Govt warned against ‘oil curse’

The government should move fast to set up a legal framework for its nascent oil and gas sector if it is to avoid the ‘oil curse’, and enable Namibians to enjoy the benefits of the country’s natural resources.

This was said by Shakwa Nyambe, the managing partner of SNC Incorporated, ahead of the Frontier Energy Network (FEN) summit for sub-Saharan Africa on 6 December.

SNC Incorporated is an energy, natural resources, corporate and commercial dispute-resolution firm.

Nyambe will be introduced as regional leader for sub-Saharan Africa at the summit.

According to a statement from the FEN’s chief executive, Gayle Meikle, deputy minister of mines and energy Kornelia Shilunga is set to deliver the keynote address at the gathering.

The FEN is an exclusive community of energy leaders worldwide.

Nyambe says a legal framework and policies would allow the people to partake in the sector and be given preference to get job opportunities, provide services and ensure that those companies that do not comply face sanctions.

The political and economic dysfunction known as the ‘oil curse’ is a complex, structural phenomenon, caused largely by poor management or investment of oil revenue by the governments of oil-producing countries.

Many countries in Africa are said to suffer from the ‘oil curse’.

Nyambe says the energy sector is booming because of the oil and gas discoveries off-shore Namibia, as well as the drive for green hydrogen.

The recent offshore discoveries by TotalEnergies and Shell have placed Namibia in the spotlight, with major international and medium-sized oil companies, as well as oilfield service companies showing increased interest to invest in Namibia, he says.

“This is a new sector, and people want to know what is happening in the sector, there is potential for the country to be very rich, and also the potential for the oil curse to rear its ugly head,” he says.

Nyambe, who has worked for the National Petroleum Corporation of Namibia (Namcor) as well as other international institutions in the oil sector, says the sector needs to be well managed and the country must have the right legal framework within which institutions must work to stop the ‘oil curse’ from existing.

“We need everybody on board, including the media and civil society, to play their role in ensuring there are checks and balances to expose corruption in the sector and stop money ending up in cartels or some rent-seeking elite bent on capturing the system.

“People who are patriotic about the country and want to expose corrupt practices become targets of those benefiting from the corrupt system, so we need the right legal framework to stop these things and protect good people from the bad,” he says.

He says the legal sector could advise the government on the loopholes in legislature to tighten the legal framework but the onus is on the government to ask for that help to benefit from the oil and gas sector.

“We advise the government to move very fast so that they do not delay the benefits that should accrue to Namibians from their oil and gas sector,” Nyambe says.

He says when money from oil comes in as taxes and royalties, the government could use it to ease the social burden of people through subsidising transport, water, electricity and housing.

“That is using the money from oil in a sustainable manner so that the next generations can benefit from it.

The money can also be pumped into other sectors of the economy to boost agriculture, manufacturing and others, so that we diversify our economy.

“The government can also put part of that money in a sovereign wealth fund for future use,” he says.

Nyambe says at the moment the oil and gas sector is at the exploration stage, soon to be followed by the development stage, to put up infrastructure before the production stage starts with oil and gas being pumped out of the ground.

This could happen before 2030, he says.

He says the country needs to build on local expertise to ensure that when expatriates leave, there will be enough skilled Namibian manpower to run the industry.

“This is where local institutions of higher learning can come in, with the gas sector financing some of the training through levies,” the lawyer says.

– email: matthew@namibian.com.na