Namibia is poised to be one of Africa’s major oil-producing nations with estimated reserves of 12 billion barrels of oil. If these estimates are confirmed, this will place Namibia fourth in terms of proven oil reserves in Africa, behind Libya, Nigeria, and Algeria and slightly ahead of its northern neighbour Angola.
Furthermore, in addition to the economic expectations, there are huge political expectations. Most notably, the wealth generated from the discoveries is the surest way for Namibia to achieve our founding father’s Vision 2030, which aims to “reduce inequalities and move the nation significantly up the scale of human development, to be ranked high among the developed countries in the world.”
Namibia has vast mineral resources, like fish and uranium, but none compare to the oil discoveries in terms of dollar value.
Local content and value creation
The oil and gas sector is primarily about getting oil out of the ground and shipping it to wherever it is needed. Simply put, the bulk of opportunities lie in the facilitation of this process, like logistics, housing and legal.
Namibia, as a new oil and gas frontier, has developed the local content (LC) policy for the oil and gas industry which has been adopted by the cabinet recently. This policy prioritises the involvement of Namibian citizens in the oil and gas industry, fostering the retention of oil and gas revenues within the country, and thereby enhancing socioeconomic development.
This is important as some international oil companies tend to favour vertical integration, which can disadvantage the participation of local service providers in the industry.
At the same time, Namibia’s law recognises the crucial role international investors play in developing the oil and gas sector. These companies contribute invaluable experience, expertise, technology, and capital, where local firms, despite good progress, often face capacity limitations. Therefore, a good balance is required.
Local content refers to the percentage of locally produced materials, personnel, financing, goods and services rendered to the oil industry, which can be measured in monetary terms.
Local participation refers to the level of Namibian ownership in the oil and gas industry. This position of supporting local participation has encouraged the likes of CABSHIP, the large Angolan oil and gas logistics company, to form a local joint venture with an indigenous Namibia company.
Namibia’s local content legislation objectives include the development of local capacities in the petroleum industry value chain through education, skills transfer and expertise development, transfer of technology know-how, and active research and development programmes; A minimum local employment level and in-country spend for the provision of the goods and services in the petroleum industry value chain; An increase in the capability and international competitiveness of domestic businesses; the creation of petroleum and related supportive industries that will sustain economic development; and a statutory minimum degree of participation, and in some instances, control, for Namibians over projects, goods and services, businesses and financing in the petroleum industry value chain.
There are different considerations and principles underpinning the legislative objectives, but I am highlighting them here since it is saying a lot of altruistic sweeping statements and doing good for the nation but a lot of enabling this sector has to do with the largest enabler, which is the Namibian maritime sector. Namibia should be a seafaring nation based on its Economic Exclusive Zone area size and the GDP contribution of the fishing industry alone.
Maritime considerations for local content policy
Namibia’s maritime law is lacking in many areas and needs to be updated for the LC policies to be effective (Konstantinus, 2019; Stanisland, 2012).
Maritime law is particularly critical for Namibia to realise value from the oil discoveries because of three big reasons: firstly, all of the confirmed oil finds are at sea; as such, most of the logistics functions will happen at sea and concentrate around the coastal towns of Lüderitz and Walvis Bay.
Secondly, Namibia’s maritime laws are outdated and will, in most parts, inhibit the realisation of full value for Namibians.
The following areas of maritime law are specifically identified as critical for oil and gas operations:
Maritime education: The institutions and regulations for training and certification of seafarers in Namibia do not meet international standards. updated STCW due to the act not being amended and enabling the institutions.
Admiralty law: The body of law that governs nautical issues and private maritime issues in Namibia is archaic and must be overhauled.
Ship registration and laws governing ship operations are so old they present barriers for local maritime business startups.
These maritime laws must be revised not only because it is necessary to promote economic development but also because they could make maritime operations seamless and in line with international best practices.
Furthermore, the maritime laws of Namibia, which should form the framework within which LCPs are found wanting and must be updated as a matter of urgency (Konstantinus, 2019; Stanisland, 2012). Maritime law is particularly critical for Namibia because most of the confirmed oil finds are at sea, and oil exploitation will happen at sea.
The following areas of maritime law are specifically identified as critical for oil and gas operations:
Maritime Education: The institutions and regulations for training and certification of seafarers in Namibia do not meet international standards.
Admiralty Law: The body of law that governs nautical issues and private maritime issues in Namibia is archaic and must be overhauled.
Ship registration and laws governing ship operations are so old they present barriers for local maritime business startups.
These maritime laws must be revised not only because it is necessary to promote economic development but also because they could make maritime operations seamless and in line with international best practices.
The benefits of introducing these incentives will result in more ships registered in Namibia.
Compounded to the above, the objective of the Namibian government must be to give preference to local shipowners via maritime cabotage. Konstantinus et al (2019) argue that the development of regional maritime transport in Europe was achieved majorly through maritime cabotage, in particular the expansion of the maritime cabotage area in 1985 and later policies that promoted the use of maritime transport.
The proposal for maritime cabotage is enhanced at the African continental level by the recently passed African Integrated Maritime Strategy, which in Article 15 provides that “[AU] Members shall promote [maritime] cabotage and effective participation of private sector operators at national, regional and continental levels.”
This consideration further had foresight of the Africa Continental Free Trade Area agreement (AfCFTA), which, when implemented, will supposedly create a single market of goods with a combined GDP of US$3.2 trillion.
Such a market has the potential to drastically accelerate the use of maritime transport for intercontinental trade, and Namibia is currently a signatory of this trade.
In conclusion, skills and knowledge in maritime will go far in extracting real value from local content and, in turn, will have a compounded effect of real value of Namibians, not just state benefits derived from petrodollars, but upskilling is more meaningful for the nation as a whole.
-Dr Abisai Konstantinus is passionate about the sea.
