Martin Endjala
The Bank of Namibia has made a call to government that there is a need for Namibia to build competent and accountable institutions in order to ensure a level playing field for all actors operating in the energy industry.
The central bank’s Governor Johannes !Gawaxab said that the integrity of government institutions is vital to ensure that Namibia maximizes the benefits of its oil industry. He was speaking at the 5th edition of the Namibia International Energy Conference, held under the theme, ‘Shaping the Future of Energy Towards Value Creation’.
The conference drew policymakers, energy leaders, and industry professionals from across the continent and beyond together to engage, discuss and gain valuable strategic insight into shaping Namibia’s role in driving value creation within the global energy landscape
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.
!Gawaxab is adamant that this will only be possible if the country invests in the local workforce development and ensures that it intentionally empowers Namibians to be active participants in the industry rather than passive spectators.
He pointed out some key recommendations related to growth-enhancing policies, investment-related reforms, and environmental and climate-related considerations. In terms of growth-enhancing policies, Namibia must build competent and accountable institutions to avoid the resource curse, he added.
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 a condicio sine qua non, an indispensable action and an essential factor which Namibia cannot afford to compromise on. As such, the country needs to develop a transparent legal and regulatory framework to govern the industry in order to level the playing field and ensure that there is no corruption or favoritism”, explained the Governor.
Additionally, local value creation and industrialization should be maximized. The local content policy published in draft form should aim to maximize the benefits to Namibian citizens,!Gawaxab added.
“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,”The Governor emphasized.
Furthermore, targeted incentive packages are required 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 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.
The head-start of the establishment of the sovereign wealth fund launched last year, the Welwitschia Fund, managed by the Bank of Namibia under the auspices of the Ministry of Finance, the Fund is said to facilitate the transfer of wealth sourced from Namibia’s abundant natural resources so that generations to come also benefit even long after the current resource base is depleted.
With this Fund, !Gawaxab says that the country is better positioned to institute long-term oil and other natural wealth management.
Despite the oil prospects envisaged to provide significant revenue in the short term, the Governor maintains, that it is imperative that the country’s economic structure is diversified in order to reduce Namibia’s dependence on a single commodity, adding that there are many examples around the world where countries have obtained windfalls from oil and gas but eventually ended up poorer than before.
As such, Namibia must avoid the resource curse by learning from the experiences of others and implementing the necessary recommendations and policy considerations early on.
“Namibia has the potential to punch well above her weight and size and become an energy exporter. As we move forward in crafting the future of Namibia’s energy landscape, let us remember that our natural resources are not infinite, but the benefits they bring can be.
Therefore, we must strive to develop a sustainable and equitable framework that maximizes the benefits to all Namibians, both now and in the future. Let us work together towards a prosperous and inclusive Namibia lamented the Governor.
