Namibia has sufficient domestic capital to finance meaningful participation in its emerging oil and gas industry, but structural bottlenecks, slow decision-making and weak investment mechanisms risk limiting local ownership, according to Cirrus Capital Director Roland Brown.
Speaking at the Bank of Namibia’s seminar on preparing the financial sector for a sustainable oil and gas economy, Brown said the country has an estimated N$350 billion in domestic savings and a banking sector with about N$195 billion in assets, providing a strong financial base for local investment.
However, he warned that the biggest challenge is not access to capital, but the lack of structures capable of connecting available funding with investment opportunities in the oil and gas value chain.
“So, the implication of this, I think, is that there is capital in Namibia. There are the commercial banks, obviously they have capital, as well as pension funds, insurers, asset managers, and private savings. In addition to all the contractual money, there is also private capital from high-net-worth individuals and individual savings, which may be willing to participate in this oil and gas space. I would go as far as arguing that capital is probably not the single biggest constraint for owning significant portions of the value chain,” Brown said.
He said institutional investors, including pension funds, insurers and asset managers, are well positioned to finance long-term investments in the sector but are often constrained by regulatory requirements, risk considerations and lengthy approval processes.
Brown said Namibia already has the capacity to establish financing vehicles such as private equity funds and special purpose vehicles to support local participation, but warned that bureaucracy could prevent the country from capitalising on opportunities.
“Putting in place a technically suitable structure is not really the big problem. The structures we need are trivial. But if you allow the structure to become the barrier, you will watch the industry develop offshore while Namibia still quibbles,” he said.
Brown argued that Namibia must move beyond discussions around local content and develop practical mechanisms that enable genuine local ownership across the oil and gas value chain.
He said local companies cannot be expected to shoulder all commercial risks without support if the country wants to build a competitive domestic industry.
“We should be looking at conditions when it comes to this industry. Some of those conditions should involve risk sharing around genuine industry development from a Namibian perspective. Perhaps we need to put aside some standard global operating procedures and allow a little bit of risk when it comes to appointing Namibian entities whether pre- or post-FID so that we can start to develop the local industry. If a Namibian entity must take all the risk, and there is no risk sharing, we will be left with taxes and little else,” he said.
Brown also called for faster decision-making across Namibia’s financial and regulatory institutions, saying lengthy approval processes could result in missed investment opportunities.
Comparing Namibia with established oil-producing countries, he said major transactions in Norway are routinely completed within two months, while decision-making in Namibia often takes considerably longer.
“In Norway, the norm to transact on an asset is two months. Two months from the day you meet to the asset changing hands. In Namibia, very little happens in two months. You might get a meeting with your bank,” he said.
He warned that unless reforms are implemented quickly, Namibia risks seeing a significant share of investment opportunities and value creation migrate offshore, leaving the country to benefit primarily through tax revenues rather than meaningful ownership and participation in the sector.
