of 900 direct jobs. It is the largest plantation of the country.

In addition to the crops, roads have been constructed, houses have been built for the employees as well as a health centre, while the construction of the rubber plant is gathering speed. By 2020, it must produce 62,000 tonnes of dry rubber.

This project, which is Olam Gabon's most advanced project, is backed by $400 million of investment and should ultimately lead to job creation on a large scale. It is also the most integrated project of its kind. "What interested us in this type of project was the impact on the village communities," claimed a development specialist visiting the site. "It brings the villages back to life."

This is exactly what the Gabonese authorities were seeking to achieve when they signed a public-private partnership with Olam in 2010. The Olam partnership was the flagship project and to be a symbol of a new diversified economy. Signed to great fanfare and with high expectations, it had to work. It was a blueprint for what was possible. The government, in its efforts to diversify the economy, is focusing on agriculture as an inclusive job-creating sector that generates added value and drives growth.

The ultimate goal is to create integrated growth clusters within the country. "Thanks to agriculture, we will create the interconnections that the country needs with the help of an improved road, rail and airport network. Thanks to agriculture, we will set up schools, hospitals, internet and the people will stay in or return to the villages," a government analyst confirmed.

A leader's ambition

Covering a total area of 125,000 acres, between Mouila and Kango, Olam's goal is to make Gabon the leading African producer of palm oil. An investment of 287 billion CFA francs ($500m) was made for the first phase. By mid-April 2015, 51.000 acres had been planted, including 35.000 acres in Mouila. The site also has a nursery covering 222 acres, which produces the equivalent of 5.6m seeds.

Furthermore, the objective is to develop a processing industry with a higher added value. "West Africa imports 1.9 million tonnes of palm oil. Tomorrow, we will supply the Gabonese market and export to the sub-region," says Gagan Gupta, Country Director of Olam in Gabon. The first harvest is this year.

At Kango, the construction of the palm oil factory is approaching completion. At first, its production capacity will be 45t an hour, 25 days per month. This will be gradually increased to a maximum capacity of 60t an hour in 2018. In the meantime, two other plants will be built at Mouila, with construction work due to begin before the end of the year. They should produce 160t an hour in 2020.

The development of palm oil production should ultimately yield an annual CFA360bn ($625m) for Gabon. Production will be certified by the criteria laid down by the Roundtable on Sustainable Palm Oil.

As a leader in the agri-business sector, with subsidiaries in 65 countries, Olam, (founded 25 years ago in Nigeria) came to Gabon with a number of pledges and aspirations: developing special economic zones (SEZ), plantations, factories, producing and processing locally and with a target set by government.

Gabon imports CFA300bn ($525m) of food each year. "Olam International is a leading player in integrated supply chain management and the processing of farming products and food using sustainable methods," says Gupta.

"Gabon is a platform for some major projects headed by Olam in Africa. Of these projects, this is where we have invested the most. Compared to what has been achieved in other places, the growth of our activities has been very rapid."

Even if the projects undertaken by the group created concern amongst environmentalists, Olam eventually succeeded in establishing itself in the Gabonese economic landscape. The group has created nearly 5,000 direct jobs, mostly filled by Gabonese. Management is conducted by Malaysians who have expertise in growing rubber and palm oil plantations.

"The villagers are delighted to have access to local jobs," pointed out one of the workers in Bitam. This keeps in check the rural exodus, or urban drift, that is so detrimental to the development of the agriculture sector.

Supporting the development process

In the areas where it is located, Olam is committed to supporting socio-economic development and the availability of basic social services. By 2022, the plan is to create 26,000 jobs, build more than 10,000 housing units as well as some 30 health centres and 20 schools. It is supporting subsistence farming by means of the 75,000 acres of village plantations allocated to Olam employees.

Thanks to this experience, other multinational corporations are now showing an interest in Gabonese agriculture. The objective is not only to service the national market, but also regional and continental demand.
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Title Annotation:GABON OLAM
Comment:Olam: on site production and processing.(GABON OLAM)
Publication:African Business
Geographic Code:6GABO
Date:Aug 1, 2015
Words:887
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