UPHILL BATTLE: Namibia will face various challenges regarding oil and gas exploration. Photo: FILE
UPHILL BATTLE: Namibia will face various challenges regarding oil and gas exploration. Photo: FILE

Oil and gas will pose challenges for Namibia - IPPR

Ellanie Smit
The discovery of commercially significant quantities of oil and gas will have major consequences for Namibia and many aspects of its economic policy.

These can include taxation, revenue and expenditure, currency, economic diversification, local ownership, corruption and membership of important international organisations.

The Institute for Public Policy Research (IPPR)’s latest quarterly economic review points out that there is a huge range of experiences — within Africa and further afield — upon which policymakers and politicians can draw to ensure the country avoids the curse and makes the most of this resource before the global energy transition renders it a stranded asset.

According to the IPPR, perhaps the greatest danger is that the presence of substantial revenues leads to higher levels of corruption.

“The presence of a huge pot of money makes it easy for politicians and those connected to them to syphon off rents.”

It pointed out that Namibia scores better on Transparency International’s Corruption Perceptions Index than other African oil and gas producers, but its anti-corruption institutions — both public and non-governmental — will need to be strengthened if greater levels of corruption are to be avoided.

“Joining the Extractive Industries Transparency Initiative (EITI) would send a clear signal of positive intentions and allow Namibia greater access to international best practice when it comes to avoiding many of the dangers associated with oil and gas, but so far Namibia has not been keen to join.”

Skill-intensive sector

The IPPR further noted that only greater diversification will generate employment for the majority as the oil and gas sector is highly capital and skills-intensive. “Namibia’s track record on economic diversification is already poor and special efforts will have to be made on currency management, public investment and skills if the strong forces that act against economic diversification are to be countered.”

It said there is a danger that, with oil and gas, government will conclude it does not need other outside investors and consciously or unconsciously throw in the towel on export diversification.

A key question, it added, is also whether the offshore find can lead to economic linkages that bring further economic benefits to Namibia or whether the industry remains an isolated offshore island generating revenue but little else for the domestic economy.

No strong incentives

IPPR further pointed out that Namibia had sought to present itself to the world at the United Nations Climate Change Conference in Glasgow (COP26) in November 2021 as a model green economy when oil was discovered shortly afterwards. The country has always been fully signed up to global action to address climate change through United Nations Framework Convention on Climate Change (UNFCCC), it added.

CoP26 recognised the need to halve greenhouse gas emissions by 2030, achieve net zero carbon dioxide by 2050 and limit the global temperature rise to 1.5 degrees or “well below two degrees”.

However, there are no strong incentives for individual countries, especially developing countries, to forgo exploitation of fossil fuel resources.

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Namibian Sun 2024-11-10

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Premier League: Liverpool 2 vs 0 Aston Villa | Brighton 2 vs 1 Manchester City | Wolves 2 vs 0 Southampton | West Ham 0 vs 0 Everton | Crystal Palace 0 vs 2 Fulham | Brentford 3 vs 2 Bournemouth Katima Mulilo: 21° | 34° Rundu: 20° | 25° Eenhana: 19° | 29° Oshakati: 22° | 30° Ruacana: 20° | 31° Tsumeb: 21° | 30° Otjiwarongo: 18° | 30° Omaruru: 16° | 31° Windhoek: 15° | 28° Gobabis: 16° | 31° Henties Bay: 12° | 19° Wind speed: 26km/h, Wind direction: S, Low tide: 04:05, High tide: 10:43, Low Tide: 17:11, High tide: 23:27 Swakopmund: 14° | 15° Wind speed: 37km/h, Wind direction: SW, Low tide: 04:03, High tide: 10:41, Low Tide: 17:09, High tide: 23:25 Walvis Bay: 12° | 21° Wind speed: 39km/h, Wind direction: SW, Low tide: 04:03, High tide: 10:40, Low Tide: 17:09, High tide: 23:24 Rehoboth: 14° | 30° Mariental: 13° | 30° Keetmanshoop: 10° | 28° Aranos: 14° | 31° Lüderitz: 14° | 24° Ariamsvlei: 11° | 29° Oranjemund: 15° | 20° Luanda: 25° | 26° Gaborone: 18° | 22° Lubumbashi: 16° | 32° Mbabane: 17° | 21° Maseru: 12° | 26° Antananarivo: 15° | 32° Lilongwe: 23° | 34° Maputo: 21° | 29° Windhoek: 15° | 28° Cape Town: 15° | 24° Durban: 18° | 20° Johannesburg: 15° | 20° Dar es Salaam: 25° | 31° Lusaka: 22° | 34° Harare: 21° | 33° Currency: GBP to NAD 22.67 | EUR to NAD 18.84 | CNY to NAD 2.45 | USD to NAD 17.58 | DZD to NAD 0.13 | AOA to NAD 0.02 | BWP to NAD 1.25 | EGP to NAD 0.35 | KES to NAD 0.14 | NGN to NAD 0.01 | ZMW to NAD 0.64 | ZWL to NAD 0.04 | BRL to NAD 3.06 | RUB to NAD 0.18 | INR to NAD 0.21 | USD to DZD 133.12 | USD to AOA 909.05 | USD to BWP 13.4 | USD to EGP 49.25 | USD to KES 129.2 | USD to NGN 1664.84 | USD to ZAR 17.59 | USD to ZMW 27.2 | USD to ZWL 321 | Stock Exchange: JSE All Share Index Same 0 | Namibian Stock Exchange (NSX) Overall Index 1851.79 Down -1.41% | Casablanca Stock Exchange (CSE) MASI 14663.22 Up +1.21% | Egyptian Exchange (EGX) 30 Index 31267.47 Up +0.72% | Botswana Stock Exchange (BSE) DCI Same 0 | NSX: MTC 7.75 SAME | Anirep 8.99 SAME | Capricorn Investment group 17.34 SAME | FirstRand Namibia Ltd 49 DOWN 0.50% | Letshego Holdings (Namibia) Ltd 4.1 UP 2.50% | Namibia Asset Management Ltd 0.7 SAME | Namibia Breweries Ltd 31.49 UP 0.03% | Nictus Holdings - 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Nam 2.22 SAME | Oryx Properties Ltd 12.1 UP 1.70% | Paratus Namibia Holdings 11.99 SAME | SBN Holdings 8.45 SAME | Trustco Group Holdings Ltd 0.48 SAME | B2Gold Corporation 47.34 DOWN 1.50% | Local Index closed 677.62 UP 0.12% | Overall Index closed 1534.6 DOWN 0.05% | Osino Resources Corp 19.47 DOWN 2.41% | Commodities: Gold US$ 2 684.46/OZ DOWN -0.0083 | Copper US$ 4.30/lb DOWN -0.027 | Zinc US$ 3 003.50/T UP 0.17% | Brent Crude Oil US$ 74.29/BBP DOWN -0.0215 | Platinum US$ 969.80/OZ DOWN -0.0274