Overview

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.

With a preliminary estimate of gross domestic product (GDP) growth of 4.5% in 2015, down from 6.4% recorded in 2014, the economy continues to grow faster than the 4.3% long-term trend. Low interest rates, fiscal stimulus, and unusually high foreign direct investment (FDI) in mining have resulted in a construction boom, fast household consumption growth, and solid growth in tradable services.

While strong growth contributed to job creation and poverty reduction, significant macroeconomic imbalances also emerged. Partly reflecting imports for extractive projects, but also driven by fiscal stimulus and private credit growth, the current account deficit reached 14.3% of GDP in 2015. With successive fiscal deficits, debt levels climbed from around 15% of GDP in 2009 to around 36% of GDP in 2015. Consequently, Namibia is now undertaking necessary adjustment amid an unfavorable external environment. Responding to expected declines in SACU receipts, the recent budget statement announced expenditure cuts averaging 1.7% of GDP per year over 2016-2018, bringing the primary deficit down to around 2.6% of GDP by 2018. Such an adjustment is expected to protect medium term GDP growth prospects (4.2% in 2016 and 5.4% in 2017) and debt sustainability. By 2017, public debt should stabilize around 39% of GDP and the fiscal deficit decrease to 4.9% of GDP, down from 6.6% in 2015.

Development Challenges

Namibia’s economic growth, prudent macroeconomic policies, and generous social programs have not generated the jobs needed to overcome the inequitable distributions of income and assets or raise living standards in rural areas and among the urban poor. At the top of the government’s agenda is bringing down the very high unemployment rate.

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: Apr 12, 2016

World Bank Group (WBG) Cooperation

The WBG’s first Country Partnership Strategy (CPS) 2013-2017 guides activities by the WBG, International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA). The two pillars of the CPS are: enhancing state capacity and strengthening the private sector. The Bank supports Namibia through a program of analytical and advisory services. Priorities for technical cooperation include economic management, statistics and monitoring and evaluation capacity, natural resource management, and business regulations. IFC and MIGA are seeking opportunities to increase investment in infrastructure.

In August 2015, the International Finance Corporation (IFC) signed a ZAR300 million investment in Trustco, a financial services group, to support the group’s education lending and micro-insurance offerings. In past years, IFC has invested in a fisheries project (Pescanova), a hotel in northern Namibia, and an equity investment in the country’s first indigenous life insurance company (Namibia Life). IFC is working with the Ministry of Trade and Industry to improve business regulations and with the Namibia Business Innovation Center to support mobile ICT applications development through its infoDev program.

Namibia’s Multilateral Investment Guarantee Agency (MIGA) membership makes direct foreign investment into the country eligible for MIGA’s risk insurance and credit enhancement products. Also, Namibian firms investing in other developing countries are also receiving coverage from MIGA for their investments in the region. MIGA is currently investigating the potential to support investments in public infrastructure.

Last Updated: Apr 12, 2016

The Namibian Coast Conservation and Management Project has brought Namibia’s entire 1,570 km coastline under protection and has shepherded the development of the Coastal Management Policy (launched in 2013). IFC investments in the fishing industry have contributed to generating jobs and export revenue. Its investment in what is now the Protea Hotel in Ondangwa helped raise the quality of hospitality services in an underserved segment of the Namibian market.

Technical support to the new Namibia Statistics Agency (NSA) has enabled the new institution to increase the frequency, quality, and dissemination of official statistics. In 2013, the WBG helped NSA document and distribute public-use micro-data from the latest census, labor force survey, and all household income and expenditure surveys conducted since independence.

Last Updated: Apr 12, 2016

The World Bank Group (WBG)

Namibia became a member of the International Bank for Reconstruction and Development (IBRD), International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA) in 1990.

Last Updated: Apr 12, 2016


LENDING

Namibia: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments