As global financial institutions continue to reduce or eliminate fossil fuel lending, emerging producers like Namibia are seeking to drive local and regional financial participation in capital-intensive projects and trade infrastructure.
A finance-focused panel at the 2023 Namibia International Energy Conference explored new pathways to financing and developing capital-intensive African energy and infrastructure projects. Under the theme, “Financing Energy & Power Projects: Trends, Outlook & Forecast,” a strategic panel examined how Namibia can finance large-scale energy projects and structure deals that benefit local economies.
“It is critical that we find a new pool of liquidity. Most of the European banks are moving away from hydrocarbon financing and this is clearly affecting projects across Africa,” said Paul Eardley-Taylor, Southern African Regional Head of Oil & Gas for Standard Bank. “Over time, the request from Namibia will be in the billions of dollars and we will need local banks to ramp up support at every level of the hydrocarbon value chain.”
In addition to leveraging foreign investment as an end within itself, panelists discussed how the sector can leverage foreign support as a means of creating local capacity through regional debt and credit-support instruments. Claire Hobbs, Chief Treasurer for the Bank of Windhoek, urged local firms to take a more active role in financing Namibia’s energy and infrastructure sectors.
“None of the banks are big enough on their own to take on these mega-projects and service these mega-loans,” said Hobbs. “In terms of smaller projects, we are prepared and ready. But we must work together to secure regional partners and back local content efforts. Bank Windhoek is 100% Namibian-owned and we are focused on supporting local capacity building.”
With a view to increasing the availability of domestic capital, traditionally conservative pension funds are now also getting involved in the sector. Government Institution Pension Fund CEO, David Nuyoma, for example, has invested in a range of new energy projects, concentrating primarily on the renewable energy space.
“Pension funds tend to be particularly risk-averse, but we’ve already made the call that if done correctly, we can do business in this space. We intend to invest incrementally, and have already invested into 105 MW of domestic renewables projects. This year alone, we intend to add 146 MW of generation capacity to our investment portfolio and will be positioned within half of all annual demand,” said Nuyoma.
While local and regional financing efforts are actualizing new developments, Bruce Hansen, Managing Director at Simonis Storm Securities Namibia, clarified why such efforts are critical to the long-term success of the Namibian – and African – energy industry.
“There are a cocktail of issues influencing global hydrocarbons development, from commodity pricing to portfolio alignment efforts in response to the Paris Agreement. The world will need 10,000 MW of generation capacity by 2030, and we need to be innovative in how we structure our capital for deployment,” said Hansen.
