By Tio Nakasole
Namibia distinguishes itself from neighbouring countries as an attractive hub for investment and trade. Based on Fitch ratings (ranked sixth out of fourteen in Southern Africa and 4th out of forty-nine in Sub-Saharan Africa), in terms of trade openness (3rd out of fourteen in Southern Africa and 4th out of 49 in Sub-Saharan Africa), and lastly, when it comes to economic openness (Namibia is ranked 4th in Southern Africa, in Sub-Saharan Africa, and 74th out of 202 markets globally).
Despite the above good score point for Namibia, the economy remains highly underdiversified, as the vast amount of commercial activity is centred on mining and agriculture.
In addition to that, the Namibian economy remains closely linked to the South African economy, from which the bulk of Namibia’s imports originate.
This is reflected by the NSA’s last quarter report on International Merchandise Trade Statistics, by which 36.6% of Namibian imports are sourced from South Africa. That also tells an interesting story: Namibia cannot afford to close her borders with South Africa without committing economic suicide.
This is exactly because of Namibia’s heavy dependence on South Africa. In terms of consumption, Namibia’s inflation has been contained at 3.5% in December 2025 due to Namibia’s strong commitment to the Namibia dollar’s peg to the South African rand and the Bank of Namibia’s monetary policy cut rate.
Major contributors to inflation recorded at the end of last year have been mainly housing, transport and hotels. In spite of that, heavy reliance on imports and external global shock uncertainty (such as the Venezuela and US conflict and Russia and Ukraine) may drive the inflation up to around 3.8%, as per the projection made.
The Fitch forecast also indicates that there will be some sigh of relief expected as the Bank of Namibia will respond to these effects by cutting its policy rate further by 25 basis points (bps) to 6.25% by the end of 2026 and by 50 bps to 5.75% in 2027.
Why GDP Growth Matters
The leading question is, why does Gross Domestic Product (GDP) growth come into an equation in terms of determining the nation’s economic shift, like Namibia? Yes, nearly all countries around the world measure the size of their economy using GDP as the standard measure of what a nation’s economy produces.
Macroeconomically, GDP has become an important factor for any country, as it reflects the size of an economy, and governments monitor how the size of the economy moves from one year to another. Therefore, it is every government’s interest to see the size of their economy growing year after year. And usually most of the economies on average grow by 2–3%.
Using an expenditure approach, the composition of GDP is mainly made up of independent variables, which include consumption, investment, government spending, and net export. These variables can positively and negatively affect the GDP growth, and to a further extent by external shocks such as geopolitical shock, global commodity price, pandemic, climate and weather, and technological and market transition.
Some of the contributing factors to economic growth are the growth of the labour force, the skill level of human capital, the high rate of physical capital stock, and improvements in technology and natural resources (such as oil, diamonds, and uranium, to mention only some).
Hence, the sustainable rate of economic growth for Namibia, for example, is of paramount importance based on the above factors, as its spillover effect has direct and indirect implications on the status of the economy, particularly for ordinary citizens.
Based on the Bank of Namibia, Namibia’s real GDP growth is expected to pick up from an estimated 3.0% in 2025 to 3.8% in 2026, to be driven by a rising investment and commercial services sales related to the country’s nascent oil sector, construction and uranium sector.
Whereby, offshore oil and gas discoveries and green hydrogen production present opportunities to boost foreign direct investment inflows further in both 2026 and 2027. Nevertheless, our investment flows into Namibia have been heavily dependent on mining, particularly diamonds, gold and uranium, for growth in exports have been dominated by and exposed to fluctuations in global commodity prices.
As a result, that prolongs the spillover effects into the mainstream of the economy, down to its heavy reliance on extractive industries, particularly mining.
Therefore, the addition of the discovery of oil and gas, as well as the rollout of green hydrogen project initiatives, is expected to bring in capital inflow, which can eventually shift our growth rate compared to the past years.
Key Risks to the Economy
Namibia remains an economy with a small population, making it prone to global events, as discussed above.
Apart from that, some risks remain sectorally driven, such as the weakening in global demand for diamonds due to lab-grown diamond competition, posing a further threat to Namibia’s mineral market exports.
In addition, our tax rates in Namibia remain high relative to those of other Southern African markets. Namibia’s ranking in terms of taxation is 13th regionally and 186th globally, according to a government intervention analysis done by Fitch this year.
