Staff Writer
Former minister of mines and energy, Tom Alweendo has called on Namibia’s financial sector to prepare for the country’s emerging oil and gas industry, warning that discoveries alone will not translate into economic prosperity without strong institutions, financing capacity and local participation.
Speaking at a Bank of Namibia seminar on preparing the financial sector for a sustainable oil and gas economy, Alweendo said Namibia had entered a new phase following major offshore oil discoveries, but cautioned that “a discovery is not yet development” and “a resource is not yet prosperity”.
The distance between discovery and development is not travelled by geology. It is travelled by institutions, capital, skills, discipline and trust,” he said.
Alweendo, who previously served as governor of the Bank of Namibia before becoming minister of mines and energy, said the country’s challenge was to create a financial architecture capable of converting oil and gas potential into sustainable national value.
He said the oil and gas sector was currently largely financed by foreign capital because of its capital-intensive nature, technical complexity and exposure to long project timelines, commodity price fluctuations and environmental obligations.
However, he warned that if Namibian banks and financial institutions remained outside the sector’s value chain, the country risked seeing much of the financial benefits flow elsewhere.
“If local banks and other financial institutions remain outside the oil and gas sector, the financial value chain will be captured elsewhere. Advisory fees will be earned elsewhere. Project structuring will happen elsewhere,” Alweendo said.
He said Namibia needed to avoid a situation where the country had oil activity but limited domestic financial participation.
According to Alweendo, local banks did not need to finance exploration risks or replace international investors, but they could play an important role in supporting local businesses through supplier finance, contract-backed lending, foreign exchange services and participation in syndicated financing.
He said the immediate opportunity for domestic financial institutions was financing Namibian companies that secure contracts in the oil and gas supply chain.
“This is not speculative oil finance. This is contract-backed banking,” he said.
Alweendo also stressed the importance of ensuring that previously excluded Namibians participate meaningfully in the emerging industry, saying financial inclusion should be structured around credible businesses with sound governance and the ability to deliver.
He called for clear and predictable policies covering taxation, local content, environmental obligations, procurement and dispute resolution to give investors and lenders confidence.
