Namibia flag Namibia: Economic and Political Overview

The economic context of Namibia

Economic Indicators

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After years of robust growth, 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. From a contraction of -8% GDP in 2020, the economy started to recover in 2021, growing by 1.3% (IMF). Economic growth is expected to strengthen to 3.6% in 2022 and 3.1% in 2023 (IMF), supported by mineral exports and private consumption (Coface).

Namibia has experienced a period of exceptional growth masking increasing macroeconomic imbalances, a slowdown in productivity and a decline in external competitiveness. While the economy was rebalancing, it was hit by a severe drought and the consequences of the pandemic-induced lockdown. Budget deficit worsened to -9.5% GDP in 2020, and while it narrowed to -8.4% GDP in 2021 and is expected to further decrease to -7.6%  GDP in 2023, it remains very high (Coface). Similarly, public debt increased to an estimated 69.9% GDP in 2021, and is forecast to further widen to 72.6% GDP in 2023 before starting to decline to 71.7% GDP in 2023 (IMF). To reduce the risk associated with indebtedness, the authorities are attempting to diversify their sources of financing (Coface). The exchange risk remains limited because this debt is mainly domestic, issued on long-term maturities and denominated in local currency. Inflation increased from 2.2% in 2020 to 4% in 2021, and is expected to reach 4.5% in 2022 and 2023, driven by food and transport prices (IMF). With the Namibian dollar pegged to the rand, the level of inflation will remain vulnerable to the volatility of the South African currency. The government priorities are to support recovery and economic growth, to ensure the sustainability of public finances and debt through fiscal consolidation, to reform the tax system and to implement structural policy reforms. The government's priority is also to better redistribute wealth while maintaining a favorable business environment. Growth has not accompanied job creation and the extreme social and economic inequalities inherited from apartheid persist despite the generous spending allocated to social programs.

Namibia is one of the countries with the highest inequalities. In part due to impact of the pandemic, poverty rate is projected to stay near 65% through 2022 (World Bank) and around 15% of the adult population is infected with the AIDS virus. Unemployment is high and affected 20.4% of the population in 2020 (World Bank), with a notable disparity between rural (39%) and urban areas (30%), among women (38%) and young people (43%).

 
Main Indicators 20202021 (e)2022 (e)2023 (e)2024 (e)
GDP (billions USD) 10.5812.3112.4913.3614.08
GDP (Constant Prices, Annual % Change) -8.02.73.03.22.6
GDP per Capita (USD) 44455
General Government Gross Debt (in % of GDP) 66.672.071.871.771.5
Inflation Rate (%) 2.23.66.44.94.5
Current Account (billions USD) 0.27-1.12-1.00-0.56-0.54
Current Account (in % of GDP) 2.6-9.1-8.0-4.2-3.8

Source: IMF – World Economic Outlook Database, October 2021

Note: (e) Estimated Data

Main Sectors of Industry

Namibia is one of the most important diamonds exporters and the 3rd largest uranium producer in the world. The country also has one of the most productive fishing industries in the world. Agriculture accounts for 9.2% of the Namibian economy and employs more than a fifth of the workforce (World Bank, 2020). The country's arid climate and geographic conditions do not favour farming and the crop variety is rather limited. Major crops include: maize, millet and sorghum. The livestock sector is productive and export oriented. Beef accounts for the largest share of livestock exports. Fishing is another important component of the primary sector (accounting for almost 25% of all activities in the primary sector), as Namibian waters are rich in fish.

The secondary sector contributes to 26.3% of GDP and employs about 16% of the active population. The sector is characterised 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 neighbouring countries (Botswana, South Africa and Zimbabwe), the country is among the world's first in value per unit, with an average price of USD 578 per carat (De Beers Interim Financial Reports 2021). 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. In addition, Namibia is the third largest producer of uranium in the world, and is home to two mines capable of producing 10% of the world 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.

Services account for 59.1% of GDP and employ 62% of the working population. Namibia's diverse landscapes and extensive wildlife offers significant tourism assets and as such, tourism is a major source of income. Its direct contribution to GDP is around 10%. The construction sector is the activity that suffered most during the recession and is struggling to regain a positive momentum.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 21.9 16.4 61.8
Value Added (in % of GDP) 9.0 26.5 57.9
Value Added (Annual % Change) 5.9 -14.6 -5.6

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

 

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Indicator of Economic Freedom

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

 
 

Country Risk

See the country risk analysis provided by Coface.
 

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Sources of General Economic Information

Ministries
Ministry of Finance      
Ministry of Industrialisation and Trade
Ministry of Mines and Energy (temporarily unavailable)
Ministry of Agriculture, Water and Forestry
Statistical Office
Namibia Statistics Agency
Central Bank
Central Bank
Stock Exchange
Namibian Stock Exchange
Economic Portals
Namibian Chamber of Commerce and Industry
 

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Latest Update: November 2022