Ndapwilapo Shimutwikeni
Considering the recent oil and gas discoveries in Namibia, local content was a central focus at the recently- concluded 6th edition of the Namibia International Energy Conference, which was attended by over 750 delegates from 46 nations.
In the oil and gas industry, local content refers to the development of local industries, a workforce and resources to support the operations of international oil companies within a country.
For Namibia, fostering ‘Namibian Content’ can significantly enhance economic growth, social development and technological advancement.
As highlighted by the World Bank, “Implementing effective local content policies can
drive economic growth and development in resource-rich countries. By building local
capacity and fostering the development of local industries, these policies can create jobs, enhance skills and ensure that a greater share of the benefits from natural resource extraction remain within the country”.
This article delves into the benefits of local content – in our case, ‘Namibian Content’ – as well as highlighting success stories from other countries.
Economic growth and job- creation
Local content policies can be a catalyst for economic growth by ensuring a significant portion of the industry’s value chain is retained within the country.
By promoting the use of local goods, services and labour, these policies can create a myriad of job opportunities for Namibians.
This not only fosters employment, but also stimulates the development of ancillary industries such as manufacturing, logistics and services, which support the oil and gas sector.
For instance, in Brazil, the implementation of local content requirements led to the growth of the domestic shipbuilding industry, creating over 30 000 jobs and reducing the country’s dependency on foreign vessels. Similarly, in Ghana, local content policies in the oil sector have resulted in increased employment, with over 7 000 direct jobs created since the inception of the policies, and the establishment of new businesses to service the industry.
Skills development
One of the most significant benefits of local content is the development of skills, and the transfer of knowledge to the local workforce.
By involving Namibians in various aspects of the oil and gas industry, from exploration to production, they gain valuable expertise and experience.
This not only enhances their employability within the sector, but also equips them with skills that are transferable to other industries.
Norway provides a prime example of how local content can lead to substantial skills development.
The country’s local content regulations required international oil companies to partner with Norwegian firms and train local employees.
Economic diversification
Local content policies can also contribute to the diversification of Namibia’s economy. By developing industries related to the oil and gas sector, the country can reduce its reliance on oil revenues, and build a more resilient economy.
This diversification can include the growth of sectors such as engineering, tourism, construction, information technology, education, agriculture and environmental services, which can provide stability during periods of oil price volatility.
Ownership
Local content initiatives often emphasise increased local participation and ownership in the oil and gas industry. By encouraging joint ventures and partnerships between international companies and local firms, Namibia can ensure a greater share of the profits remain within the country.
This can lead to the creation of local champions – that is, companies that grow to become major players in the sector.
Community Benefits
Local content policies can also drive social development by ensuring the benefits of the oil and gas industry extend to local communities.
In some countries, these policies can mandate investments in community infrastructure, education, healthcare and other social programmes, thereby improving the quality of life for Namibians.
Additionally, local content can foster a sense of ownership and pride among local communities, as they see tangible benefits from the industry operating in their region.
Technological advancement
By involving local companies and workforces in the oil and gas sector, local content policies can spur technological advancement and innovation. When local firms are part of the industry’s supply chain, they are often required to meet international standards, which drives them to improve their technologies and processes.
This can lead to a broader technological base in Namibia, benefitting other sectors of the economy as well.
Implementation
Successfully implementing local content policies requires strategic focus and proactive measures. Here are the key factors to consider.
Capacity-Building: Invest in developing a skilled local workforce and capable local companies. Establish comprehensive training and development programmes to transform the local talent pool, creating a robust and competent workforce that meets industry demands.
Streamlining regulatory processes: Simplify and improve regulatory frameworks to enhance compliance and boost investor confidence. Address bureaucratic challenges to ensure smoother operations for both international and local companies, resulting in accelerated project timelines and a dynamic business environment.
Financial support: Provide financial incentives and investment opportunities to empower local firms. This support helps them upgrade infrastructure and technology, enhancing their competitiveness and ability to meet industry standards, thus fostering collaboration and growth alongside established international companies.
Adapting to market dynamics: Encourage local companies to embrace the global nature of the oil and gas industry. Competing with advanced international firms can drive local companies to innovate and improve, enabling them to gain a strong foothold in the market.
By concentrating on these key areas, local content policies can be successfully implemented, leading to sustainable growth, innovation and a thriving local industry.
The benefits of local content in Namibia’s oil and gas sector are manifold. By focusing on economic growth, skills development, economic diversification, increased local participation, social development and technological advancement, Namibia can ensure that its oil and gas resources are a blessing for its population of three million. However, it is crucial to recognise and address the challenges associated with implementing local content policies. Learning from the success stories of countries like In Norway, Brazil, Nigeria, Qatar and the UAE, Namibia can implement effective local content policies that drive sustainable development and improve the quality of life for all Namibians.
It is important to take a pragmatic approach, considering Namibia’s unique qualities and context, to ensure the policies are tailored to the specific needs and potential of the country. The key to success is striking the right balance between local requirements and international competitiveness. In addition, governance is crucial to ensuring transparency, accountability and effective implementation, ultimately leading to sustainable and inclusive growth.
*This is an abridged version of the article. Ndapwilapo Selma Shimutwikeni is the founder of the distinguished Namibia International Energy Conference and CEO of RichAfrica Consultancy. She specialises in natural resources’ law and policy, and facilitates investment linkages.