Namibia’s construction sector is expected to remain subdued in 2026, as modest support from improving credit conditions is outweighed by structural constraints and delays in major investment decisions, according to Simonis Storm.
The firm’s Economist, Almandro Jansen, said the outlook for the sector remains uneven, shaped by easing financial conditions on the one hand and persistent structural weaknesses on the other. While access to credit is gradually improving, this has yet to translate into a broad-based recovery in construction activity.
Private sector credit extension is forecast to grow by about 5% year on year, driven largely by corporate borrowing. However, household credit demand is expected to remain restrained due to moderate income growth and elevated living costs, limiting activity in residential construction.
Corporate borrowing is expected to remain concentrated in mining, logistics, energy-related services and trade-linked sectors. Mortgage credit is projected to recover only gradually, while instalment and lease finance is expected to remain the strongest area of credit growth.
Simonis Storm forecasts headline inflation to average between 3.6% and 3.8% in 2026, remaining within the Bank of Namibia’s target range. Jansen said this outlook should create room for further monetary easing during the year.
“Our base case is for the repo rate to remain stable in the near term, with two additional 25 basis point cuts expected in 2026, likely in the first and fourth quarters,” he said.
Jansen added that a stable to easing interest rate environment should gradually improve credit affordability, supporting housing upgrades, renovations and mid-income residential developments rather than large-scale construction projects.
A strong acceleration in large-scale construction activity remains unlikely without clearer progress on major infrastructure, green hydrogen and oil and gas investments. Jansen said final investment decisions in these areas are expected to determine the next phase of growth in the sector.
Recent data reviewed by Simonis Storm shows the construction sector contracted by 5% in the third quarter of 2025, following an 11.3% expansion in the previous quarter. The reversal highlights the sector’s sensitivity to the timing of large investment decisions.
Structural bottlenecks are expected to persist into 2026, particularly the limited availability of serviced land and constrained public finances, which continue to restrict government’s ability to initiate and fund large infrastructure programmes.
Regionally, Simonis Storm expects the two-speed pattern in construction activity to continue. Windhoek is projected to remain subdued, while Swakopmund and the broader coastal region are expected to maintain stronger momentum.
Data cited by the firm shows that approved building plans in Windhoek declined to 543 in the fourth quarter of 2025 from 574 a year earlier. By contrast, Swakopmund recorded 334 approvals over the same period, up from 205, pointing to firmer construction activity along the coast.
