Limited market access, skills shortages and weak domestic processing capacity are among the key structural constraints preventing Namibia from diversifying its economy beyond mineral extraction, according to the United Nations Conference on Trade and Development (UNCTAD).
The findings were presented during the recent launch of a report on value addition and economic diversification within the critical energy transition minerals value chain.
Speaking at the event, Chief of the Extractive Commodities Section at UNCTAD, Clovis Freire, said consultations with the private sector identified several systemic barriers that continue to limit Namibia’s ability to develop downstream industries.
Freire said companies identified restricted access to markets, the absence of long-term off-take agreements, high capital costs, shortages of specialised technical skills and regulatory and certification bottlenecks as major impediments to industrial development.
“Key constraints emerged during consultations with the private sector, including limited market access, lack of scale and off-take agreements, high capital costs, skills shortages, certification bottlenecks and weak domestic processing ecosystems,” Freire said.
He noted that some local firms believe certain manufacturing activities, such as battery assembly, could be undertaken in Namibia. However, the country currently lacks sufficient technical expertise in areas such as electro-mechanics and industrial automation.
Freire added that national procurement systems could also play an important role in supporting the development of domestic production in sectors such as pharmaceuticals.
According to the report, more than 170 specific constraints were identified during the study and linked to targeted policy interventions aimed at strengthening Namibia’s industrial base.
Proposed measures include the introduction of apprenticeship programmes lasting between six and twelve months, with gender participation targets, as well as temporary training subsidies for companies that host apprentices.
Other recommendations include strengthening collaboration between universities and industry in applied research, improving certification and standards compliance systems, and introducing blended finance mechanisms to help reduce capital constraints for industrial projects.
The report also proposes the development of industrial hubs and shared technology platforms to lower entry barriers for new manufacturing firms, alongside the strategic use of public procurement to stimulate domestic demand for locally produced goods.
“In response to the challenges identified, more than 170 policy gaps were mapped and linked to targeted instruments, including apprenticeship programmes, training subsidies, university–industry research collaboration, stronger certification systems, blended finance tools and shared industrial hubs,” Freire said.
Freire said the strategy is based on the principle that economic diversification is a key driver of long-term growth.
Research presented at the launch showed that expanding the number of products a country exports explains about 71% of the differences in GDP levels between countries. When economic complexity is included in the analysis, that explanatory power rises to 91%.
He said diversification creates a reinforcing cycle of capability development, enabling countries to expand into increasingly sophisticated industries.
“Diversification generates a virtuous cycle. The more a country diversifies, the more capabilities it builds, which in turn creates opportunities for further diversification,” Freire said.
“With coordinated policy action, targeted reforms and strategic investment, Namibia has the potential to transform its economic structure, reduce its vulnerability to commodity price shocks and generate sustainable industrial growth and employment.”
