Namibia must avoid oil resource curse – !Gawaxab

Namibia’s recent oil and gas discoveries present a transformational opportunity to shift the country’s economic structure, increase foreign reserves and transform the country into a major player within the regional energy market.

However, under growth-enhancing policies, Namibia must build competent and accountable institutions to avoid the resource curse.

This was said by the governor of the Bank of Namibia, Johannes !Gawaxab at the fifth edition of the Namibia International Energy Conference, held under the theme: ‘Shaping the Future of Energy Towards Value Creation’.

“International experience has shown that resource-rich countries tend to be more prone to corruption due to their large rents coupled with weak governance structures.

“The integrity of our institutions is an indispensable action and essential factor which Namibia cannot afford to compromise on,” said !Gawaxab.

The integrity of government institutions is vital to ensuring the country maximises the benefits from its oil industry, he said.
“The country needs to develop a transparent legal and regulatory framework to govern the industry in order to level the playing field and ensure there is no corruption or favouritism.”

The conference drew policymakers, energy leaders, and industry professionals from across the continent and beyond to engage, discuss and gain valuable insight into shaping Namibia’s role in driving value creation within the global energy landscape.

Under investment-related recommendations, !Gawaxab said targeted incentive packages are a must to reduce the investment risks faced by early adopters in the oil and gas sector and related initiatives.

This may extend to other sectors of strategic importance.
The governor added that environmental and climate-related considerations highlighted the significant impact oil production can have on the environment, and as such, implementing measures that mitigate these impacts will be crucial.

He said there was a need to maximise local value creation and industrialisation and the local content policy published in draft form should specifically aim to maximise the benefits to Namibian citizens.

“This will be achieved by enhancing and developing strategies that will target the participation of Namibian labour, goods and services, companies, ownership and financing along the value chain,” he said.

The governor highlighted the head start the country had made in promoting the equitable distribution of the benefits of Namibia’s natural resource through the recent establishment of the sovereign wealth fund, the Welwitschia Fund.

The fund is managed by the Bank of Namibia under the auspices of the finance ministry and it will facilitate the transfer of wealth sourced from Namibia’s natural resources for future generations to benefit long after the resource base is depleted.

“With the fund, the country is better positioned to institute long-term oil and other natural wealth management,” he said.

The governor implored that while oil can provide significant revenue in the short term, it is imperative that the country’s economic structure is diversified in order to reduce Namibia’s dependence on a single commodity.

– Email: matthew@namibian.com.na