Namibia

Higher rainfall favours agriculture and hydropower, while diamonds will continue to suffer

Economic growth is expected to see a slight improvement in 2025 and 2026, supported by the recovery of agricultural production after the drought of 2024, in addition to larger uranium extraction and renewable energies. Investments will be made in renewables (solar and wind) for green hydrogen production. The commissioning of renewable energy with approximate 93 megawatt capacity is planned for the 2025-2026 fiscal year. The exploration of new offshore oil and gas fields will also boost growth, but the economic benefits are not expected to materialise for another several years. Furthermore, the sixth National Development Plan "NDp6" (for the period between 2022-2023 and 2026-2027) aims to ensure food and water security, strengthen the role of the private sector in the economy, increase the efficiency of government institutions and promote growth in the renewable energy market.

Inflation easing is being observed on back of a decrease in energy and food prices, as well as stabilisation of the South African rand to which the Namibian dollar is pegged. In 2025 and 2026, inflation will remain within the central bank's target range of 3-6%, reflecting the inflation trajectory of South Africa. The slowdown in inflation, high real interest rates, and the resolve to support growth have prompted the central bank to make several rate cuts during 2024 and 2025. Further cuts are expected. This monetary easing action will encourage private consumption and investment.

However, the decline in global demand for diamonds since 2024 is weighing on mining activity and exports. The increase in US tariffs on Namibian products will have a limited direct impact, as exports to the US account for only 3% of total exports. In contrast, the indirect impact of the trade war could be greater, particularly owing to the decline in global demand for raw materials, including diamonds. Moreover, the uncertainty generated by trade tensions could negatively affect energy investment projects. Last, sluggish global growth could weigh on tourism activity. The government also introduced a visa requirement for tourists from certain countries.

Durably wide public deficit, but domestic borrowing

Namibia has a heavy public debt burden, but plans to make an early repayment of USD 500 million on a USD 750 million Eurobond maturing in October 2025 using a sinking fund which is funded by past revenues from the SACU. The part paydown will a significantly reduce the debt-to-GDP ratio. However, the budget for the two 2025-26 and 2026-27 fiscal years plans an increase in investment spending (modernisation of railways and hydraulic infrastructure projects, in particular), which should, in principle, be offset by a tightening of operational expenditures (wage bill), all aimed at curbing the deficit to less than 4% of GDP. But on the other hand, the government wishes to reduce the corporate tax rate for non-mining companies from 30% to 28% and its attempts to reduce the wage bill in the public sector have failed. At the same time, a decline in SACU revenues is anticipated from 2025 due to the sluggishness of the South African economy and the drop in global commodity prices and a decrease in tax revenues from diamonds. This decrease in revenues, combined with the increase in expenditures, will therefore widen the public deficit.

As for the external accounts, the current account, which is structurally negative, is expected to see its deficit decrease due to falling import prices and an increase in production and demand for gold and uranium. The deficit will mainly be financed by foreign direct investments (FDI) related to oil and gas exploration, among others. Last, the Namibian dollar is at par with the rand, which could depreciate due to its strong dependence on raw materials and its vulnerability to unfavourable global economic conditions. The external debt can be primarily pinned to the private sector and related to foreign direct investments. Foreign exchange reserves represent four months of imports.

SWAPO facing the challenges of unemployment and inequalities

The SWAPO, the movement that led to independence in 1990, held onto the Parliamentary majority during the November 2024 elections, while its presidential candidate, Netumbo Nandi-Ndaitwah, won the election and became the first woman to hold the position. The President aims to tackle high structural unemployment for the next five years. To do that, she plans to create more than 500,000 jobs in agriculture, education and vocational training, housing, health and sports, among others. In December 2024, her government approved the National Upstream Petroleum Local Content Policy, which aims to enhance local participation in the oil sector by providing training and job opportunities for Namibians and integrating Namibian businesses throughout the value chain of the sector. Nandi-Ndaitwah also proposes to merge certain ministries to reduce government spending. The SWAPO plans to introduce reforms favourable to the private sector and macroeconomic stability, without neglecting the well-being of the population. However, the high unemployment rate, coupled with poverty and inequalities, are major sources of public frustration. The previous administration's failure to combat unemployment cost the SWAPO 12 parliamentary seats in the last elections. In addition, land reform continues to polarise the population. A colonial legacy of German South-West Africa (1884-1915), the unequal distribution of land persists. Approximately 70% of private agricultural land is owned by the white minority, which represents only 8% of the population (compared to just 16% owned by the black population). The Revised National Resettlement Policy 2018-2027, which provides for a voluntary redistribution of land based on the “willing buyer, willing seller” principle, has struggled to make inroads as demand is not very solvent and the state allocates only limited financial resources to it, despite the population's demand.

Despite recent tensions related to the extension of the ban in place since 2021 on importing fresh South African products, South Africa remains Namibia's main partner. Bilateral relations are strengthened by the South Africa-Namibia Binational Commission, which works to enhance economic, sectoral and political cooperation. During its last plenary meeting in 2023, the two countries agreed on cooperation in the energy sector, particularly in electricity and green hydrogen. Sectoral committees meet periodically. Furthermore, Namibia and South Africa are part of the Southern African Monetary Area along with Lesotho and Eswatini. Additionally, ties with the European Union are strengthening, as the EU seeks to diversify its sources of energy and raw materials. In 2021, the German and Namibian governments issued a joint statement on German colonisation, particularly the massacres and other atrocities that followed the rebellion of the Herero and Nama populations between 1904 and 1908. In the statement, Germany acknowledged its moral and historical responsibility, extended its apologies, and proposed a EUR 1.1 billion development programme over 30 years. Nevertheless, the statement was quickly contested by representatives of the descendants of the affected communities, supported by the UN, due to their limited involvement in the negotiations and the lack of acknowledgment of the crime of genocide and the obligation to make reparations. Reacting to the pressure, the Namibian government called for a renegotiation of the agreement. Germany officially recognised the genocide in December 2024, and both countries now aspire to definitively seal the agreement. Last, China will continue to maintain a close relationship with Namibia through its role in infrastructure development, trade, and investments in the uranium sector.

Last updated:July 2025