World Bank study says no to NEEEF
• Investors closely monitor empowerment bill
The Bretton Woods institution says Namibia's inequalities can be addressed through public procurement systems.
A study commissioned by the World Bank has concluded that there is no need for the National Equitable Economic Empowerment (NEEEF) Bill, set to be introduced at a time when value addition and local empowerment is pushed in Namibia’s green hydrogen and oil and gas industry.
The idea behind NEEEF was to ensure a balanced redistribution of wealth and resources in the country. The emotive proposed law originally sought to compel investors to sell at least 24% ownership - or as otherwise determined by the minister of trade - to previously disadvantaged Namibians.
Government has since shelved its hardline stance, but investors remain unsure of setting up shop in Namibia until there is absolute certainty about what the law would look like.
In its national green hydrogen strategy development, the World Bank study observed that no general local content nor ownership legislation is currently enacted in Namibia, although NEEEF is one of the ways government seeks to address the issue.
Local content refers to the value that an extraction project brings to the national economy beyond revenues derived from the resource directly.
In the looming Namibian oil industry, local content laws would ensure equal opportunities for citizens, residents and domestic industries to partake in oil and gas exploration activities.
Because there is generally no local content or ownership legislation enacted in Namibia, the World Bank study suggested such ambitions can be achieved through public procurement processes to address economic inequalities in the country.
No need
An alternative, the study suggested, would be to include certain requirements or make local content part of bid evaluation criteria and - if for some reason the project is not procured by competitive tender - electricity generation licences can be used to introduce the relevant requirements.
Its stance is that training and education must accompany local content requirements due to a skill deficit in the Namibian green hydrogen value chain, given that expats demand visas, permits and high salaries.
“There is no need to enact the NEEEF Bill, which in any case has been in draft form for several years without the apparent need for it to be enacted,” a draft of the study read.
“If local ownership rules are introduced as a condition to tender, it needs to be clarified whether a ministry or state-owned entity being granted the right to a percentage shareholding, if applicable, could also double up as a previously disadvantaged Namibian and thereby be granted additional ownership rights. However, it is not recommended to undertake such a doubling-up approach.”
Concerns have been repeatedly raised over the lack of value addition in the country, which has left Namibia dependent on imports - despite minerals being mined here.
Rightly sceptical
In an opinion piece published a month ago, now Namcor acting CEO Shiwana Ndeunyema wrote that Namibians are rightly sceptical as to whether the country’s abundant natural resources - in particular oil and gas - will meaningfully benefit them, or even their children’s children.
He added that the challenge however is how Namibia’s natural resources governance architecture will facilitate the participation of all Namibians, especially the youth, in the management of oil and gas resources.
“The answer lies in legislation and policy-making, in particular the much-anticipated local content policy under the auspices of the mines and energy ministry. The policy promotes the participation and development of domestic industries and labour in the oil and gas sector, and the transfer of technology and capital to Namibians.
“Yet, legislation and policy alone are inadequate. The key issue is how we implement them. As in all law and policy designed to better the lives of Namibians, we need an end-game mindset. If law and policy do not benefit ordinary Namibians, bringing the private sector, civil society and youth into the management of our natural resources, they will have failed to achieve their purpose,” he wrote.
Meanwhile, a 2017 report by the Oxford Institute for Energy studies stated that resource-rich countries in the Middle East and north Africa, especially Gulf countries - Kuwait, Iran, Iraq, Bahrain, Oman, Qatar, Saudi Arabia and the United Arab Emirates - are increasingly inserting local content requirements into their legal framework.
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The idea behind NEEEF was to ensure a balanced redistribution of wealth and resources in the country. The emotive proposed law originally sought to compel investors to sell at least 24% ownership - or as otherwise determined by the minister of trade - to previously disadvantaged Namibians.
Government has since shelved its hardline stance, but investors remain unsure of setting up shop in Namibia until there is absolute certainty about what the law would look like.
In its national green hydrogen strategy development, the World Bank study observed that no general local content nor ownership legislation is currently enacted in Namibia, although NEEEF is one of the ways government seeks to address the issue.
Local content refers to the value that an extraction project brings to the national economy beyond revenues derived from the resource directly.
In the looming Namibian oil industry, local content laws would ensure equal opportunities for citizens, residents and domestic industries to partake in oil and gas exploration activities.
Because there is generally no local content or ownership legislation enacted in Namibia, the World Bank study suggested such ambitions can be achieved through public procurement processes to address economic inequalities in the country.
No need
An alternative, the study suggested, would be to include certain requirements or make local content part of bid evaluation criteria and - if for some reason the project is not procured by competitive tender - electricity generation licences can be used to introduce the relevant requirements.
Its stance is that training and education must accompany local content requirements due to a skill deficit in the Namibian green hydrogen value chain, given that expats demand visas, permits and high salaries.
“There is no need to enact the NEEEF Bill, which in any case has been in draft form for several years without the apparent need for it to be enacted,” a draft of the study read.
“If local ownership rules are introduced as a condition to tender, it needs to be clarified whether a ministry or state-owned entity being granted the right to a percentage shareholding, if applicable, could also double up as a previously disadvantaged Namibian and thereby be granted additional ownership rights. However, it is not recommended to undertake such a doubling-up approach.”
Concerns have been repeatedly raised over the lack of value addition in the country, which has left Namibia dependent on imports - despite minerals being mined here.
Rightly sceptical
In an opinion piece published a month ago, now Namcor acting CEO Shiwana Ndeunyema wrote that Namibians are rightly sceptical as to whether the country’s abundant natural resources - in particular oil and gas - will meaningfully benefit them, or even their children’s children.
He added that the challenge however is how Namibia’s natural resources governance architecture will facilitate the participation of all Namibians, especially the youth, in the management of oil and gas resources.
“The answer lies in legislation and policy-making, in particular the much-anticipated local content policy under the auspices of the mines and energy ministry. The policy promotes the participation and development of domestic industries and labour in the oil and gas sector, and the transfer of technology and capital to Namibians.
“Yet, legislation and policy alone are inadequate. The key issue is how we implement them. As in all law and policy designed to better the lives of Namibians, we need an end-game mindset. If law and policy do not benefit ordinary Namibians, bringing the private sector, civil society and youth into the management of our natural resources, they will have failed to achieve their purpose,” he wrote.
Meanwhile, a 2017 report by the Oxford Institute for Energy studies stated that resource-rich countries in the Middle East and north Africa, especially Gulf countries - Kuwait, Iran, Iraq, Bahrain, Oman, Qatar, Saudi Arabia and the United Arab Emirates - are increasingly inserting local content requirements into their legal framework.
[email protected]
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