Prospects and pitfalls of Namibia's oil and gas sector

Abstract

Namibia is an oil and gas frontier state. Expectations of a coming boom with ensuing positive effects for the entire economy are high. The author assesses the prospects of the Namibian oil and gas sector, drawing on the concept of ‘linkages’. Because the corresponding literature neglects political challenges, the author complements the linkage concept with the resource curse approach so as to elaborate on important pitfalls, advancing the state of the art in terms of theories. The empirical analysis is based on a survey of Namibian newspapers, a database and reports on elite capture related to oil and gas as well as 14 interviews with domestic and foreign companies, consultants and public authorities. It is shown that important economic benefits result from the oil and gas sector. They will further increase if large-scale extraction begins. Whereas many political downsides of resource booms do not apply to Namibia, the elite appear to have turned the licensing system for exploration into a means of self-enrichment. This implies that tremendous amounts of money that should have been available to the state – and thus to the Namibian society as a whole – have ended in private pockets.