STAFF WRITER
NAMIBIA needs to take hard lessons from how oil discoveries have become a curse than a blessing in most African countries by creating wealth for multinationals and failing to to improve the lives of the ordinary folks, a new report by Simonis Storm says.
Titled Macro Pulse: The Norway Model A Guiding Light for Namibia’s Oil Future, the report recommended Namibia take lessons on creating better regulatory architecture and making sure that national benefits are prioritized from Norway’s experience with oil discovery.
Namibia will most likely see the first production from the discovered hydrocarbons in a decade.
“The African experience with oil is replete with cautionary tales that underscore a simple truth:
hydrocarbons generate revenue, but only institutions create sustainable wealth.
“Nigeria’s decades-long production, still accounting for nearly 90 percent of export earnings, should have made it a continental powerhouse; instead, chronic under-investment in public services, recurrent macro-instability, and endemic corruption have eroded its social contract,” the report said.
Namibia has become a darling of many multinational oil companies including Total Energy, Shell, Recon Africa among many after finding hydro carbons on its coastline.
The report said like Namibia, Nigeria established a sovereign wealth fund in 2012 but remains a very small investment with barely N$60 billion (US$3 billion) to cushion fiscal shocks or smooth foreign-exchange cycles.
The report sais Angola’s trajectory is even starker.
“At the height of the 2000s boom, crude oil provided roughly 90 percent of export receipts and
nearly half of government revenue, yet much of that windfall was captured by political elites,” the report said in part, It said Equatorial Guinea offers a further warning to Namibia.
“ Although oil once propelled its GDP per capital to the upper ranks of Africa, weak governance, opaque budgeting, and minimal Macro Pulse: The Norway Model A Guiding Light for Namibia’s Oil Futures Investment in human capital have left infrastructure, health, and education systems fragile; resource wealth has bypassed the wider population,” said the report.
In contrast, Simonis Storm said, Norway illustrates what disciplined petroleum management can achieve.
“Hydrocarbons still comprise roughly 60 percent of Norwegian exports, yet fiscal policy remains
insulated from price swings because the Government Pension Fund Global exceeds USD 1.8 trillion and withdrawals are capped at the fund’s estimated real return about three percent per
annum,” the report said.
They said the transparent reporting and stringent ethical screens in Norway reinforce public trust, while the separation of commercial, regulatory, and policy functions prevents rent-seeking and
politicization.
“ The outcome is not merely wealth preservation but a resilient, broad-based
economy that consistently ranks among the world’s most equitable and least corrupt.
“For Namibia, poised between discovery and production, these contrasting narratives crystallization
the stakes. The choice is not whether oil will flow geology has already decided that but whether
the institutions governing it will strengthen or undermine the republic. The window to decide is
narrow and now,” the report said.
COMMENTS