By Cons Karamata
Namibia’s recent reclassification by the World Bank from an upper-middle-income country to a lower-middle-income country should be received not as a setback, but as a strategic and welcome development in the country’s quest for inclusive growth.
Since its designation as an upper-middle-income country in 2000, Namibia has been boxed into a category that did not reflect the lived realities of the majority of its population. That classification—based solely on per capita income—overlooked the structural inequalities entrenched in the country’s economy and significantly limited its access to concessional financing and critical grant funding.
The reclassification, announced on July 1st, 2025 in the World Bank’s annual income group update, was largely driven by a drop in Namibia’s gross national income (GNI) per capita, which declined to US$4,240 in 2024—below the current threshold for upper-middle-income status, which stands at US$4,466.
This reduction was amplified by a significant upward revision of Namibia’s population figures by the United Nations Population Division, which increased the population estimate by 13.8%, thereby diluting per capita income.
At the same time, economic growth has moderated. According to the Bank of Namibia, real GDP growth slowed to 3.7% in 2024, down from 4.4% the previous year. The mining and quarrying sector, which has long been a cornerstone of the economy, contracted by 1.2%—a stark contrast to its robust 19.3% growth in 2023.
This decline was largely due to weaker global demand for diamonds and other minerals. While sectors such as agriculture and services continue to show resilience, the overall growth momentum has weakened relative to the country’s development needs.
Namibia’s previous income classification ignored the stark inequalities that persist in the country. With a Gini coefficient of 0.58—the second highest in the world after South Africa—Namibia’s high per capita income figures have long masked the reality that a significant share of the population continues to live in poverty.
The World Bank estimates that 19.6% of Namibians live below the international poverty line of US$2.15 per day, affecting over 600,000 people. The wealth of the few has often skewed national statistics and failed to translate into broad-based improvements in living standards.
The recent reclassification is therefore an opportunity to reset Namibia’s development agenda. It opens the door to renewed eligibility for concessional loans and donor support, which, if used strategically, can support inclusive and sustainable growth.
However, caution is warranted. Namibia’s public debt remains elevated, with a debt-to-GDP ratio hovering around 70%—well above the average for lower-middle-income countries and significantly higher than that of peer economies such as Botswana.
This high debt level underscores the need for discipline in the use of new borrowing instruments. Concessional loans should be reserved for investments with a high developmental return, particularly in sectors that can spur job creation and foster long-term growth.
The country’s economic strategy must now pivot. Rather than relying heavily on debt-financed growth, Namibia should prioritise innovative approaches to secure donor and grant funding, particularly for critical sectors such as education, healthcare, agriculture, and renewable energy.
These areas hold the potential to not only uplift the quality of life for ordinary Namibians but also to create employment, strengthen food security, and support a greener, more diversified economy.
Importantly, national development plans such as NDP6 must be realigned with this new economic reality. The underlying assumptions around Namibia’s income status, fiscal space, and resource envelope must be updated to reflect the country’s current classification and the fresh opportunities it presents.
This also requires building strong institutional partnerships with multilateral organisations and re-engaging bilateral donors who had previously scaled back support due to Namibia’s upper-middle-income label.
If managed prudently, Namibia’s reclassification can serve as a pivotal moment to deepen structural reforms, realign policy priorities, and strengthen social investment. It offers a second chance to craft a more inclusive path to prosperity—one that puts the majority of Namibians at the centre of the development process.
*Cons Karamata is the Chief Executive of the Economic Association of Namibia
