Oil boom risks bypassing local banks
Namibia's commercial banks risk becoming spectators in the country's own oil and gas boom unless they move quickly to finance the sector, the former central bank governor and mines minister, Tom Alweendo, has warned.
Delivering the keynote address at a Bank of Namibia seminar on 4 August, titled From Discovery to Development: Preparing Namibia's Financial Sector for a Sustainable Oil and Gas Economy, Alweendo said the country stood at "a new frontier" but cautioned that discovery alone would not deliver prosperity.
"A discovery is not yet development," he told an audience of central bank officials, government ministers and banking executives. "A resource is not yet prosperity. A licence is not yet a livelihood."
Alweendo, who served as Governor of the Bank of Namibia and later as Minister of Mines and Energy, said the "distance between discovery and development is not travelled by geology", but by "institutions, capital, skills, discipline and trust".
A rare vantage point
Few Namibians are positioned to make this argument with the same authority. Alweendo opened his address with a wry aside about the circumstances of his invitation, telling the audience that on receiving the Bank of Namibia's letter he had briefly wondered "whether the Bank was inviting me to give a keynote address — or to come and explain something from my time as Governor". He said he had since read the letter more carefully and come to the seminar "relieved, grateful, and ready to speak about a subject that matters deeply to Namibia's future".
That dual background — central banker and resource-sector policymaker — shaped much of his address. "As a former Governor of the central bank, I know that banking is built on prudence," he said. "Banks do not lend because a sector is fashionable, because the country is excited, or because a project carries national emotion. They lend on the basis of risk, capital adequacy, governance and repayment capacity. That discipline must not be weakened."
But, he added, "as a former Minister of Mines and Energy, I also know this: when a country discovers a strategic natural resource, it cannot afford to be a spectator in its own development."
The risk of being left out
Namibia's oil and gas sector, Alweendo said, is currently financed almost entirely by foreign capital — a situation he described as understandable given the scale, technical complexity and long timelines involved in offshore development, but one that carries a real danger for the domestic economy.
"Our banking sector was not built around offshore oil development," he said. "It was built around the economy Namibia has had: households, mortgages, instalment finance, trade and conventional commercial lending. That model has protected stability and supported growth. But the economy before us is changing, and the question is whether our financial system will change with it."
If local banks stayed on the margins, he warned, the financial value chain around the industry would simply be captured elsewhere. "Advisory fees will be earned elsewhere. Project structuring will happen elsewhere. Local companies may win contracts on paper but fail to deliver because they cannot obtain working capital, equipment finance, guarantees or insurance support."
The consequence, he said, would be "a painful contradiction: Namibia will have oil activity, but limited Namibian financial participation. We must not allow that."
What ordinary Namibians are asking
Alweendo framed the stakes in personal terms, invoking the "young graduate in Luderitz" wanting to know whether the industry would build a future for her, the small business owner hoping to supply services "without being crushed by lack of finance", and the welders, engineers and marine technicians asking whether the discovery would improve their livelihoods.
"These expectations may be high. Some may even be unrealistic," he said. "But they are legitimate. People are asking a fair question: will this opportunity belong to Namibia, or will it merely pass through Namibia?"
He was careful, however, not to frame this as a case for lowering lending standards. "Oil and gas can create wealth, but it can also destroy capital," he said. "A poorly structured transaction does not become safe because it carries the language of local content. A weak company does not become bankable because it is close to opportunity. A bad loan does not become developmental because it is made in a strategic sector."
The task, he said, "is not to make banks less prudent. It is to make the sector more bankable."
Building the bridge
Alweendo used the image of a bridge to describe the role he wants Namibia's financial sector to play — connecting "global oil capital: experienced, mobile and demanding" on one side with "Namibia's development ambition: jobs, skills, local firms, public revenue, infrastructure and industrial growth" on the other.
"If that bridge is weak, foreign capital will come, extract what it needs, and leave limited local capability behind," he said. "If it is strong, foreign capital can become a partner in domestic development."
