By Hafeni Motsi
As Namibia stands on the brink of an oil boom, the question is not whether foreign direct investment (FDI) will pour into its nascent oil and gas sector, but rather how this windfall can be converted into broad-based, long-term prosperity for the country’s citizens.
With many other countries also unveiling significant hydrocarbon prospects and a shrinking global pool of exploration funding, the window of opportunity is narrowing and must be seized with strategic discipline.
This article highlights how the sector can catalyse industrialisation through local content development, skills training and strategic infrastructure investment. It emphasizes the importance of policy certainty, enabling investment frameworks and supplier development to ensure Namibians actively participate in the oil and gas value and supply chain.
With coordinated efforts from government, industry and civil society, the country can capture greater onshore value from offshore resources positioning itself as a competitive, inclusive, and sustainable energy economy.
Recent offshore discoveries of light crude oil and associated natural resources, by companies like TotalEnergies, Shell and Galp (among investment from other operators) have drawn billions in FDI and sparked hopes of doubling Namibia’s GDP by 2040. Indeed, FDI hit a record N$48.2 billion in 2023, more than doubling 2022 levels, largely on the back of oil exploration.
The Namibia Investment Promotion and Development Board (NIPDB) views this influx as a once-in-a-generation opportunity to build a diversified and economically complex economy that is not solely or heavily reliant on raw exports by strategically reinvesting oil revenues into other industries. The goal: to ensure that as much socio-economic value as possible is retained in-country, laying the foundation for sustainable growth long after the oil wells run dry.
Learning from Resource-Rich Success Stories
Namibia draws inspiration from countries that have successfully turned natural resource riches into tangible economic development. Norway, for example, famously transformed North Sea oil into a stable, advanced economy.
Instead of letting oil dominate, Norway invested its petroleum earnings into a sovereign wealth fund with diversified investments across global assets. This insulated the Norwegian economy from oil price swings and ensured oil wealth would benefit future generations.
Then there is the United Arab Emirates (UAE), which transformed itself within a few decades from an oil-dependent desert economy into a global hub for trade, tourism and finance. The UAE’s strategy hinged on aggressive diversification and reinvestment.
In Dubai, oil now accounts for less than 1% of the GDP, a dramatic shift achieved by plowing oil revenues into real estate, logistics, tourism, education and healthcare. Namibia’s nascent strategy mirrors these lessons: diversify early, invest in infrastructure and human capital, and save wisely for the future.
Namibia’s Competitive Advantage
Namibia’s 12.89 billion barrel equivalent (and increasing) resource potential has placed the country among the top 3 countries on the continent in terms of proven oil reserves and potentially the largest in the SADC region.
This has already resulted in the entry of four out of the five top 10 oil and gas companies in the world (by revenue), including TotalEnergies, Shell, Chevron, and ExxonMobil. These companies, known as the “Majors,” bring with them unparalleled technical expertise, capital and global influence.
Crucially, the Majors were soon followed by the Tier 1 oilfield service companies with 5 of the top 10 globally now active in Namibia. These include industry giants like SLB (formerly Schlumberger), Halliburton, SBM Offshore, Subsea 7 and Baker Hughes, which are already investing in infrastructure such as workshops and liquid mud plants to support operations.
Additionally, these firms are investing in skills development, having signed Memoranda of Understanding with institutions like the Namibia University of Science and Technology, University of Namibia and Petrofund Namibia to train and upskill Namibians for technical roles in the sector.
Leveraging Anchor Investors To Stimulate The Local Economy
The NIPDB’s investment promotion strategy capitalizes on this momentum. Our approach involves leveraging the presence of the Majors and Tier 1 oilfield service companies to attract players from their global supply chains.
These firms, ranging from valve manufacturers to digital services providers and marine logistics specialists are being encouraged to “follow their clients” to Namibia. Our goal is tofacilitate partnerships between these international suppliers and Namibian businesses to develop local capacity to service the sector.
By encouraging joint ventures, technology transfer agreements and supplier development initiatives, Namibia can progressively build a robust domestic supply chain. This ensures that a greater share of the value generated from oil and gas activity remains in the local economy through jobs, procurement and knowledge.
Furthermore, once local companies gain experience supporting offshore production in Namibia, they can export these services to other regional markets, enhancing Namibia’s competitiveness in the African energy landscape.
Channeling Oil Revenues into future-proofing the Namibian Economy
The overarching principle for Namibia is clear: don’t let oil be the only story. Global demand for fossil fuels will eventually wane in a net-zero future and oil reserves themselves are finite. The true promise of the oil boom is as a catalyst for developing other sources of growth.
That means channeling oil revenues into strategic sectors like manufacturing, tourism, agriculture and green energy that can collectively boost Namibia’s economic complexity. The government is already moving in this direction, as evidenced by the launch of the Welwitschia Sovereign Wealth Fund in 2022 to capture a share of resource revenues (from oil, minerals and green hydrogen) for investment in development projects and to bridge infrastructure gaps.
Such a fund, much like those of Norway and UAE, can finance national projects from new roads, power grids to education programs, ensuring that oil wealth translates into tangible assets and skills.
A Future Beyond Oil
Namibia may be on the cusp of becoming a significant oil producer, a status that, if managed wisely, could turbocharge development. However, we are keenly aware that without deliberate action, oil booms can leave countries no richer in the long run. The plan, therefore, is to treat this gift of nature as an engine to drive broader progress: modernizing infrastructure, nurturing new industries and investing in people.
By leveraging FDI in oil and gas as a springboard and channeling oil revenues into long-term diversification, Namibia can craft a new narrative: a resource-blessed nation that converted oil wealth into a complex, innovative and inclusive economy achieving prosperity that outlasts the pumps on the oil rigs.
Though excitement builds around Namibia’s oil and gas potential, a sense of cautious optimism must prevail. While recent discoveries have positioned the country as a promising frontier, securing the first FID and attracting future ones will depend on our ability to remain globally competitive.
To remain competitive in attracting global oil and gas exploration capital, Namibia must maintain a sharp focus on ensuring fiscal policy certainty, infrastructure readiness and local capacity development. Maintaining predictable fiscal terms into the future, including taxation, royalties and state participation are critical for investors evaluating long-term, capital-intensive projects.
At the same time, investment in enabling infrastructure such as ports, logistics corridors and pipeline systems is vital to support offshore development and reduce delivery risk. Strengthening local capacity through skills development, supplier enablement and institutional coordination will ensure that Namibians are equipped to participate meaningfully in the supply and value chains. Together, these measures will reinforce Namibia’s position as a stable and competitive destination for petroleum investment.
Namibia stands at a historic crossroads. With world-class oil discoveries and record-breaking investment inflows, we have a rare opportunity to reshape our economy and secure lasting prosperity for all citizens. But success will depend on deliberate action.
We call on all Namibians, whether in government, business, academia, or civil society to work collaboratively in a transparent manner to ensure that our oil and gas sector becomes a launchpad for economic complexity, skills development and inclusive growth; not just during the oil boom, but long after.
*Hafeni Motsi, Acting Senior Manager: Investment Analysis and Development at Namibia Investment Promotion and Development Board
