• Business 7

Holistic approach needed for oil, gas

• 2 Months Ago - 2024-06-19 00:00:00

Josef Sheehama - Although Namibia's oil and gas industry has the potential to boost the country's economy, careful management and diversification are essential to ensuring this potential is realised 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 global community and local enterprises reveals a desire for an industrialised future by utilising its resources.

Investment
Namibia's immense untapped resources and favourable investment climate are significant drivers of the sector's future economic growth.
The country 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 (BoN), which shows that the oil and gas sector generated N$33.4 billion in foreign direct investment (FDI) between 2021 and 2023.
Namibia can benefit from the experiences of other nations dealing with oil, gas and green hydrogen, avoiding mistakes and gaining knowledge for creating a successful and sustainable industry.

Human capital
In light of this, Namibia is making significant investments in energy and the local labour force, using alliances with leading businesses to upskill employees.
Progress also requires investments in human capital and resources. If no money is spent on local content, no matter how much money is invested, progress will not be achieved.
Additionally, Namibia can enhance its oil production capacity by collaborating with internationally accredited oil and gas companies in the Organisation of the Petroleum Exporting Countries (OPEC), thereby becoming the fourth-largest oil producer in Africa.
Proper management of natural resources is crucial to avoid the resource curse.

Opportunity
As an independent researcher specialising in economics and business, I urge Namibians to take advantage of this fantastic opportunity.
Namibia can meet its domestic demand, as well as global demand if capacity and production rise.
Considering that nine to ten billion people are predicted to inhabit the planet by 2050, this substantiates the need for more oil producers worldwide. This demonstrates that the oil industry is economically viable. As Namibia's population ages and becomes more urbanised, we must recognise that the country will need more energy.
For the socioeconomic and economic domains, oil will therefore be indispensable.

Long term
We need to realise 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.
Developing this infrastructure requires significant capital and the costs are high.
The health, safety and environmental standards of the highly specialised oil industry are very strict. Namibia needs both experience and foreign direct investment in the industry to develop this infrastructure.

Skills
Moreover, it is commendable that Namibia has decided to encourage some of its young people to major in green hydrogen, oil and gas.
Over 300 Namibians have been given training opportunities 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 these fields at universities, others are sent to countries like Angola to gain real-world experience.

Diversification
Furthermore, my advice to our ministers and the country's economic advisors is that while we work to reform Namibia's economy, we must recognise that economic diversification is critical to protecting other industries.
The oil, gas and green hydrogen industries will not provide all the jobs; thus, we must maintain economic equilibrium to ensure all economic sectors are balanced.
To avoid dependence on the oil and gas industries, we should diversify economic endeavours and maintain balance across sectors.
Implementing appropriate national and economic strategies will ensure mining, agriculture and other essential sectors are not isolated, thereby mitigating the risk of single-sector concentration.

Strategic shift
Additionally, the discovery of oil and green hydrogen are major economic engines due to their transformational potential for the Namibian economy and the number of jobs they will create.
As a result, we have the opportunity to use these transitions to drive competitiveness and assist Namibia in achieving economic independence.
If successful, a strategic shift like this could generate enormous wealth for Namibia, reduce poverty and inequality, and create a more affluent future for all Namibians.
When it comes to economic diversification, agriculture is foundational.
Agriculture is the primary employer, and some argue that it is nearly impossible to build the economy, export goods, or produce anything without it.

Labour
History demonstrates that no country has ever succeeded in achieving economic diversification without highly qualified technical labour and advanced technological capabilities.
As a result, Namibia will never be able to realise its dream of becoming an industrialised country unless it adopts strong policies to address the economic issues that attract 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 from major players in the energy sector and associated disciplines 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 toward the Welwitschia Sovereign Wealth Fund to improve citizens' well-being in critical areas like infrastructure, healthcare and education.
Building a globally competitive workforce must be Namibia's first priority as it develops its oil, gas and overall energy sectors. This will ensure stable and long-term economic growth.

Roadmap
For this reason, I urge 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 benefit from natural resource development, the government should encourage accountability and transparency.
Moreover, the government should ensure that small and medium enterprises (SMEs) are fully integrated into these resources and that foreign businesses collaborate with SMEs.