November 01, 2024
Economy

Enhanced oil and gas resource governance can turn our story around

March 20, 2023
Enhanced oil and gas resource governance can turn our story around

Last week, I presented at a conference hosted by the Namibian Institute of Corporate Governance (NICG). A question posed by the moderator lingered, long after the conference had ended: ‘How is Namibia faring in terms of natural resource governance for the benefit of Namibia and her people?’

Namibians are rightly skeptical as to whether Namibia’s abundant natural resources, in particular oil and gas resources will meaningfully ever benefit them, or even their children’s children.

Natural resource governance considers how power, decision making and responsibility for natural resources is administered in a country. As an economics graduate and strategy leader at NAMCOR, I see two key aspects to Namibia’s resource governance question – the biodiversity and conservation aspect, and the socio-economic aspect, also known as ‘Who gets to benefit?’

The first aspect, I believe, is being ably dealt with by a number of expert NGOs working closely with the Ministry of Environment, Forestry and Tourism, who together have been effective watchdogs for environmental preservation. As a country, we have done reasonably well in the protection, upliftment and scientific management of our biodiversity.  

The second aspect, concerning the governance architecture over our country’s natural resources, is a thornier matter. We have a satisfactory governance infrastructure but lack the capacity to sustain it – too few of us have a value addition mindset, and as a result, our economic structure predominantly rests on the the export of our raw materials, which creates wealth and jobs overseas, but not here at home.

The true litmus test for determining the strength of any resource governance architecture is its ability to serve both the people and the environment. If it does not serve both, it is not sustainable. Sustainability, therefore, is embedded not only in the question of how we manage our natural resources, but who manages it and who gets to benefit. Therein begins the ESG conversation. Why are we so rich in resources and yet so lagging in key development or economic indicators?

Namibia is ranked the fifth richest country in Africa in natural resource terms, boasting diamonds, uranium, copper, gold, lead, tin, lithium, zinc, and now oil. Despite these natural endowments, we are still unable to free many of our citizens from the shackles of poverty and unemployment. We are still battling chronic unemployment, which is projected to reach 23% in 2023 and 22.5% in 2024. Total youth unemployment is higher, at 34%. In addition, we have the godfather of all social evils, inequality, ranking as the world's second-most unequal country (after South Africa), with a gini co-efficient of 59.1 in 2015, according to World Bank estimates.

Our resource governance architecture is of little use if it cannot make a dent in these figures. Our governance architecture is a product of our natural resources ideological stance; essentially, our understanding of how decisions ought to be made in respect of natural resources. We need to see the trickle-down benefits of natural resource exploitation to the citizens of this country, specifically indigenous peoples’ and the youth.

In my view, one of the best ways to assess the effectiveness of any governance infrastructure is to establish its correlation with key economic and development indicators. In Namibia, these indicators are contained in our National Development Plan (NDP), the UN Sustainable Development Goals, on which our NDP is largely based, and the Harambee Prosperity Plan (HPP).

These documents peg Namibia’s prosperity to measurable outcomes such as poverty rates, unemployment rates and gini-co-efficiency. We have lofty goals, but are making too little progress in attaining them. The problem, I contend, is enmeshed in our somewhat lopsided handling of our natural resource governance model.   

The model is sound, but we have fallen short over the past few decades in aligning capacity building to the model. As a result, our current natural resource governance is not sustainable. If Namibia had applied a lazer sharp focus to capacity building and value addition from the start, we probably would not be seeing the unemployment rates we are seeing today, or an economic structure characterised by the export of raw materials.

The governance question must thus be considered alongside capacity building if we are to deliver sustainable natural resource management for the benefit of Namibia and her people. In short, we need a model that assigns equal weight to the governance structure, capacity building and sustainability.

A classic example of the governance-capacity-sustainability nexus was the establishment of the Namibia Petrofund in 1993, a direct response to the scarcity of skilled personnel in the petroleum industry at the time. The express purpose of the fund was to build capacity and mainstream competent Namibians into the petroleum industry, so that we would be ready and capacitated in the event of an oil discovery.

The fund has achieved its goal – many of the movers and shakers in Namibia’s petroleum industry today are products of the Petrofund programme. However, the fund addresses only the capacity of human resources working in the petroleum sector. The question that lingers – and the challenge that remains – is how Namibia’s natural resources governance architecture will facilitate the participation of all Namibians, especially the youth, in the management of our oil and gas resources.

The answer to this question lies in legislation and policy making, in particular, the much-anticipated Local Content Policy, under the auspices of the Ministry of Mines and Energy. The policy promotes the participation and development of domestic industries and labour in the oil and gas sector, and the transfer of technology and capital to Namibians.

Yet, legislation and policy alone are inadequate. The key issue is how we implement these.  As in all law and policy designed to better the lives of Namibians, we need an end-game mindset. If law and policy does not benefit ordinary Namibians, bringing the private sector, civil society and youth into the management of our natural resources, it will have failed to achieve its purpose.    

For this, we will need visionary leadership, a strong focus on preventing and curbing corruption, and smart partnerships with those who carry the reservoir of technical knowledge, such as international oil and service companies.

Corruption will derail the best laid plans unless we have the necessary mechanisms in place. Across the board, we need vigorous, consistently applied measures that ensure transparency and accountability in public administration, including rules on conflicts of interest, asset declaration and public access to information. We also need strong oversight mechanisms and bodies, staffed by competent individuals drawn from civil society and the private sector with a proven commitment to open governance.

We can turn our poverty story around, given the wealth lying beneath our feet, if we have the will and the zeal to do so. Our resource management architecture is not enough. We need to ensure that capacity building keeps pace with legislation, so that our whole orientation is toward mainstreaming Namibians, and in particular the youth, into sector participation, adding value to our raw materials, managing them for the benefit of all, while holding our leaders to account.  

*Shiwana Ndeunyema is the Executive: Business Strategy at the National Petroleum Corporation of Namibia (NAMCOR). Shiwana was also appointed as co-lead consultant by GIZ, acting on behalf of the Ministry of Public Enterprises, to provide consultancy services in the development of a State Ownership Policy Model for Public Enterprises (PEs) in Namibia. The Ownership Model is a pioneering policy document that seeks to professionalize and strengthen the Namibian state’s governance and ownership function over Public Enterprises in Namibia. Shiwana serves on various boards in Namibia’s private and public sectors and holds a bachelor’s honors degree in Economics from the University of Namibia, a Master of Science degree in HR, with specializations in Organisational Behaviour & Performance Management from Edinburgh Business School, Heriot-Watt University, along with other postgraduate qualifications in Knowledge Management & Human Resources.

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Last modified on Wednesday, 22 March 2023 18:06
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