Political stability and sound economic management have helped anchor economic growth and poverty reduction in Namibia. Growth has not been accompanied by job creation, however, and extreme social and economic inequities inherited from apartheid persist despite generous spending on social programs. The country is also vulnerable to short- and long-term environmental shocks as all major sources of growth depend heavily on Namibia’s fragile ecosystem.
Namibia has enjoyed a sustained period of strong growth. Between 2010 and 2014, the economy grew at an average annual rate of 5.6% per annum. Growth was driven by massive investment in extractive projects, strong export prices, rapid private credit growth, and a program of deficit-financed fiscal stimulus.
Over the longer-term, Namibia faces important challenges in diversifying the economy and broadening economic opportunities. The economy remains heavily dependent on mining, while limited demand for unskilled labor leads to concentration of labor in unproductive subsistence agriculture. Policy priorities for a more inclusive economy include: i) improving access to and quality of secondary, tertiary, and vocational education; and ii) addressing labor market rigidities.
Relatively strong economic growth has not been sufficient to deal with poverty, inequality, and unemployment. Using the national poverty line of N$ 377.96, the poor Namibian comprised 28.7% in 2009/10, following a 9.0 percentage point fall from 37.7%in 2003/04. The reduction was driven by gains in in rural areas. Using the international poverty lines, 19.7% of the population lived on less than $1.90 a day in 2015 compared to 21.9% in 2010. In 2015, 42.9% lived below the $3.10 per day poverty line, compared to 45.1% in 2010. Namibia remains one of the most unequal countries in the world, with a Gini coefficient of 0.597.
Electricity demand has been growing rapidly, pushed by urbanization and the mining sector. Long-term agreements to purchase electricity at favorable rates are expiring, and there is no significant new generation capacity since independence. Wholesale electricity prices have risen by double-digit rates in each of the past several years.
All major production sectors—mining, tourism, livestock and meat production, and fisheries—are vulnerable to external economic and ecological shocks. Foreign demand in each industry is cyclical, seasonal, or unpredictable, with downstream effects for employment, income, and government revenue. All face risks from climate change and/or other countries’ policies to address climate change.
Last Updated: Oct 17, 2016