Rebar: VAT on local products is six times higher in Senegal than in Gabon

In the state’s amended finance law for 2026, published in the official gazette on July 17, the Gabonese government stepped up its strategy to promote local production of reinforcing steel (rebar), continuing its goal of reducing the country’s dependence on imports of this construction material. Indeed, after adjusting the value-added tax (VAT) applicable to rebar made in Gabon from 5% to 10% in the state’s 2026 finance law, Gabonese authorities decided, this time in the amended finance law, to further reduce the VAT rate applicable to locally produced rebar, bringing it down to just 3%.

This measure should logically lead to a drop in the price of this construction material on the local market. Such a price effect could in turn drive an increase in both the consumption and production of Gabon-made rebar, to the detriment of the imported material, which does not benefit from the reduced VAT rate. In Senegal, by contrast, the reality is different: rebar and all other goods and services are subject to the same VAT rate of 18%.

In other words, the VAT rate applicable to this construction material produced in Senegal is six times higher than the rate in effect in Gabon for the same product. Yet, despite the geographical distance, the rebar markets in Senegal and Gabon share similarities in terms of supply and vulnerability to international conditions: on one hand, increasingly cheap imports due to a global production surplus, and on the other, a rising local production whose rigid production costs limit producers’ ability to adjust prices and heighten their sensitivity to swings in global prices, according to a market analysis note.

Restoring the competitiveness of local manufacturers

Seen from this angle, the safeguard measure for the local steel industry adopted by the Gabonese government — through the introduction and subsequent reduction of the preferential VAT rate applied to locally produced rebar — could set an example for Senegal. The result would be a competitiveness gain for Senegal’s steel industry, which would trigger a price effect capable of boosting both consumption and production, while also curbing the imports that each year widen the country’s trade deficit.

Such a measure would more decisively complement those already under consideration since early 2026 by the Senegalese government, aimed at restoring the competitiveness of industrial units and preserving the national industrial fabric against competition from imported products, according to a letter sent on April 16, 2026 to certain members of the Senegalese government by then-Prime Minister Ousmane Sonko.

In his letter, the man who was still head of the Senegalese government at the time set out five measures to support the local rebar industry, which he described as being “in difficulty” due to what he himself called “strong competition from imported rebar.” These measures are: raising the customs reference value of rebar to discourage imports, requiring the use of locally produced rebar for public works projects, monitoring the destination of rebar intended for public works projects, certifying all wire-drawers and rolling mill operators, and continuing discussions on the supply of wire rod to wire-drawers from rolling mills.

The Reduced VAT weapon

While beneficial, these measures are notable for mainly targeting better organization of the industry, cleaning up the sector and its trade channels, and integrating local rebar consumption into public procurement in Senegal. On the other hand, these measures have the weakness of barely touching on taxation (raising the customs reference value), which is nonetheless the lever needed to impact both production costs — and by extension market competitiveness — and purchasing power, which could boost consumption.

To achieve these results, several countries have introduced a reduced VAT rate on certain local products deemed sensitive, alongside the standard rate applicable to other goods and services. In France, for example, there are four VAT rates: the standard rate of 20%, the intermediate rate of 10%, and reduced rates of 5.5% and 2.1%. In Morocco, the standard VAT rate of 20% coexists with reduced rates of 14%, 10%, and 7%, depending on the targeted products and sectors. Gabon has just drawn on this model by lowering the reduced VAT rate on locally produced rebar from 10% to 5%, and then from 5% to 3%, while other products remain subject to the standard rate of 18%.

Indeed, tax experts agree that reducing the VAT rate on local products improves their competitiveness against imports, in that it lowers consumer prices, stimulates domestic purchasing, supports local production, and fosters economic independence by reducing external dependency.