(Bloomberg) -- Namibia has set up a sovereign wealth fund to serve as a buffer against future economic shocks, President Hage Geingob said.

Royalties from the sale of natural, renewable and non-renewable mineral resources, taxes, divestiture from public investment holdings and contributions from certain state-owned enterprises will finance the fund launched Thursday.

The arid and sparsely populated country has hopes of being the next big frontier for oil after significant offshore finds by TotalEnergies SE and Shell Plc in February, and plans to develop and export green hydrogen. 

Read more: Namibia Has 10 Years to Get Oil Industry Going Before Net-Zero

“It is imperative to put some savings aside to cushion the economy in the event of unpredictable catastrophes,” Geingob told lawmakers in Windhoek, the capital. “Having fiscal buffers in place can help to lessen the impact of unpredictable events on the day-to-day livelihoods of Namibians.”

The southern African nation’s economy, which has contracted nine out of 16 quarters since 2018, is facing increased headwinds from low credit growth, soaring energy prices and supply shocks caused by the war in Ukraine and renewed virus lockdowns in China. 

The SWF will be split into short- and long-term funds known as the intergenerational and stabilization accounts, and it should help build investor confidence, Finance Minister Ipumbu Shiimi said.

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