Oil exploration bleeds N$4.8bn out of Namibia

Namibia’s growing oil and gas exploration industry is creating a new economic challenge, with billions of dollars flowing out of the country to pay for foreign technical, consulting and other specialised services.

The Bank of Namibia says Namibia recorded a N$4.8 billion net outflow on services in the second quarter of 2026, an increase of 51.1% from a year earlier.

The increase was driven partly by spending associated with the country’s ongoing offshore oil and gas exploration and appraisal drilling.

The bank says the increase in services payments was linked to foreign expertise being used in the mining and oil and gas sectors.

“The increase was largely driven by higher outflows under other private business services, particularly managerial and consulting services by entities in the mining sector coupled with technical and trade-related services associated with the ongoing oil and gas exploration and appraisal drilling activity,” the bank says.

In simple terms, Namibia is paying more money to companies outside the country for specialised services needed to explore and assess its offshore resources.

The money leaving the country

The services bill forms part of a wider external deficit that reached N$12.1 billion during the second quarter.

The bank says the current account deficit widened by N$6.8 billion compared with the same quarter last year, mainly because Namibia imported more goods and paid more for services from abroad.

The services outflow alone increased by 30% compared with the first quarter reaching N$4.8 billion.

Oil and gas exploration is particularly important because offshore drilling requires highly specialised equipment, technology, engineering expertise, consultancy and other services that may not yet be widely available locally.

The result is that a portion of the money invested in Namibia’s oil exploration does not circulate in the domestic economy.

A warning for local businesses

The figures come as Namibia positions itself as a future oil and gas producer following major offshore discoveries.

The challenge now is to ensure that the development of the industry does not simply create an export sector while leaving local companies on the sidelines.

The latest balance-of-payments figures suggest that foreign companies are playing a significant role in providing the specialised services required during exploration.

This does not necessarily mean that Namibia is losing from oil exploration. Foreign expertise and equipment are often necessary during the early stages of developing a new industry.

However, it highlights the importance of building local capacity before large-scale production begins.

If Namibian companies can eventually provide more of these services, a greater share of the billions expected to flow through the industry could remain in the domestic economy.

Reserves provide a cushion

Despite the growing outflows, Namibia’s foreign reserves remain relatively strong. The country’s reserves increased by 9% to N$56.4 billion at the end of June, providing about 3.5 months of import cover.

By the end of August, reserves had increased further to N$58.5 billion, equivalent to about 3.6 months of import cover.

The bank says the increase was supported mainly by Southern African CustomsUnion (Sacu) receipts and financial inflows.

“The quarterly growth was primarily driven by Sacu receipts at the beginning of the quarter alongside financial account inflows,” it says.

The reserves therefore provide Namibia with a buffer as the country continues to spend heavily on imports and foreign services linked to oil exploration.

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