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Do not let Oil and Gas crowd out other crucial sectors

Do not let Oil and Gas crowd out other crucial sectors

By Josef Kefas Sheehama.

Although Namibia’s oil and gas industry has the potential to boost the country’s economy, careful management and diversification are essential to ensure that this potential is realized without detrimental effects on other industries.

Namibia, along with other African countries, is emerging as an attractive oil and gas opportunity due to legislative changes that make the market more appealing. Namibia’s partnership with the world community and local enterprises reveals a desire for an industrialized future by utilizing its resources. Namibia’s immense untapped resources and favourable investment climate are significant drivers of the sector’s future economic growth.

In this regard, Namibia has begun to overhaul its regulatory structure and fiscal policies to attract investment and encourage economic growth through oil, gas, and renewable energy. This presents enormous opportunities for both domestic and international businesses. Namibia boasts 11 billion barrels of oil and 2.2 trillion cubic feet of natural gas reserves, paving the way for enhanced exploration and production for neighboring countries. This is supported by a report from the Bank of Namibia which shows that the oil and gas sector generated N$33.4 billion in foreign direct investments between 2021 and 2023.

Namibia can benefit from the experiences of other nations dealing with oil, gas, and green hydrogen, to avoid mistakes, and gain knowledge for creating a successful and sustainable industry. In light of this, Namibia is making significant investments in energy and the local labour force, using alliances with significant businesses to upskill employees. Progress also requires investments in human capital and resources. If no money is spent on local capacity, no matter how much money is invested, you will not see any progress.

Additionally, Namibia can enhance its oil production capacity by collaborating with internationally accredited oil and gas companies in OPEC, thereby becoming the fourth-largest oil producer in Africa. Proper management of natural resources is crucial to avoid the resource curse. As an Independent researcher specializing in economics and business, I implore Namibians to take advantage of this fantastic opportunity. Namibia can meet its domestic demand as well as the global demand if capacity and production rise.

Considering that 9 to 10 billion people are estimated to inhabit the planet by the year 2050, this substantiate the need for more oil producers across the globe. This shows that the oil industries are economically viable. As Namibia’s population ages and becomes more urbanized, we must recognize that the country will need more energy. For the socioeconomic and economic domains, oil will therefore be indispensable.

Therefore, we need to realize that this is a long-term development. It should be highlighted that Namibia has a long way to go in terms of oil and gas expertise, so we must be willing to welcome the international community to share their knowledge and skills. It requires a lot of capital, and the infrastructure is costly. The health, safety, and environmental standards of the highly specialized oil industry are very strict. Namibia needs both experience and foreign direct investment in the industry to develop this infrastructure.

Moreover, it is commendable that Namibia has decided to send some of its young people to major in green hydrogen, oil and gas. Over 300 Namibians have been given preference for training in the petroleum sector. These skills will be crucial for the development of Namibia’s energy industry as well as for passing on to future generations. While some young Namibians are sent to study in these fields at universities, others are sent to countries like Angola to gain real-world experience.

Furthermore, my advice to our ministers and the country’s economic advisors is that, while we work to reform Namibia’s economy, we must recognize that economic diversification is critical to protecting other industries. We must recognize that the oil, gas and green hydrogen industries will not provide all jobs; thus we must maintain economic equilibrium to ensure that all economic sectors are balanced. Thus, to avoid dependence on oil and gas industries, diversify economic endeavours and maintain balance across sectors. Implement appropriate national and economic strategies to ensure mining, agriculture, and other essential sectors are not isolated, mitigating single sectoral concentration risk.

Additionally, oil and green hydrogen are major economic engines due to the transformational potential for the Namibian economy and the amount of jobs that will be created. As a result, we have the opportunity to use these transitions to drive competitiveness and assist Namibia achieve economic independence. If successful, a strategy shift like this may generate enormous wealth for Namibia while decreasing poverty and inequality and creating a more affluent future for all Namibians. When it comes to economic diversification, agriculture is the foundation. Agriculture is the primary employer, and some argue that it is difficult to build the economy, export goods, or produce anything without agriculture.

Therefore, without highly qualified technical labour and advanced technological capabilities, no country has ever succeeded in achieving economic diversification, as history demonstrates. As a result, Namibia will never be able to realize its dream of becoming an industrialized country unless it adopts strong policies to address the economic issues that draw in investors, upholds the rule of law and the Constitution, and invests in human capital, particularly in technology education.

It is important for us to understand that foreign direct investment (FDI) comes from major players in the energy sector and associated disciplines. It not only supports the growth of the oil and gas industry but also accelerates economic growth in general by transferring technology and encouraging innovation. Oil and gas revenue can be directed to the Welwitschia Sovereign Wealth Fund, which is needed to improve citizens’ well-being in critical areas like infrastructure, healthcare, and education. Building a workforce that is competitive worldwide must be Namibia’s first priority as it develops its oil, gas and overall energy sectors.

To this end, for this reason, I am urging our leaders to present a roadmap and implement any unfinished initiatives to speed up economic growth and create employment opportunities for our people, particularly the younger generation.

Strengthening anti-corruption measures and ensuring that all Namibians benefited from natural resource development, the government should encourage accountability and transparency.


 

About The Author

Josef Sheehama

Josef Kefas Sheehama has more than 21 years banking experience serving as Manager Credit, Branch Manager and now Centralize Credit Head Office at Bank Windhoek. He holds a Certified Associate Institute Bankers CAIB (SA), Associate Institute Bankers AIB(SA), Chartered Banking Professional CHBP (SA), B Com Banking, B Com Law, Postgraduate Islamic Finance and Banking, MBA and an LLB degree. Also founder of church since 2009. He is an independent Economics and Business Researcher. Authored more than 100 articles in Economics and Business. Served on Northwest University panel (Green Hydrogen). His MBA thesis published by the International Journal of Current Research (Exploring sustainable economic challenges and opportunities).