Namibia has been warned against building an oil industry centred on crude exports while continuing to import higher-value petroleum products, with experts calling for investment across the value chain to retain more economic value domestically.
Julien Ayippey, Head of Strategy, Research and Data Analytics at First National Bank Ghana, said Namibia should use its offshore discoveries to develop opportunities beyond upstream production, including gas, refining, fuel supply and industries servicing the petroleum sector.
Speaking at the RMB and FNB Strategic Thought Leadership Summit, Ayippey said Ghana’s experience showed that becoming an oil producer did not automatically translate into the development of a complete domestic petroleum value chain.
He pointed to Ghana’s continued reliance on imports of refined petroleum products despite producing crude oil as an example of the economic value that can be lost when downstream capacity fails to develop alongside production.
“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,” Ayippey said.
Namibia currently imports its refined petroleum requirements, meaning the development of an offshore oil industry without corresponding downstream investment could leave the country exporting crude while continuing to spend foreign currency importing finished fuels.
Ayippey said the country should assess the entire petroleum value chain and determine where Namibian businesses could participate competitively rather than concentrating economic policy solely on extraction.
He said local content should be used to retain a greater share of spending generated by oil projects within the domestic economy.
“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,” he said.
Ghana’s experience also demonstrated that building domestic capacity takes time. Ayippey said about 22% of contracts in Ghana’s petroleum industry are classified as local content, while 35% involve joint ventures and about 90% of jobs are held by Ghanaians.
He said Namibia should therefore begin developing suppliers, skills and businesses before large-scale petroleum development and production begins.
The government has approved the National Upstream Petroleum Local Content Policy, which seeks to increase Namibian participation through employment, procurement, enterprise development, ownership, skills and technology transfer, research and innovation.
Former mines and energy minister and Alvenco Advisory founder Tom Alweendo said local content ambitions should, however, be commercially viable and should not impose costs that make Namibia less competitive as an investment destination.
He said local businesses should build the capacity required to compete for petroleum contracts rather than relying solely on regulatory protection.
Alweendo also urged Namibian companies to begin positioning themselves before oil companies take final investment decisions (FID), warning that waiting until projects are approved could leave domestic firms behind.
“I know of Namibians who are already moving, who are building their businesses, who are building capabilities,” he said.
“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.”
Ayippey said Namibia should also consider how future petroleum revenues can be channelled into other productive industries capable of generating economic activity after oil production eventually declines.
“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.
The challenge for Namibia, according to the speakers, is therefore not simply to become an oil-producing country, but to determine how much of the investment, procurement and value generated by the industry ultimately remains in the domestic economy.
