Namibia is a geographically large country with a small population of about 2.53 million (2021) 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 Angola, Botswana, South Africa, and Zambia.
Political stability and sound economic management have helped poverty reduction and allowed Namibia to become an upper-middle-income country. However, socioeconomic 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
The lingering impacts of the pandemic, which led to a sharp economic downturn in 2020, and the ongoing war in Ukraine continue to weigh on the country’s growth performance. Growth in 2022 reached 3.5%, driven by mining (especially the growth of diamond production), manufacturing, and the continued recovery of services. Diamond production increased by 46% while many services sectors, such as trade and finance, which rely on face-to-face interaction, continued to recover following the removal of all remaining pandemic-related restrictions mid-year. On top of both droughts and flooding, agricultural production has been hampered by higher fertilizer prices due to the war in Ukraine.
Despite the economic recovery in 2022, the socioeconomic situation did not improve significantly. Employment is estimated to remain below pre-pandemic levels as labor-intensive manufacturing subsectors have added jobs relatively slowly. Spurred by higher fuel prices, inflation increased to a five-year high of 6.1% in 2022, disproportionately affecting the most vulnerable and decreasing consumers’ real income. Poverty rates are estimated to remain above pre-pandemic levels.
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. 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 socio-economic 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: Mar 29, 2023
