!Gawaxab cautions against Dutch Disease amidst oil and gas optimism

Martin Endjala

The Bank of Namibia’s (BoN) Governor, Johannes !Gawaxab has cautioned against the Dutch Disease stating that despite the oil and gas discoveries, growth is not guaranteed, due to the volatility of commodity prices.

Dutch disease is a paradoxical situation where good news for one sector of the economy, such as the discovery of natural resources, negatively impacts the country’s overall economy.

He added that if the country has no long-term goal and vision for the future, it might succumb to Dutch Disease.

He said this yesterday, during a stakeholder engagement in Lüderitz, //Karas Region, while highlighting key opportunities presented by the recent oil and gas discoveries as well as green hydrogen developments. The discussion was held under the theme: “Positioning Namibia’s Oil and Gas Endowments: Avoiding the Dutch Disease”.

“Given the abundant oil and gas resources and green hydrogen potentials, the Lüderitz town possesses immense economic and developmental possibilities. However, various challenges, including infrastructure limitations and limited access to capital, may hinder its growth. To tap into this potential, stakeholders must engage and develop strategies to address these challenges head-on,” he said.

He stated that there is a need to position Namibia’s oil and gas endowments and manage the inherent risks of Dutch Disease that come with natural resource development.

He explained that Dutch Disease is a paradox that countries with an abundance of natural resources like fossil fuels and certain minerals tend to have less economic growth, less democracy and worse development outcomes than countries with fewer natural resources.

!Gawaxab stressed the critical importance for Namibia to adopt strategies to foster and maximise economic growth by drawing on various case studies.

He also emphasised that Lüderitz should not abandon what the town is known for, which is fishing and other industries and that it should work towards building for what is to come with its already existing structures and plans.

This, he said, would ensure that Lüderitz would not fall into the trap of Dutch Disease.

!Gawaxab highlighted the importance of enhancing the tourism and hospitality sectors of Lüderitz along with its educational institutions and healthcare facilities, to accommodate the anticipated increase in population.

He said Lüderitz is on the cusp of transforming into a bustling hub of economic and energy activity which would result in increased prosperity and the improvement of the living standards of its inhabitants.

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