Therefore, with such a fiscal regime and mine ownership restructure, the complexity and volume of payments required could increase, which may act as a significant obstacle to businesses and depress the market’s attractiveness, create backlogs and cause delays.
Other bottlenecks in the similar sector: smaller diamond miners could possibly lack the economies of scale and access to capital as enjoyed in sister countries such as Botswana, South Africa and Angola.
Moreover, despite the economy being tied to agriculture, future events, such as extreme weather (drought or flood) and locust outbreaks, pose substantial risks to that sector.
On the other hand, small and medium enterprises (SMEs) remained locked out of transactions due to red tape when it comes to access to capital, which stands out as a common denominator of obstacles, despite their estimated contribution of 12% to the country’s GDP.
Lastly, outdated statistics such as the Namibia Household Income and Expenditure Survey (the last time it was conducted was in 2015/16) also weigh on the reliability of socioeconomic data for the market, making it difficult to accurately assess the economic health and wealth both nationally and regionally.
The consequence of such statistical time lags can lead to myopic policymaking, decisions and later wasteful government expenditure, as resources and development budgets may end up being allocated inaccurately and eventually ending up misplaced, solving the symptoms and not placed where the root causes are.
Productivity-Led Renaissance Strategy
The follow-up question could be, what can we do in order to move away from the mark and mire of global risks and dependence to that of resilience and resurgence? Undisputably, one may agree that “if one can feed you, at the same time can also control you.” So, sectors such as agriculture are ones that should be of the national powers, as food security should be the fulcrum on which the survival of a nation-state like Namibia should rest.
Hence, it is so interesting that as the first area of focus sector in the NDP6, the government’s commitment toward climate-smart, sustainable and competitive livestock value chains should be a main target, especially for that at-line ministry.
Agriculture is important not only for food security but is also a more labour-intensive sector than some other sectors combined. Therefore, the revival of some green schemes, for example, will enable the absorption of some of those who have been stranded due to scarce opportunities.
Strategic partners are needed across the Namibian sectors in ensuring that value creation and value addition on minerals and natural resources are well catered for before export. Additionally, activation of Special Economic Zones at ports of entry on the coast (especially Walvis Bay) and at the national border in the north (such as Oshikango and Katima Mulilo) through regional investor map design needs to be simplified to work in the best interest of all Namibians.
Upgrade Namibia’s transport corridors to modern and competitive standards, enabling seamless regional connectivity and the efficient movement of strategic commodities ranging from green hydrogen and oil to bulk freight through modern, interoperable logistics systems, including smart tolling and dry-port management infrastructure, that may contribute extra revenue to the government coffers to finance other national development budgets, in tandem easing budget deficit pressure.
Especially the Walvis Bay–Ndola–Lubumbashi Corridor, the Trans-Kalahari Corridor, and the Trans-Caprivi (Zambezi) Corridor to feed the landlocked countries of both Southern and SSA that rely on our ports of entry.
With global supply chains and rising product standards, enterprises in Namibia need equal attention for safer funding with different means of verifying creditworthiness and not only collateral.
A mechanism that is based on expected cash flows and not current assets, for instance. The National Equitable Economic Empowerment Bill, 2015, would, if promulgated, have a wide-reaching impact on the Namibian business sector.
These pieces of legislation would introduce Namibian ownership and local content requirements in some of these resource-rich sectors; therefore, they need to be expedited and become effective.
In totality, our pursuit of sustainable economic growth for 2026 and beyond should be guided by our economic policies that are in harmony with our priority focus area, as well as our strategic means of production.
Most of the good policies already exist but demand implementers. The government should aim to build a haven for a well-coordinated investment around our strategic means of production and not promise heaven out of a single resource like oil, gas and green hydrogen alone.
But with other areas as well, such as manufacturing, tourism and eco-tourism, technologies, and technical skills development.
This is because some resources can deplete over a lifetime, but a robust economic architecture can remain standing strong for many more years to come. Therefore, through a comprehensive and disciplined approach of implementation that is corruption-free, Namibia can enable sustainable and inclusive growth while mitigating the economy against structural fractures of Dutch disease, enclave-driven development and cyclical recessionary pressure that simultaneously accompany resource-led growth trajectories.
*Tio Nakasole, Analyst at Monasa Advisory and Associates. His insights draw from his experience in economic and policy analysis. The views expressed do not represent those of his employer. – theoerastus@gmail.com
