Namibia risks missing the broader economic benefits of its emerging oil industry if it focuses on crude exports without building domestic supply chains, local businesses and industries that can survive beyond petroleum production, industry experts have warned.
Speaking at the RMB and FNB Strategic Thought Leadership Summit, experts said Namibia should draw lessons from Ghana, Nigeria and Côte d’Ivoire by using anticipated oil investment and revenues to diversify the economy and retain more petroleum spending locally.
Julien Ayippey, Head of Strategy, Research and Data Analytics at First National Bank Ghana, said local content rules should be designed as a long-term economic policy rather than a short-term political intervention.
“Local content shouldn’t be seen as a quota. It should be seen as how you keep money within the economy, and that’s how your economy grows,” Ayippey said.
He said Ghana’s experience showed that developing meaningful domestic participation takes time, with the country progressively building local capacity since entering the oil industry.
According to Ayippey, about 22% of contracts in Ghana’s petroleum industry are currently classified as local content, while 35% involve joint ventures and about 90% of jobs are held by Ghanaians.
He said Namibia should establish local content rules that extend beyond political cycles and ensure that revenues generated from finite petroleum resources are invested for future generations and into other productive sectors of the economy.
“There should be rules behind it that go beyond a political timeline,” Ayippey said.
The warning comes as Namibia moves closer to potential first oil following major offshore discoveries and the approval of its National Upstream Petroleum Local Content Policy.
The policy seeks to increase Namibian participation in the sector through employment, procurement, enterprise development, ownership, skills and technology transfer, research and innovation.
Ayippey said Namibia should also avoid concentrating solely on upstream exploration and production and instead consider opportunities across the petroleum value chain, including gas development, refining and fuel supply.
He pointed to Ghana’s experience of producing crude oil while continuing to import refined petroleum products as an example of the economic value that can be lost when downstream industries remain underdeveloped.
“It’s not just about exploration. Yes, we found oil. But can’t we look at it from oil to pump, which is more of looking at it from the upstream, going to the gas and industry, going to refining and finally to fuel supply,” he said.
Ayippey said Namibia should identify areas where local companies can compete commercially rather than attempting to immediately localise every segment of the petroleum industry.
He also urged the government to use future petroleum revenues to develop sectors capable of supporting economic growth after oil reserves are depleted.
“As a finite resource, that means it’s going to get there. But how can you get that revenue to ensure that at least you are helping other sectors come out?” he said.
Former mines and energy minister and Alvenco Advisory founder Tom Alweendo said Namibia’s local content ambitions should remain commercially viable and should not undermine the country’s competitiveness as an investment destination.
He said domestic participation should be based on businesses developing the skills, capacity and financial strength required to compete for petroleum contracts rather than depending solely on regulatory requirements.
Alweendo also warned Namibian businesses against waiting for oil companies to reach final investment decisions (FID) before preparing to enter the industry.
“I know of Namibians who are already moving, who are building their businesses, who are building capabilities. But that’s already happening. Because if you wait until everything is dotted, everybody is agreed, it might be too late for you even to get into the sector anymore,” he said.
He said businesses, banks and other stakeholders should begin assessing investment opportunities and risks before projects reach FID.
FNB Namibia Group Economist Cheryl Emvula also raised concerns about the pace at which Namibia is moving from discoveries towards development, arguing that delays could postpone the wider economic benefits expected from the industry.
Drawing comparisons with Ghana, Emvula said the West African country moved relatively quickly from major discoveries towards investment and production, while Namibia’s development process has taken longer.
The economic stakes extend beyond petroleum production itself, with billions of dollars in potential investment expected to create opportunities for local suppliers, financial institutions and service providers if projects proceed.
Speakers said Namibia’s challenge will therefore be not only to bring its offshore discoveries into production, but to ensure the resulting investment and revenues create domestic industries, businesses and skills that remain productive long after the country’s oil resources decline.
