WAYNE RUKERO
CANDIDATE ATTORNEY
FISHER, QUARMBY & PFEIFER ATTORNEYS
I. Introduction
The World Economic Forum is the International Organization for Public-Private Cooperation. The Forum engages the foremost political, business, cultural and other leaders of society to shape global, regional and industry agendas. The Forum strives in all its efforts to demonstrate entrepreneurship in the global public interest while upholding the highest standards of governance. Moral and intellectual integrity is at the heart of everything it does. 1
The World Economic Forum Annual Meeting 2022 took place in the Swiss town of Davos from the 22nd of May 2022 – 26th of May 2022 under the theme ‘History at a Turning Point: Government Policies and Business Strategies’. Many socio-political and economic commentators expressed that this year’s Meeting convened at the most consequential geopolitical and geo-economic moment of the past three decades and against the backdrop of a once-in-a-century pandemic. To this end, the meeting brought together over 2000 leaders and experts from around the world – all committed to a “Davos Spirit” of improving the state of the world.
The war in Ukraine and the resulting tragedy called for global moral action. World leaders were thus challenged to address urgent humanitarian and security challenges as they simultaneously advance long-standing economic, environmental and societal priorities – all while reinforcing the foundations of a stable global system. In particular, the various sessions delved into conversations around global cooperation; economic rebalancing; society; equity and global health; nature; food and climate; industry transformation; and innovation, governance and cybersecurity.
II. NAMIBIA IN PERSPECTIVE
As far as Namibia is concerned, notions around equity and global health; industry transformation and economic rebalancing unequivocally invoke a mention of Namibia’s present-day oil and gas discoveries. It is common cause that Namibia has potentially hit its biggest oil discoveries since independence to help double its economy by 2040 according to the Chairperson of the National Petroleum Corporation of Namibia (Namcor), Ms. Jennifer Comalie. 2
In February this year, TotalEnergies SE stated that it had made a “significant” oil discovery off the coast of Namibia, three weeks after ShellPlc announced a find off the Namibian coast as well. To date, explorers have drilled more than a dozen exploration wells in search of oil and gas. Wood Mackenzie consultants estimated that the combined recoverable finds are at almost 4 billion barrels of oil and to this, Jennifer Comalie also indicated that that at their peak, these two discoveries could bring about $5.6 billion to a very small Namibian economy post its full production. Nevertheless, TotalEnergies and Shell executives cautioned that the discoveries still await an appraisal stage to accurately determine their size. 3
The $11-billion economy is thus banking on the discoveries to boost its budget and create more jobs in a nation with one of the world’s largest unemployment rates. With countries and companies pledging to hit their net zero targets around 2050, Namibia has about a decade to develop and make the most of the recent finds. 4
Despite these promising strides towards the transformation of the Namibian economy vis-à-vis entrepreneurship and economic rebalancing, the World Economic Forum remains simultaneously invested in its mission of accelerating the energy transition. In this regard, the Forum is committed to helping limit global warming to less than 1.5 degree Celsius above pre-industrial levels, while ensuring that the energy of the future is affordable, secure, and inclusive. It specifically aims to nurture the industry action, initiatives, and outlooks necessary to catalyze the transformation of the energy landscape – and to help accelerate the overhaul of national energy systems and key industrial sectors. 5
III. BALANCING COMPETING INTERETS
However, it is contended that navigating the energy transition requires a balanced approach. An approach that brings into equilibrium the three dimensions of the energy triangle, namely, economic development and growth, energy security and access, and environmental security. Thus, a bold move away from fossil fuels in the spirit of energy security and access and environmental security without due consideration of the economic benefits, small economies such as Namibia who having made major inroads into the oil and gas sector and seek to bank on, may have rather lopsided outcomes if all competing interests are not balanced effectively. 6
More than that, unprecedented events such as the Covid-19 pandemic and the Ukraine war have already caused severe economic downturns on both developed and developing countries globally. Russia’s invasion of Ukraine constitutes a perfect storm, creating headwinds on all three imperatives of the energy triangle and coupled thereto, high energy prices pose risks to economic growth and have raised the cost of living (i.e. food, housing, transportation) and commodities everywhere. 7
