Can Namibia turn oil into prosperity?
New oil discoveries could lift Namibia’s fortunes if it avoids the economic and political pitfalls of a resource boom.
In a nutshell
- New oil finds set the stage for possible conflict
- Namibia’s public is frustrated with socioeconomic conditions
- Corruption could squander the resource windfall
The recent discovery of large reserves of crude oil off the coast of Namibia has fueled speculation about the fate of the sparsely populated country, whose economy has been largely dominated by mining, agriculture, fishing and tourism.
Namibia and South Africa are two of the world’s most unequal societies in terms of income and wealth distribution, with Gini index scores of 59.1 and 63, respectively. Together with Zambia, they place three members of the Southern Africa Development Community (SADC) among the four most unequal countries globally.
The oil discovery thus cements Namibia’s place among those resource-rich countries in the region, which has a history of conflict over assets like minerals, oil and gas. It has led to talk about whether oil exploration could help Namibia double its gross domestic product (GDP) by 2040. And it could shape not only the country’s own development but also benefit the SADC as a whole, with successful exploration and management of oil revenue in Namibia delivering value to other jurisdictions in the region.
Inequality and deepening poverty
Poverty, inequality and unemployment are the scourges confronting the SADC’s postindependence democracies. Namibia is no exception, with its citizens largely dependent on subsistence agriculture. The region’s disproportionately young populations are increasingly agitated with worsening socioeconomic conditions, despite living in a resource belt.
Poverty has resulted in wider disenchantment among Namibia’s youth, as evidenced by the significant loss of support for the ruling SWAPO (South West Africa People’s Organization) in 2020’s local government elections. SWAPO’s liberation credentials – which include leading the country to gain independence in 1975 – did not meet expectations for leading Namibia to economic prosperity.
The region’s disproportionately young populations are increasingly agitated with worsening socioeconomic conditions.
A similar story has played out in South Africa and Zimbabwe, where liberation parties have squandered opportunities to rebuild. Corruption has threatened the credibility of institutions to the point where these democracies are generally seen as having failed to surpass what was achieved by pre-independence regimes.
The threat of corruption
In South Africa, the failures of local governments and weekly revelations about corruption by African National Congress (ANC) leaders led to a significant electoral decline in the local 2021 elections, with the long-dominant party receiving less than half of the total votes cast.
In Namibia, it was corruption in the allocation of fishing quotas that is thought to have sunk SWAPO in Namibia’s 2020 local elections, pointing to a possible shift of political trajectory not seen since independence.
Disclosures that SWAPO officials received bribes for fishing rights raise serious questions about whether the recent oil discovery will double the country’s GDP by 2040, as suggested – or instead multiply its political problems and socioeconomic tensions even sooner. As SWAPO faces the mounting task of remaining in power amid a failure to properly manage public resources, one must ask whether the latest resource finds will not plunge Namibia into new scandals, as with the “Fishrot” case.
Facts & figures
There is merit to the idea that the massive oil revenues expected to flow in Namibia could turn the country toward economic prosperity, with positive implications for the SADC. Alternatively, the revenue could drive new levels of corruption that fuel social tensions and threaten political stability, adding to a worrying regional trend of conflict around extractive resources such as oil and gas. Nations with a history of liberation struggles always face the possibility of full-blown conflict stemming from resource wealth. In these countries, the rhetoric of “resource nationalism” often dominates public discourse, threatening political stability.
Growing frustration with the poor management of exploration revenues has led to discussions of resource nationalization. Liberation parties in the SADC have been unable to stamp out such ideas, as they are also seductive to politicians struggling to maintain influence over a discontented public.
In this context of resource-related conflict, Namibia’s oil discovery should raise flags about the ensuing risks, unless some kind of a renewal of purpose takes place among the country’s ruling elites. That SWAPO is deeply implicated in the Fishrot corruption scandal is an indication of what might be lying ahead for Namibia, which now holds the region’s largest reserves.
Namibia might be looking at a more prosperous future, but the country may also fall prey to the “resource curse” of massive corruption and the undermining of democracy. In the broader region, communities already do not generally benefit from resource-driven wealth; the missing link is good governance. Policy incoherence and corruption ultimately reduce the capacity of states to respond to pressing issues such as poverty and unemployment, constituting a major threat to democratic stability and social cohesion.
With increasing tensions linked to extractive sectors, SADC governments face a need to be more transparent in managing the revenues generated. This would help nations benchmark alongside each other in moving toward development goals through resource extraction.
These are labor-intensive sectors that hold the promise of lifting up impoverished communities. Managed competently and with accountability, the discovery of oil in Namibia – as well as extractive industries across the SADC region – could change lives for the better, as long as they are not reduced to tools for fading liberation parties struggling to stay in power. Solidarity and cooperation among member states at the SADC level could help secure that outcome.