Namibia is a geographically large country with a small population of about 2.5 million (2020) and a 1,500 km-long coastline on the South Atlantic. The driest country in Sub-Saharan Africa, it is rich in mineral resources, including diamonds and uranium, sharing borders with South Africa, Botswana, Zambia, and Angola.
Political stability and sound economic management have helped poverty reduction and allowed Namibia to become an upper-middle income country. However, socio-economic inequalities—the legacy of apartheid systems of government in the past—remain extremely high and were worsened by the COVID-19 pandemic. Structural constraints to growth have also hampered job creation.
Economic Outlook
Namibia’s economic recovery continued in the first half of 2022, but it has been uneven, with several sectors lagging. Real GDP growth increased to 5.3% Y-o-Y in Q1—supported by stronger activity in the mining, manufacturing, and financial service sectors—but has since slowed. Momentum in mining was sustained into the second quarter, with diamond production increasing by 50% in the first half of 2022. The effects of the pandemic on economic activity have waned, with all remaining COVID-19-related restrictions removed in July 2022. GDP growth for 2022 is projected at 2.8%.
Leading up to 2015, Namibia’s economy experienced strong growth, averaging nearly 5% annually, fueled by investment and enabled by prudent economic management. Growth stagnated from 2016 onwards, and three of the last five years have been marked by recession, with a sharp contraction in 2020 amid the COVID-19 crisis.
Before the pandemic, the growth slowdown was caused by severe drought, lower commodity prices, reduced public investment, weaker growth in neighboring countries, and persistent structural rigidities. Public investment has historically been an important driver of growth, but elevated debt levels constrain fiscal space, making it important to encourage greater investment and participation from the private sector.
Global and regional developments are important drivers of Namibia’s economic performance, as well as fiscal and external positions, as the country is highly reliant on commodity exports and Southern African Customs Union (SACU) transfers. The twin shocks of the pandemic and spillovers from the war in Ukraine have negatively affected socio-economic progress and raised food insecurity risks.
Development Challenges
Since its independence in 1990, Namibia had made progress in reducing poverty, halving the proportion of Namibians living below the national poverty line—to 28.7% in 2009-10 and to 17.4% by 2015-16.
Despite this, deep underlying challenges persist, undermining the prospects for further advancement. A pre-1990 history of the systematic exclusion of the black majority from full participation in economic activities continues to shape society and the economy, constraining the country’s economic and social progress to this day. To this day, the key legacies of colonial rule and of racial segregation are territorial segregation and resource misallocation, and a lack of access to basic services for a large portion of the population.
Economic advantage remains in the hands of a relatively small segment of the population, and significant inequality continues. This lack of inclusiveness and society’s vast disparities have led to a dual economy—a highly developed modern sector, co-existing with an informal subsistence-oriented one—and are manifested in three main socioeconomic challenges that define the economy:
- Namibia ranks as one of the world’s most unequal countries. Its Gini coefficient of 59.1 in 2015 was second only to South Africa. Geographical disparities in both economic opportunities and access to services are large and widening. High levels of inequality result in starkly different poverty rates across different groups, including by age and gender.
- Relatively high poverty, lagging human capital, and poor access to basic services are interrelated problems. Namibia’s poverty rapidly declined from 1993/94 to 2015/16, but it remains high for the country’s level of development. Despite recent progress, Namibia ranked 117th among 157 countries on the Human Capital Index.
- The duality of the labor market, combined with slow job creation and low primary-sector productivity, results in very high unemployment.
Due to consistently negative per capita GDP growth since 2016, and the negative impact of COVID-19 on livelihoods, poverty rates are projected to have increased. Typically, female-headed households, less educated, larger families, children and the elderly, and laborers in subsistence farming, are particularly prone to poverty.
Last Updated: Oct 06, 2022
