By Tio Nakasole
In the thirty-six years of independence, Namibia is known for its over reliance on its mineral resource wealth, procyclicality of macroeconomic policy, unemployment and large income disparities.
Challengingly, Namibia is the second-highest inequal society (Gini index at 59.1) in Africa. Inequality is visible especially between urban centres: Windhoek, Swakopmund and Walvis Bay and the rural areas, where poverty rates exceed 45%. In addition, high unemployment (rate 36.9%) remains too high, especially in the sparsely populated regions.
Based on the Namibia Statistics Agency’s (NSA) 2023 Labour Force Report, regions such as Kavango West and East have the highest rates of unemployment, followed by Ohangwena and lastly the Kunene, Omusati and Oshana regions.
Apart from being highly populated, these regions have a rural majority of the population and are, moreover, sparsely populated with limited industrial or formal employment opportunities, contributing to very high joblessness.
In part of these regions, agricultural activities, such as subsistence farming, are the primary source of livelihood. However, they become prone to climate change (drought or flood), consequently threatening food security.
The good news now is that Namibia is now at a critical juncture of its nascent developments phase which can either transform it or break it further. The country’s recent offshore oil and gas discovery, green hydrogen foreign direct inflows, and natural resources such as diamond and uranium production position Namibia will add more flavours to it.
Overarching Challenges
The historical binding constraints that have been preventing Namibia from developing new engines of growth have been different in nature, hence demands a corresponding treatment.
As a reclassified lower middle-income economy effective 1 July 2025 from an upper middle-income economy, Namibia has been experiencing lower levels of development outcomes in proportion to its population growth.
Regionally, compared with its peers, the country grapples with high rural-urban migration rates as many individuals, including small-scale entrepreneurs and informal traders, move to urban areas in search of sustainable markets, jobs, education, and better services.
According to the Labour Force Survey, approximately 67% of the population lived in rural areas in 2001, declined to 57% in 2011 and plummeted further to 49.6% in 2023. Unquestionably, that paradigm shift in rural–urban migration has intensified over the past two decades.
In addition, access to finance and land are also active constraints the country face. The latent signals for access to finance are particularly of note, given the very low levels of domestic savings, which may further dependence on FDI to finance productive activities.
Moreover, the country has a significant shortage of productive know-how particularly in the energy sector, which manifests in low levels of economic complexity, economic complexity outlook and social transformation.
Lastly, Namibia has very limited opportunities to diversity into, and these opportunities have a limited strategic value. Most of Namibian export products lie at the periphery of the product space and distant from each other, which leaves very few potential nearby jumps.
Moreover, Namibia has a relatively low Economic Complexity Index -0.58, (95th) in global rankings, indicating the export basket is dominated by raw or low-complexity products like minerals, metals, and primary commodities rather than sophisticated manufactured goods.
This leaves the wider economy highly exposed to fluctuations in international commodity prices, compounding development constraints. In addition, an economy that is trapped in primary production like agriculture, mining you are trapped in something called market prices.
But an economy that is manufacturing based for example, their prices are not dictated by market price, they determine how much they can sell, because their products are differentiated.
Policy Renewal
Namibia’s development priorities are undergirded by several national policies that seek to improve the status quo. Among others is the active National Development Plan Six (NDP6), which provided a blueprint for developing and transforming Namibia with a focus on economic growth, transformation and resilience; human development and community resilience; Environmental sustainability and effective governance and public service delivery.
Equally, outstanding socioeconomic bills such as the National Equitable Economic Empowerment Bill and the Namibia Investment Promotion and Facilitation Bill would, if promulgated on a balance of mutual benefit that attract investors while improving communities, will have a wide-reaching impact on the Namibian sectors.
As these pieces of legislation would likely to infuse more Namibian ownership and local content requirements on certain sectors, ensuring organic growth.
Modus Operandi
Going forward, the modus operandi for Namibia should be about how to engineer a sustained growth acceleration that is inclusive in nature within the context of fiscal consolidation.
Another, part of the solution to rural-urban migration is by driving investment that are not only extractive but that stay with the communities, and having microeconomic policies enforced that encourage domestic investors particularly in small-scale farming, small and medium enterprises, ecotourism and creative industries. China, Malaysia, Thailand and Costa Rica are some of the handful of examples. Once the potential of Namibia’s rural areas is developed and harnessed in terms of agriculture, ecotourism and creative industries, for instance, that could offset the migration crisis and in tandem open up untapped opportunities which would amplify the sine qua non of food production, job creation and sustainable and inclusive growth.
With regard to traditional engines of growth such as natural resources, the slowdown in investment was not specific to Namibia but rather a worldwide phenomenon. The drop in commodity prices also generated a significant decline in the flows of direct investment to the sector worldwide.
Indubitably, commodity prices are known to be cyclical, and in particular those that are more relevant to Namibia – diamonds, lead, zinc and gold– have already started to show signs of recovery, particularly uranium and gold.
In order to take advantage of new investments opportunities, investment promotion efforts by NIPDB shall continue but target ‘efficiency-seeking’ investors, which tend to take advantage of a competitive factor in the country (efficient labour force, access to international financial markets, infrastructure) to produce and export to foreign markets.
Through this strategic lens, investment becomes not only a catalyst for growth, but also a tool for job creation, enterprise development, and domestic long-term prosperity.
In conclusion, Namibia’s economy over the years has a footprint of being resilient, however it should find its coherent treatment plan of a growth that is significant.
That should cut across institutional strengthening, capacity building, close monitoring of fiscal developments, decentralisation policy revitalisation and implementation, and regular policy dialogue on both micro- and macroeconomic management.
*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
