Overview

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Context
Strategy
Results
Partners

Namibia is largely desert, ranchland with a long coastline on the South Atlantic, and borders South Africa, Botswana and Angola. The country’s natural mineral riches and tiny population of about 2.5 million (2016) have made it an upper-middle-income country. Political stability and sound economic management have helped anchor poverty reduction, however this has not yet been accompanied by job creation, and extreme socio-economic inequalities inherited from the years it was run as under an apartheid system still persist, despite generous public spending on social programs.
Real economic activity contracted 1% in 2017, registering a contraction for four consecutive quarters. The continuation of the fiscal consolidation process led domestic consumption to stall. This process was done mostly through reduction in the capital expenditures that affected most sectors of the economy, especially construction and tertiary sector activities. The construction activity shrank in 2017 by more than 30% on annual basis. This reflects the base effect from last year due to the completion of the Husab mine, without any additional large construction projects to offset this impact. Within the manufacturing sector, a contraction is also noticed at the electricity production sub-sector because of the closure of two power plants (Van Eck and Paratus) due to regular maintenance.
The fiscal consolidation process significantly affected domestic consumption this also reflected on the services sector. Sharp contraction is noticed in the wholesale and retail trade, tourism sector and public administration. The remaining tertiary sector activities registered a significant slow-down compared to 2016, for which additional impact had the economic slow-down in Angola. The contraction of the domestic demand also resulted in significant reduction of the credit and deposit growth which reflected in significant slow-down of the financial intermediation services.

A positive signal for the Namibian economy came from the mining and agricultural activities. The mining sector activity increased by more than 15% on annual basis in 2017, due to the higher diamond and uranium production. The diamond production in 2017 has expended by more than 10% and reflects the base effect from the previous year when some of the offshore diamond extraction vessels were closed due to regular maintenance. The uranium production increased by more than 25% in 2017 and this is mostly a result of the start-up of operation of the Husab mine. The agricultural production also rebounded in 2017 from the previous droughts with a solid growth of 5%.
In the medium-term, economic activity is expected to recover slowly. Annual GDP growth is expected to reach 1.5% in 2018 and 3% in 2020. Near-term recovery will be driven by the increase in mining production. The uranium production is expected to increase as the Husab mine ramps-up its operation and is expected to reach its full production capacity by 2020. Diamond production will also increase gradually consistent with the prospects for recovery in the global demand. Services are expected to contribute to the recovery as the domestic demand and the regional trading partners slowly recover. The economic recovery will also be facilitated with the planned infrastructural investment projects for which a funding is expected by the AfDB. An impeding factor to growth recovery will be the recent credit rating downgrade that will further reduce investors’ confidence.
Development Challenges
Namibia’s relatively strong economic growth has not been enough to deal with its levels of poverty, inequality, and unemployment. By the national poverty line (N$377.96), poor Namibians made up 28.7% of the total population in 2009/10, a drop of 9.0 percentage points from 37.7% in 2003/04.
The reduction was driven by gains in rural areas.
By the international poverty line, 16.9% of the population lived on less than $1.90 a day in 2015, compared to 21.3% in 2010. In 2015, 39.0% lived below the $3.10 per day poverty line, compared to 44.3% in 2010. Namibia remains one of the most unequal countries in the world, with a Gini coefficient of 0.597 in 2010.
Namibia’s government continues to exercise the requisite leadership in developing and financing the policies it needs to address its development challenges, policies such as the Harambee Prosperity Plan, and the fifth National Development Plan. Program implementation and delivery of public services lags behind and undermines sound policies.

Last Updated: Apr 19, 2018
The World Bank Strategy for Namibia consists of two pillars focusing on:
State Capacity
Economic management
Environment and natural resource management
Statistical capacity
Health and nutrition
Private sector Development
Institutional environment for a competitive private sector
Investments in productive capacity and infrastructure
In consultation with the government, the Bank prepared the Performance and Learning Review (PLR) of the Country Partnership Strategy for Board consideration in FY18.
The PLR found that originally planned activities have now been delivered successfully for the most part and the experience has prompted the Namibian Government to request WBG cooperation for additional activities within the existing CPS focus areas, which are fully aligned with the priorities laid out in the government’s NDP5 (2017/18-2021/22). Given this development, and noting that the new requested activities will deepen cooperation in key areas for Namibia’s development such as transport, financial sector strengthening and health, the PLR proposes to extend CPS implementation through FY20. Such an extension would also align a follow-on CPF to the next electoral cycle, which are scheduled for the last quarter of 2019.

Last Updated: Apr 19, 2018
The Country Partnership Strategy (CPS) has delivered on most of the planned advisory activities within its limited program and achieved some important results. Knowledge services and TA were funded mainly by Trust Funds (TFs), such as the Institutional Development Fund (IDF), the Trust Fund for Statistical Capacity Building (TFSCB), and the Financial Sector Reform and Strengthening Initiative (FIRST).
Under Pillar 1, delivery of CPS products and results has been strong, including in economic management (debt management, budget transparency, procurement and public-private partnership legal framework), statistical capacity building and poverty analysis. The report on fiscal policy and inequality jointly produced by the Namibia Statistical Agency and the World Bank in FY17 received wide attention from policymakers and the media.
Under Pillar 2, the pace of deliveries has been good in the competitive private sector program area (financial sector, investment climate, competition), and substantial progress was made in the infrastructure program, which mainly featured activities of IFC and MIGA.

Last Updated: Apr 19, 2018
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 19, 2018