The economic context of Namibia

Economic Indicators

After years of robust growth, the Namibian economy entered into recession in 2019 and 2020, impacted by the dissipation of temporary stimuli, a drop in raw material prices, a severe drought, and then the COVID-19 pandemic. The economy returned to growth in 2021 (3.5%) and 2022 (4.6%), supported by robust diamond, gold, and uranium production, and a gradual recovery in tourism and manufacturing. Economic activity surpassed the pre-pandemic level in 2023, when growth was estimated at 3.2%, driven by mining and recovering tourism. The IMF projects growth to remain in the 2.5–3% range over the medium term, excluding offshore oil and gas exploration activities.

Namibia has experienced a period of exceptional growth masking increasing macroeconomic imbalances, a slowdown in productivity, and a decline in external competitiveness. Nevertheless, fiscal imbalances are expected to narrow, supported by fiscal consolidation measures to mobilize additional tax revenues and increase spending efficiency. The fiscal deficit decreased from 8.6% of GDP in FY21/22 to 5.3% of GDP in FY22/23. Revenue increased by 1.2% of GDP due to one-off dividends from state-owned enterprises, primarily diamond companies, offsetting the decline in SACU receipts (1.1% of GDP); increased mineral royalties; and improved VAT compliance measures. Expenditures decreased by 2.2% of GDP. In FY23/24, the fiscal deficit was estimated at 3.9% of GDP, leading to a decrease in the public debt-to-GDP ratio to approximately 66%. However, SACU revenues, which played a crucial role in achieving this favorable result, were anticipated to decline the following year, posing a challenge to the authorities' medium-term fiscal consolidation plan. Headline inflation dropped from a peak of 7.3% (y/y) in August 2022 to an estimated average of 6% in 2023; however, core inflation remained below 5%, and inflation expectations have returned to the target range of 3–6% (IMF). The IMF recommends tackling elevated public debt and slow growth in non-resource sectors, as well as implementing fiscal consolidation to ease debt burdens and stimulate private sector growth. Strengthening Public Financial Management (PFM) and improving the performance of State-Owned Enterprises (SOEs) will enhance productivity and ensure effective management of natural resource revenues. Streamlining business regulations and ensuring policy stability will invigorate the private sector.

Namibia is one of the countries with the highest inequalities: the country more than halved the poverty rate between 1993 and 2022, but poverty incidence remains relatively high for an upper-middle-income country (at around 18% as of 2022 using the international poverty line, according to the World Bank). Nevertheless, when using the upper middle-income poverty rate (USD 6.85), the poverty rate spikes to 57.3%. Unemployment is high and affected 20% of the population in 2022 (from 21.1% one year earlier - World Bank, latest data available), with a notable disparity between rural and urban areas, as well as among women and young people. Overall, the country’s GDP per capita (PPP) was estimated at USD 11,531 in 2022 by the World Bank.

Main Sectors of Industry

Namibia is one of the most important diamond exporters and the 3rd-largest uranium producer in the world. Agriculture accounts for 8.4% of the Namibian economy and employs 22% of the workforce (World Bank, latest data available), although around 70% of the population depends directly or indirectly on agriculture for their income and livelihood. The country's arid climate and geographic conditions do not favour farming, and the crop variety is rather limited: Namibia is the driest country in Sub-Saharan Africa and depends largely on groundwater (only 2% of Namibia’s land receives sufficient rainfall to grow crops). Of Namibia's entire land area, 47% is allocated for agricultural activities, with one percent of this portion categorized as arable land (FAO). Major crops include maize, millet, and sorghum. The livestock sector is productive and export-oriented, with beef accounting for the largest share of livestock exports. Fishing is another important component of the primary sector (accounting for almost 25% of all activities), as Namibian waters are rich in fish.

The secondary sector contributes 29.7% of the GDP and employs about 17% of the active population. It is characterized by the predominance of the mining industry thanks to the country's rich subsoil. Major mining products include diamonds, uranium, lead, copper, and arsenic. Diamonds account for almost 70% of all mining exports. While Namibian diamond production is less significant than neighboring countries (Botswana, South Africa, and Zimbabwe), the country is among the world's first in value per unit. Namibia also has the largest marine mine in the world. Offshore diamond production is increasing (it provides 75% of total production according to Coface), while onshore extraction is decreasing due to the exhaustion of terrestrial deposits. Additionally, Namibia is the third-largest producer of uranium in the world and is home to two mines capable of producing 10% of the world's output. Husab's uranium mine is the third-largest surface uranium mine in the world. Food processing (beef and fish) is the largest non-mining component of the secondary sector. According to the World Bank, manufacturing accounts for around 11% of GDP. Namibia's diamond mining industry faced reduced growth in 2023 due to declining international prices, with growth rates projected at 5.5% and 9.7% for 2023 and 2024, respectively, down from 45.1% in 2022. The uranium mining sector was estimated to expand by 14.8% in 2023 before moderating to 3% growth in 2024 (Bank of Namibia).

Services account for 54.2% of GDP and employ 62% of the working population. The main sub-sectors within services include tourism, financial services, retail and wholesale trade, transport and communication, and public administration. Namibia's diverse landscapes and extensive wildlife offer significant tourism assets and as such, tourism is a major source of income, its direct contribution to GDP being around 10%. The banking sector in Namibia comprises nine authorized banking institutions, including seven commercial banking institutions, a branch of a foreign bank, and a representative office (Bank of Namibia).

 

Breakdown of Economic Activity By Sector	Agriculture	Industry	Services
Employment By Sector (in % of Total Employment)	22.1	16.4	61.5
Value Added (in % of GDP)	8.6	28.0	55.5
Value Added (Annual % Change)	2.6	10.4	2.2

Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.

 

Find more information about your business sector on our service Market reports.

 

 

Find out all the exchange rates daily on our service International currency converter.

 

Indicator of Economic Freedom

Definition

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}

Score:

62,6/100

World Rank:

83

Regional Rank:

6

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

 

Sources of General Economic Information

Ministries

Ministry of Finance      
Ministry of Industrialisation and Trade
Ministry of Mines and Energy
Ministry of Agriculture, Water and Land Reform

Statistical Office

Namibia Statistics Agency

Central Bank

Central Bank

Stock Exchange

Namibian Stock Exchange

Economic Portals

Namibian Chamber of Commerce and Industry