Namibian Economics To The Point – February 2022

1 Mar 2022

Good rains continued in the first half of February across most parts of Namibia, replenishing underground water aquifers and raising optimism for higher agricultural output.

President Hage Geingob travelled to Europe to attend an ocean summit in France and afterwards the European-African Union summit in Brussels. The head of state also visited a green hydrogen pilot plant and the world diamond centre in Antwerp. On 27 February, President Geingob flew for Qatar for a three-day official visit accompanied by the Ministers of Defence and Mining. On Monday, 28 February Geingob and the emir of Qatar, Sheikh Tamim bin Hamad Al Thani, discussed possible Qatari investments in Namibia, including the energy sector.

A private sector institution has started a three-year project to expose corruption in Namibia and enabling whistle-blowers to anonymously submit documents on an online platform.

Germany’s green hydrogen commissioner Dr Stefan Kaufmann held talks with the Namibian government in Windhoek regarding the development of a green hydrogen industry. Three green hydrogen pilot plants will be constructed in Namibia this year.

The Bank of Namibia has published its 2022 outlook for Namibia’s economy, forecasting a growth of 3.4 percent this year and 3.7 percent in 2023. This is due to growth prospects for the mining industry and most of the tertiary industries.

The graphic shows Namibia’s latest economic growth forecast.
Graphic: Bank of Namibia

Namibia’s central bank also increased the repo rate by 25 basis points from 3.75 to 4.00 percent in February.

Inflation in Namibia increased to 4.6 percent end of January, according to the mid-month announcement of the National Statistics Agency. At the end of December 2021 inflation stood at 4.5%

Another offshore oil discovery announced

The French Total Energies Group announced the discovery of a light oil deposit in the offshore exploration block 2193B along Namibia’s southern coast this month. They named the well “Venus-1X”.

This is the second oil discovery for Namibia and only some two weeks apart.

The oil giant Royal Dutch Shell officially announced its light oil and gas find on 4 February. Shell discovered light oil and gas in exploration block 2193A, the “Graff-1” well, next to the Total Energies block. The wells close to under 100 km apart from each other.

The Total Energies’ Venus-1X well struck oil in a depth of 6,296 metres and encountered a layer of least 84 metres of “oil-bearing sandstone in a good quality reservoir”.

“This discovery offshore Namibia and the very promising initial results prove the potential of this play in the Orange Basin, on which Total Energies owns an important position both in Namibia and South Africa,” said Kevin McLachlan, Senior Vice President for Exploration at Total Energies.

Block 2913B covers approximately 8215 km² in deep water and is situated some 290 km off the coast. Total Energies is the operator with a 40 percent working interest, alongside Qatar Energy (30%), Impact Oil and Gas (20%) and Namibia’s National Petroleum Corporation of Namibia NamCor (10%).

Shell has started drilling off the southern parts of the Namibian coast in December and made its oil discovery public early this month.

Shell owns 45 percent in the offshore Petroleum Exploration License 39 (PEL 39). The Qatari company Qatar Petroleum also has a 45% stake while the state-owned company Namibia’s NamCor owns ten percent.

President Hage Geingob visits France and Belgium

President Hage Geingob attended the first ever first ever "One Ocean" summit, in Brest in France in early February. President Emmanuel Macron had invited several heads of state and government, who already committed to a sustainable use of ocean resources since 2018, including President Geingob.

At the summit, the Head of the European Commission, Ursula von der Leyen, announced the beginning of a "global coalition". The 27 EU states and 16 non-EU countries, including Namibia, will cooperate to develop a contract for the sustainable use of the high seas and the protection of their biodiversity beyond these countries’ coastlines. The contract is envisaged to be signed this year.

Geingob also held talks with the Belgian King Philippe and visited the port of Antwerp, where the shipping company CMB (Compagnie Maritime Belge), has erected a pilot fuelling station for green hydrogen.

President Geingob also visited the Antwerp World Diamond Centre (AWDC). This included a tour within the diamond office, where he could inspect a shipment of Namibian diamonds. He also met with the AWDC leadership and industry stakeholders. Namibia is regarded as an important trade partner of the Antwerp diamond industry. The country is the sixth largest diamond producer in the world.

President Hage Geingob interacts with potential investors and senior staff of the Antwerp port authority.
Photo: State House Namibia

Three green hydrogen pilot projects

The Ohlthaver & List Group has announced plans to establish a green hydrogen fuelling station at the coast together with their Belgian partner CMB.Tech (Compagnie Maritime Belge. This will be an investment of N$271 million (about 15 million Euros). Ohlthaver & List established a new subsidiary, ‘Cleanergy’ to tap into green hydrogen opportunities beyond the pilot plant, said Sven Thieme, the O&L Group executive chairperson.

Construction will start this year and the plant will be operational by the end of 2023. The pilot facility will give O&L and CMB the opportunity to test under Namibian conditions.

Depending on the results, a larger scale production plant is on the cards in the second phase, when ammonia might be produced as transport fuel. Trucks used at the port of Walvis Bay and tugs in the harbour, locomotives and mining equipment are planned to be converted to run on green hydrogen fuel.

The chief executive of CMB.TECH, Alexander Saverys, said at the press conference, that Namibia had the potential to produce green hydrogen and ammonia on a large scale and at low cost. He was virtually linked from Antwerp.

In the meantime, two German companies intend to set up similar green hydrogen pilot plants in Namibia. This was revealed during a press conference in Windhoek at State House during the blitz visit of Germany’s innovation and green hydrogen commissioner, Stefan Kaufmann. Germany will provide financial assistance amongst others to draw up its green hydrogen strategy.

Private sector in initiative against corruption

The independent Institute for Public Policy Research (IPPR) announced plans to create a new national anti-corruption alliance and an online platform for safe and secure uploading of information about corrupt practices.

The three-year project will be called ‘Integrity Namibia’ and is funded by the US Embassy with N$3 million (about 175,440 Euros) in total.

“The overall aim of ‘Integrity Namibia’ is to establish a sustainable national anti-corruption network operating across civil society, private sector, the media, traditional authorities, faith-based organisations and other non-state actors,” said IPPR director Graham Hopwood at the launch.

The project will include a national mobilisation campaign alongside research- based interventions, publications and other activities on key policy and legal issues. The project will also include the establishment of an online whistle-blower-reporting platform.

Regional conferences will be held to bring all the possible partners in a national network together. This will be followed by a national conference planned for May to launch the network and the online platform. Although a law to protect whistle-blowers was adopted by Parliament in 2017, no activities to that regard have happened by the government since then.

Finance Minister tables new budget

The finance minister Iipumbu Shiimi tabled the budget for the fiscal year starting on 1 April in the National Assembly on 22 February. Total expenses will come to N$70,8 billion (about 409 million Euros) and public debt will increase from the current N$124 billion (about 725 million Euros) to N$140 billion (about 818 million Euros). This will increase the government debt to 71 percent of the gross domestic product (GDP). No tax increases or decreases were announced. “Tax changes and reforms have been postponed”, Minister Shiimi said.

Brigitte Weidlich

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