Namibia must use the period before first oil production to prepare its financial system, businesses and institutions for the scale of investment and economic changes expected from petroleum development, Bank of Namibia Governor Ebson Uanguta and Industries, Mines and Energy Minister Modestus Amutse have said.
Speaking at the Bank of Namibia Annual Symposium on Thursday, Uanguta said the central bank was strengthening its macroeconomic forecasting and financial stability monitoring to account for the potential impact of oil and gas development.
Large investment inflows and future petroleum exports could affect Namibia’s balance of payments, economic growth and inflation, while financial institutions could become increasingly exposed to large projects and companies operating across the petroleum value chain, he said.
“We are therefore strengthening our own readiness for this transition. This includes enhancing our macroeconomic forecasting frameworks to systematically incorporate oil and gas variables and deepening our financial stability surveillance to ensure that banking and non-banking institutions understand and prudently manage emerging risks, including concentration, foreign-currency and project risks,” Uanguta said.
He said the central bank was also strengthening staff capabilities through targeted training, benchmarking and peer learning as Namibia prepares for potential oil production.
Amutse said Namibia must ensure that petroleum investment builds economic capacity beyond the oil industry, particularly by enabling local companies to participate in procurement and supply opportunities.
He called for closer coordination between government, the Development Bank of Namibia (DBN), commercial banks, insurers and petroleum operators to develop financing arrangements for capable Namibian businesses seeking to enter the petroleum value chain.
“Capability without finance remains capability on paper. Our task is to help it become a business in the real economy,” Amutse said.
He said local companies could struggle to secure the financing needed for specialised equipment, working capital and performance guarantees, even where they have the technical capacity to execute petroleum contracts.
Amutse said the DBN already provides contract finance, asset finance and performance guarantees, but these instruments would need to be adapted and scaled as petroleum procurement opportunities develop.
“Can operators provide early visibility of procurement? Can financiers build suitable working-capital and guarantee arrangements around credible contracts? Can risk be shared sensibly without lowering financial or technical discipline?” he said.
Uanguta said financing would become increasingly important as Namibian companies seek opportunities in the sector, requiring financial institutions to understand their changing funding requirements while maintaining prudent risk management.
Both Uanguta and Amutse also called for greater emphasis on skills development, technology transfer, entrepreneurship and domestic business capacity before production begins.
Uanguta said local participation should extend beyond ownership and procurement to building the ability of Namibian companies and workers to progressively undertake more sophisticated activities in the petroleum industry.
Amutse said infrastructure developed to support petroleum activities should also benefit mining, manufacturing, agriculture and surrounding communities rather than operate solely around the oil industry.
“The true measure of first oil will not be the first barrel sold. It will be the capabilities that remain in Namibia long after the last barrel is gone,” Amutse said.
Uanguta said lessons from oil-producing countries, including Nigeria and Guyana, demonstrated the importance of putting legislation, regulatory capacity and transparent revenue-management systems in place before production starts.
He said decisions taken during the pre-production period could have long-term consequences because institutional and commercial arrangements can become more difficult and costly to change once major investments are established.
