By Africa Links 24
Published on 2024-03-22 04:00:00
Namibia, a country known for its mineral and metal wealth, is now attracting attention for its huge oil discoveries in the deep coastal waters. The recent findings have sparked significant interest from energy investors, potentially positioning Namibia as one of Africa’s top petroleum producers in the near future. With an estimated 11 billion barrels of oil reserves already confirmed, the country is on the verge of a transformative energy boom as oil prices remain high and are projected to stay that way for the foreseeable future.
The initial discoveries could potentially double the size of Namibia’s economy by 2040, with oil production scheduled to begin by 2030. However, the country must navigate the challenges of avoiding the ‘resource curse’ that has plagued other oil-rich African nations. Despite having some expertise in the extractive industry, Namibia needs to enhance its bureaucratic capacity and institutional knowledge to meet the demands of increasingly sophisticated oil and gas investors.
Although Namibia gained independence over 30 years ago, its institutions and administrative processes are relatively weak. The existing laws governing the extractive industries are outdated and inadequate, especially compared to its regional neighbors like Angola that have strengthened their regulatory frameworks in recent years. This lack of a robust bureaucratic structure often results in delays and poses regulatory and operational risks for investors conducting business activities in the country.
Namibia’s licensing and procurement framework for oil and gas assets previously relied on closed-door, direct negotiations, raising transparency concerns and leading to backlogs in processing investor applications. To address these issues, authorities have attempted to streamline the process and there have been calls for the creation of an independent upstream regulator. Additionally, the registration process for a local subsidiary can be cumbersome, involving extensive communication with Namibia’s corporate registry, BIPA, which lacks transparency in record-keeping.
One of the primary obstacles for investors is finding suitable local partners with the necessary experience. The sudden surge in demand has led to some potential local partners lacking relevant oil and gas expertise, relying more on political connections. Namibian authorities are aware of these challenges and are making efforts to address them to ensure a transparent and accountable business environment for investors.
Namibia’s government is taking steps towards transparency and accountability by applying to join the Extractive Industries Transparency Initiative, which requires members to disclose contract and license details. Local initiatives to promote beneficial ownership transparency and corruption risk management in public bodies are also underway. However, authorities must expedite these efforts to capitalize on the growing investor interest in the country.
As Namibia aims to become a major player in the energy sector, it must make doing business easier and provide assurances to investors regarding safety and transparency. With the world’s evolving business landscape, characterized by risk-averse energy companies with strict anti-corruption policies, Namibia must align its governance and regulatory frameworks to meet international standards and attract sustainable investments for its burgeoning oil industry.
