Pumping oil will transform Namibia’s economy but beware the resource curse – !Gawaxab
The string of oil discoveries in 2022 has the potential to elevate the Namibian economy far above its current level but this will to a large extent depend on local capacity building of both people and institutions.
Speaking at the 5th International Energy Conference in April, the Bank of Namibia Governor, Mr Johannes !Gawaxab, said the country needs to build competent and accountable institutions to ensure a level playing field for all actors in oil.
He said the integrity of government institutions is vital to ensure the country maximises the benefits of its oil industry.
The proven discoveries of oil and gas present the opportunity for a transformational shift in Namibia’s economic structure, with a major impact on foreign reserves. But the unlimited benefits will only be realised if Namibia invests in the development of the local workforce so that Namibians can be active participants in the industry, and not remain mere observers.
On new polices for the new industry, !Gawaxab said the country needs to develop a transparent legal and regulatory framework to govern the industry for a level playing field and to ensure that there is no corruption or favouritism.
Regarding oil’s perceived local impact, the Governor made it clear that the commodity has a key role to play in local value adding and industrialisation. “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.”
“While oil can provide significant revenue in the short term, it is imperative that the country’s economic structure is diversified to reduce Namibia’s dependence on a single commodity. 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, !Gawaxab cautioned.