Let Namibia\'s oil discoveries be a blessing

Namibia is on the cusp of a historic transformation. With recent offshore oil discoveries, the country has the potential to become one of Africa\'s major energy producers.

In previous articles, wearing my economist’s hat, I spoke of the need to avoid the ‘resource curse’ and Dutch disease. Many column inches have already been filled by other professionals, both nationally and internationally, warning of a potentially bleak outlook for Namibia, with benefits accruing only to a privileged few.

Other countries serve as cautionary tales in handling their newfound oil riches. I do not wish to name specific nations, as naming and shaming serve little purpose. What matters is that Namibia embraces the challenge of harnessing oil revenues for sustainable development while avoiding the traps of mismanagement and overdependence.

In some countries, major oil discoveries created expectations of immediate wealth for all. Billions of US dollars poured in from oil majors, yet widespread poverty persisted. Citizens often felt they saw few benefits from the petrodollars. The reasons are many, but by analysing these pitfalls, Namibia can work to ensure oil becomes a blessing for every Namibian.

Weak institutions, governance gaps, and a lack of strong regulatory and oversight frameworks often create environments where opaque contracts and limited accountability flourish. Encouragingly, Namibia is taking a conscientious approach in setting up its governance structures. The government’s direct engagement with oil companies and their suppliers shows a serious intent to secure benefits that go beyond tax revenue.



Opportunities

There is recognition that this is a once-in-a-lifetime opportunity to uplift the socio-economic status of every Namibian, provided oil revenues are managed effectively. Channelling resources into healthcare, education, and infrastructure will be critical. Namibia has already established the Welwitschia Fund, a sovereign wealth fund modelled on successful examples such as Norway and Botswana. It is particularly positive that the fund has strict withdrawal limits and a clear mandate to safeguard the country’s long-term future.

To avoid the Dutch disease, which has plagued other resource-rich nations, sensible long-term planning will be vital. Oil wealth alone does not guarantee prosperity. Revenues must translate into tangible improvements in jobs, healthcare, education, and rural development. By addressing inequality and poverty directly, the government can ensure oil wealth benefits all citizens - not just elites or foreign investors.

We must also guard against over-reliance on oil. Revenues should act as a catalyst for diversifying the economy, stimulating sectors beyond oil. This will help build resilience against global price shocks.

Corruption and mismanagement remain key risks. Many countries have seen billions lost to patronage networks and poorly managed state enterprises. President Netumbo Nandi-Ndaitwah has vowed to stamp out corruption. If delivered, this commitment will ensure oil resources truly become a blessing.

Namibia must recognise that oil can be both a blessing and a curse. By embracing the principles of Harambee and working together, we can ensure that oil revenues improve the lives of all Namibians.

Namibia’s oil discoveries represent a once-in-a-generation opportunity. By building strong institutions, managing revenues transparently, diversifying the economy, and investing in people, Namibia can chart its own path. Oil should not define Namibia - it should finance its future.



John Steytler is an economist and the founding member and MD of the consultancy firm R&J Steytler.