Staff Reporter
THE former Minister of Mines and Energy, Tom Alweendo, has called on local banks and financial institutions to take a more active role in Namibia’s emerging oil and gas industry, warning that failure to do so will leave the country’s financial value chain in the hands of foreign institutions.
“If local banks and other financial institutions remain outside the oil and gas sector, the financial value chain will be captured elsewhere. Advisory fees will be earned elsewhere. Project structuring will happen elsewhere. Local companies may win contracts on paper but fail to deliver because they cannot obtain working capital, equipment finance, guarantees or insurance support. Then we will face a painful contradiction: Namibia will have oil activity, but limited Namibian financial participation. We must not allow that,” he warned.
Alweendo made these remarks during the Oil and Gas Seminar, which took place under the theme “Positioning Namibia’s Financial Sector for a Sustainable Oil and Gas Economy”.
The former minister highlighted that Namibia’s oil and gas sector is currently largely financed by foreign capital, as the Namibian banking sector was not built around offshore oil development, but rather on a model aimed at protecting stability and supporting growth.
“At present, Namibia’s oil and gas sector is largely financed by foreign capital, and understandably so. Upstream oil and gas is capital-intensive, technically complex, foreign-currency based and exposed to long timelines, geological uncertainty, commodity price risk and environmental responsibility. Our banking sector was not built around offshore oil development. It was built around the economy Namibia has had: households, mortgages, instalment finance, trade and conventional commercial lending. That model has protected stability and supported growth. But the economy before us is changing, and the question is whether our financial system will change with it,” he said.
According to Alweendo, the challenge is not to encourage banks to take on greater risk, but to make the oil and gas industry more bankable.
“That is the bridge we must build. On one side of the bridge is global oil capital: experienced, mobile and demanding. On the other is Namibia’s development ambition: jobs, skills, local firms, public revenue, infrastructure and industrial growth. Between the two stands our financial system,” he continued.
Alweendo warned that if that bridge is weak, foreign capital will come, extract what it needs and leave limited local capability behind. In contrast, he said, a strong bridge will enable foreign capital to serve as a partner in domestic development.
“That is why the financial sector matters. Not because local banks must finance everything; they cannot. Not because they must take exploration risk; they should be careful. Not because they must replace international capital; they will not. But because banks and other financial institutions can help turn contracts into companies, companies into employers, employers into taxpayers, and taxpayers into a stronger nation,” he said.
He stressed that he is not advocating reckless lending or government intervention in banks’ lending decisions. Instead, he called for policies that create the conditions for responsible financing, ensuring Namibia plays an active role in developing its own oil and gas industry.
“As a former Governor of the central bank, I know that banking is built on prudence. Banks do not lend because a sector is fashionable, because the country is excited, or because a project carries national emotion. They lend on the basis of risk, capital adequacy, governance and repayment capacity. That discipline must not be weakened. But as a former Minister of Mines and Energy, I also know this: when a country discovers a strategic natural resource, it cannot afford to be a spectator in its own development. A nation must ask: who will build capacity? Who will finance local participation? Who will prepare our local companies? Who will ensure that our people are not only watching ships offshore, but building businesses onshore?”
Alweendo said the industry represents hope for many Namibians seeking employment and business opportunities, making it essential that the country secures meaningful participation across the value chain.
“For the ordinary Namibian, the oil and gas question is not technical. It is deeply human. The young graduate in Lüderitz wants to know whether this industry will create a future for her. The small business owner wants to know whether he can supply services without being crushed by lack of finance. The welder, engineer and marine technician want to know whether this national resource will improve livelihoods. These expectations may be high. Some may even be unrealistic. But they are legitimate. People are asking a fair question: will this opportunity belong to Namibia, or will it merely pass through Namibia? That is the question we must answer through action,” Alweendo said.
Photo: Bank of Namibia
