By: Justicia Shipena
If Namibia signs agreements with central banks of oil producing countries, it can make it possible for the country to purchase oil in its local currency, saod Abednego Ekandjo, the Petroleum Economist in the Mines and Energy Ministry .
At present, Namibia purchases its fuel in US dollars from countries such as India, United Arab Emirates (UAE) and South Africa.
Kenya recently signed deals with Saudi Arabia and the UAE to buy oil with its local currency, Kenyan Shillings instead of US dollars. This is a move that has been made by some countries across the world.
Saudi Arabia is in active talks with China to price some of its oil sales to China in yuan.
“If there is a country that produces fuel, for example like India, if we reach an agreement with our central banks whereby Namibians can buy fuel from India using Namibian dollars and the Indians can buy beef from us in rupees then it can work,” said Ekandjo.
Ekandjo said he has heard of discussions that are ongoing at the BRIC level, which includes India, South Africa, Brazil, China and Russia, which are identified as rising economic powers.
“So if those agreements can be put in place, I think it can also work,” he said.
However, when asked about consideration of Namibia moving away from the US dollar oil purchase, he said the Ministry is not aware of any such discussions.
“But we believe the Bank of Namibia will be in a better position because they deal with currencies,” he said.
Meanwhile, the fastest growing import markets in refined petroleum for Namibia between 2020 and 2021 were Estonia, Botswana and Chinese Taipei.
Bank of Namibia’s Director of Strategic Communications and International Relations, Kazembire Zemburuka said it is not possible for Namibia to purchase oil in its local currency.
This, he said, is because the Namibian dollar is not tradable.
“It is not possible to purchase in our currency because the Namibian dollar can only be used in the borders of Namibia. It is not a tradable currency, it cannot be used elsewhere,” he said.
Zemburuka said for one to purchase any goods and services from outside the country one needs to convert the Namibian dollar to a foreign currency.
“To be able to procure those goods and services, we use a foreign currency. It can be the US dollar which is obviously, as we know the concept of petrol dollar, the US dollar is mainly used for all transactions when it comes to the oil market,” he stated.
In light of the developments of purchase of oil in local currencies, Zemburuka said the central bank is observing the matter.
He added that predominantly 90% or 100% of all transactions when it comes to oil is done in US dollars.
“We are observing. We are seeing other countries obviously using other currencies to effect transactions between the seller and buyer and we are noticing that trend and obviously for us is to notice the trend and see what the possibilities are.”
