By Kuvee Kangueehi
Minister of Mines and Energy Erkki Nghimtina believes there is a silver lining on every dark cloud, saying that while rising food prices and energy costs are making life expensive for everyone, they are also creating new opportunities for smart investors.
Delivering a ministerial statement in the National Assembly recently, Nghimtina urged local business people to take advantage of these opportunities.
He said it is an excellent way to preserve and grow wealth as inflation rises.
The minister said investors in food commodities and agriculture will make excellent returns as the push towards bio-fuels continues.
He noted that Namibia as an exporter of beef and fish will be affected since the price of meat will increase because mostly corn has traditionally been used to feed livestock and the demand for corn has gone up.
He explained that the high meat prices will in turn raise the demand for fish because more land will be devoted to growing bio-fuel crops such as rapeseed and tropical oil.
Nghimtina said the recent effects of rising energy prices are only the first signs of things to come.
“The energy costs are locked into a worldwide uptrend that will probably last the rest of your life.”
He noted that energy is a product of a demand and supply squeeze and is being caused by the tremendous economic growth and industrialisation taking place in Asia.
He warned that available analysis suggests that within a few years, the oil squeeze will cause energy prices to double, undermining both stock market returns and the world economy.
He attributed the high demand for energy to the rapid economic growth of China and India and said India’s economy has been growing by more than 8% a year for the past four years, while China’s annual growth rate has risen from 7% to 11,4% in 2008.
The minister added that rising oil demand would not be a problem if oil production could increase, but no one has discovered a major oil field in nearly four decades.
“American oil production has been falling since 1970, despite the US having the best technology in the world.”
He added that oil production in the North Sea started dropping in 1999, with the result that Europe is now forced to import oil from abroad. Today, the world is seeing oil output declining in countries such as Mexico, Kuwait, Russia and Venezuela.
“Iran, currently the world’s fourth largest oil exporter, recently introduced petrol rationing to avoid becoming a net importer in a few years.”