He set out three practical layers through which he believes local banks can enter the sector without taking on exploration risk. The first, and most immediate, is supplier and contractor finance — working capital, receivables discounting and foreign exchange services for Namibian firms that win service contracts. "This is not speculative oil finance," he said. "This is contract-backed banking."
The second layer is what he called industry-cluster finance: lending against the housing, training centres, workshops, shore bases and logistics systems that a major upstream sector requires onshore. "These are assets local banks and institutional investors can understand," he said. "They have physical form, broader economic use, and can support other sectors."
The third is participation in larger syndicated finance alongside international banks. "Namibian banks do not need to lead multi-billion-dollar upstream financing," he said. "But they should not be absent either. They can participate in smaller, well-secured tranches alongside international banks. That is how knowledge is transferred. That is how confidence is built. That is how local financial institutions move from the margin to the table."
A warning against repeating old patterns
Alweendo linked the financing question directly to Namibia's history of economic exclusion, warning that without deliberate action the oil and gas sector could simply "reproduce old patterns of ownership under a new sectoral name".
"Namibia's current economic ownership structure was shaped by history," he said. "The majority of our people were deliberately excluded from meaningful participation in the commanding sectors of the economy."
He called for credible, previously-excluded Namibian-owned companies to be included in the oil and gas finance agenda — while stressing this was not a call for lowered standards. "This is not a call for reckless lending or political favour," he said. "It is a call for structured, risk-managed inclusion. Where such companies have credible contracts, competent management and a clear path to delivery, lack of inherited collateral should not become a permanent barrier. That is how empowerment becomes measurable, bankable and real."
Policy clarity and the central bank's role
Turning to policymakers, Alweendo said financial institutions "cannot lend or invest into fog", and called for a petroleum policy framework that is "clear, stable and predictable", with unambiguous rules on taxation, environmental obligations, procurement and dispute resolution.
"Unclear rules do not empower the nation; they empower discretion," he said. "Unrealistic rules do not build local content; they produce fronting. Slow processes do not protect sovereignty; they destroy opportunity."
He also urged banking executives not to wait for the arrival of first oil before engaging with the industry, warning that by then "many relationships will already be formed" and international banks "already embedded". "Local banks that wait for perfect certainty may find that the market has moved without them," he said.
On the Bank of Namibia's own role, Alweendo was careful to draw a line between guidance and interference. The central bank's task, he said, was "not to instruct banks to lend irresponsibly, and not to direct credit in a way that weakens market discipline, but to convene, guide and clarify" — helping the sector work through prudential expectations, concentration limits, foreign-currency exposure and governance, and identifying where "regulatory clarity or risk-sharing mechanisms may unlock responsible local financing".
He also had a message for Namibian firms hoping to benefit from the sector. "The call for local participation is not enough," he said. "Companies must become finance-ready. They must have proper accounts, governance structures, safety systems, credible management and the ability to deliver under demanding contracts. Oil and gas procurement is unforgiving. The industry will not lower global standards because a company is local."
"From observation to preparation"
Alweendo closed his address with a direct appeal to each group in the room. "To the banks: this is not the time for fear. It is the time for disciplined learning," he said. "To policymakers: this is not the time for catchphrases. It is the time for clear, bankable rules. To regulators: this is not the time for rigidity. It is the time for intelligent supervision. To industry: this is not the time to treat local participation as a compliance burden. It is the time to build genuine Namibian capability. To local businesses: this is not the time for entitlement. It is the time to become competitive, transparent and reliable."
He called for the seminar to produce more than discussion, proposing "a roadmap, assign responsibilities and a regular progress review to assess what has been financed, what constraints remain, and who is accountable for removing them".
Reflecting on the choice facing Namibia as a resource-rich but still-developing economy, he said some countries had allowed natural resource wealth to divide them, make them careless, or weaken their institutions, while "other countries make a different choice. They use natural resources to build capacity. They strengthen institutions. They invest in people. They deepen local financial markets."
