Namibia has a real potential to effectively address the triple social ills of unemployment, poverty and inequality, depending on how we decide to deal with recent opportunities in the mining sector. 

The mining and petroleum sectors are among the most important sectors of the domestic economy, and it is therefore not coincidental that they attract public attention. 

Now, with oil having been discovered in sufficient quantities that justify commercial production and with highly sought-after critical raw materials, we have a clear window of opportunity to transform our economy. 

Local content

In addition to revenue that will accrue to the State from the petroleum sector through various taxes such as income tax and royalties, the local economy stands to gain more from local content.

Local content is the value the extraction of oil brings to the local economy beyond resource revenues. This value will be obtained from the provision of ancillary services to the oil sector. Among these are the provision of services such as engineering, logistics, accommodation and catering. Some of the services can readily be provided by local businesses, while others might take a while before our local businesses are able to provide such services. 

Moreover, it shall be a requirement for international oil companies to ensure all services that can immediately be provided by our local entrepreneurs, are acquired locally. In cases where local entrepreneurs are not able to provide certain services, we will need to have a clear programme as to how to capacitate local entrepreneurs. This can be done, for example, through joint ventures with experienced international service providers.

In the mining sector, because of the energy transition brought about by the global undertaking to address the effects of climate change, there is now a global demand for critical raw materials and metals. Some of these minerals, such as lithium, are available in Namibia. 

For this reason alone, we cannot mine these minerals and export them in their basic raw form or with minimal added value. We must insist our critical raw materials are not exported without value being added locally. Where possible, we need to insist that processed minerals are used as inputs into locally-manufactured goods such as batteries, allowing us to export finished manufactured goods. 

What must we do to ensure that in the long run we have local ownership in the exploitation of our minerals and petroleum resources? Let us recall that Article 100 of our Constitution states that “natural resources below and above the surface of the land and in the continental shelf shall belong to the State, if they are not otherwise lawfully owned”. 

For this reason, we are making a case that local ownership must start with the State, in whose ownership our natural resources is vested. The proposed State ownership should take the form where the State owns a minimum equity percentage in all mining companies and petroleum production, for which it does not have to pay. 

This is generally referred to as free carry. Should it be desirable for the State to have ownership above the minimum ownership percentage, the State should also be allowed to acquire more equity at a cost. We believe that this is the most practical way to resolve the issue of local ownership. 

Another idea we have how to incentivise local ownership, is to establish a State-funded minerals exploration fund, which could be funded by a portion of the royalties that mining companies pay to the State. The fund will then be used to assist eligible local entrepreneurs who wish to invest in the mining sector.  

We will continue to use our best endeavours to ensure our minerals and petroleum resources are exploited in the best interest of the country and its people. 

Foreign ownership

Meanwhile, what has contributed to the status where both the mining and petroleum sectors are dominated by foreign investors is the fact that operating in these sectors requires complex technologies, and is extremely capital- intensive. 

These are two things that we unfortunately do not have. It is only those who have access to risk capital who have ventured to invest in these sectors. I am not mentioning this to justify the status quo. However, I am mentioning it so that we have a better appreciation of what we might have to do to change the status quo.

Resource curse

We know of countries where the discovery of oil became a curse, and there are also countries where the discovery became a blessing. I would like to believe that we all want our discovery to be a blessing rather than a curse. However, for it to be a blessing depends mostly on our policy environment, especially our institutional and political aspects of it. 

It has been proven that countries with strong institutions, a stable political system, and an effective legal framework were able to manage their oil revenue with a positive impact on their economies and for the benefit of their citizens. 

I have reason to believe that our institutions, our political system, and our legal framework are such that there is no reason why the oil discovery should not be a blessing. What we need to do, however, is to manage the resources with a clear understanding that the resources belong to both the current and future generations. 

Necessarily, therefore, the management of the resources must benefit both generations. 

Green hydrogen

Another exciting development in the energy sector is that of our ambitious programme to develop a synthetic fuels industry, using our renewable resources. Here, I am referring to our GH2 strategy. Our world-class solar and wind resources and vast open spaces make Namibia the ideal destination for future green hydrogen development. 

These conditions give reason for Namibia to be able to produce green hydrogen at highly competitive costs. We are looking to produce more than just green hydrogen as we aim to export green ammonia, e-methanol and synthetic kerosene. The final ambition is to also manufacture more complex products, such as green zinc and steel. Key to our GH2 strategy is the creation and utilisation of molecules for local industrialisation objectives, and for the decarbonisation of industrial sectors. 

Transparency

Among the practical challenges which have the potential to derail the effective management of our natural resources is corruption. To mitigate against corruption in the management of our natural resources and to ensure that in-country value-creation reaches ordinary citizens requires us to be transparent in all our conduct. We must be fair and transparent with our employment procedures, procurement processes, and in exercising oversight over policy implementation. The more we are transparent in our conduct, the higher the chance of realising our fair share of the economic benefits from our natural resources.