Moreover, in countries whose economies rely on fossil fuels and produce oil and gas, investment and extraction activities can directly increase economic activity from the oil and gas sector. Thus, the production of oil and gas for domestic consumption and export is perceived by many governments in low-and middle-income countries as a way to attract foreign investment, boost economic growth and provide a revenue stream to support economic development in other sectors. In addition, industrialisation may be powered by energy sources which generate electricity, produce heat and make things move. Further, oil and gas, along with coal, have traditionally been readily available as a power-generation source in previously industrialising economies. 8
IV. ALTERNATIVE TECHNOLOGIES, RESOURCE CURSE AND DUTCH DISEASE
It is however conceded that the world now has alternative technologies using renewable energy sources. These alternatives, and progress in the transition to renewable energy, vary between different energy uses across the world. Some experts also argue that the economies of countries rich in oil and gas resources have generally performed unsuccessfully in the past in comparison to resource-poor countries and that many oil-and gas-producing countries have not been able take advantage of their resource wealth and invest in increasing productivity in other sectors or in establishing strong sovereign wealth funds. 9
Although not inevitable, the ‘resource curse’ and ‘Dutch disease’ are often given as reasons for the poor economic performance of countries rich in natural resources. The latter occurs when an inflow of foreign money associated with the discovery of new oil and gas resources leads to an exchange rate appreciation, with negative consequences for other traded sectors, and a shift of domestic finance and labour into the oil and gas sector. The ‘resource curse’ in oil-and gas-producing countries describes rent-seeking behaviour by elites, inequalities between districts and ethnic groups within a country, and volatility in earnings. It is captured that this has been more significant in resource-rich countries with weak institutional development and poor governance. 10
Nevertheless, it must be stated that the relationship between oil and gas production and economic growth in low-and middle-income countries is not necessarily parallel but is affected by governance conditions and the efficacy of regulatory institutions, amongst others. 11
V. CONCLUSION
To this end, as previously pointed out above, navigating the energy transition requires a balanced approach. An approach that brings into equilibrium the three dimensions of the energy triangle, namely, economic development and growth, energy security and access, and environmental security. Although there now exists alternative technologies using renewable energy sources toward the just energy transition, and the ‘resource curse’ and ‘Dutch disease’ are vehemently advanced as reasons for past poor economic performance of countries rich in natural resources, it is maintained that low-to middle-income economies such as Namibia must be granted an opportunity to pursue its novel oil discoveries so as to upscale economic development, growth and industrialisation in an attempt to impugn the cost of living (i.e. food, housing, transportation) and decrease the over-commercialization of commodities. This may be achieved by scrupulously monitoring adverse governance conditions and the effectiveness of regulatory institutions. This must further be done with clear exploration and production plans and/or objectives which compliment contemporary technologies using renewable energy sources to achieve the just energy transition ideals and sustainability in the oil and gas sector.
REFERENCES
World Economic Forum. 2022. Available at: www.weforum.org ;
Bloomberg. 2022. Africa News: ‘Jackpot’ Oil Discoveries May Help Namibia Double GDP by 2040. Available at: www.bloomberg.com ;
World Economic Forum. 2022. Fostering Effective Energy Transition: 2022 Edition, Insight Report,
Scott A and Pickard, S. 2021. Oil and gas, poverty and economic development. Available at: https://odi.org/en/about/our-work/climate-and-sustainability/faq-2-oil-and-gas-poverty-and-economic-development/ ;
[1] World Economic Forum. 2022. Available at: www.weforum.org ; last accessed on 07 July 2022.
[2] Bloomberg. 2022. Africa News: ‘Jackpot’ Oil Discoveries May Help Namibia Double GDP by 2040. Available at: www.bloomberg.com ; last accessed on 07 July 2022.
[3] Ibid.
[4] Ibid.
[5] World Economic Forum. 2022. Fostering Effective Energy Transition: 2022 Edition, Insight Report, p4.
[6] Ibid.
[7] World Economic Forum. 2022. Fostering Effective Energy Transition: 2022 Edition, Insight Report, p7.
[8] Scott A and Pickard, S. 2021. Oil and gas, poverty and economic development. Available at: https://odi.org/en/about/our-work/climate-and-sustainability/faq-2-oil-and-gas-poverty-and-economic-development/ ; last accessed on 08 July 2022.
[9] Ibid.
[10] Ibid.
[11] Ibid.