According to the African Development Bank, real GDP in the country is expected to grow by 3.5% by the close of 2023 and 3% in 2024. That said, the COVID-19 pandemic heavily impacted Namibia’s economy – which is export-oriented, trade-dependent and derives a sizable share of its earnings from tourism – resulting in prolonged economic contraction, higher spending, lower revenues and a growing fiscal deficit.
As a result, the country has adopted a tight monetary stance with high interest rates, having raised its main lending rate several times over the past year to curb inflation. To finance the expansion of its energy sector, therefore, Namibia is seeking to attract new investors, engage the local and regional banking sector, and develop innovative financing tools that can ensure long-term and sustainable economic growth.
Financing Energy Sector-Led Growth
In this context, the string of recent hydrocarbon discoveries in Namibia’s Orange Basin – TotalEnergies’ Venus-1 and Shell’s Graff-1, La Rona-1, Jonker-1X and Lesedi-1X – could have a transformative effect on the country’s revenue streams.
While commercial quantities are still being evaluated, the monetization of oil and gas from recent discoveries is anticipated to bring more than $6.5 billion in taxes and royalties alone, create more than 3,600 jobs and potentially double the size of the Namibian economy by 2040.
This would require sizable new investment in exploration, production and associated infrastructure, with Namibia already recording a higher inflow of direct investment in 2022 owing to equity injections for exploration activities, as well as higher retained earnings.
These and more will be unpacked in Energy Capital & Power’s Energy Invest Namibia publication.