The Namibian economy has a modern market sector (which creates the majority of the country’s wealth) as well as a traditional subsistence sector. The economy is closely linked to South Africa’s as a result of their shared past. The largest economic sectors are mining, agriculture, manufacturing, and tourism.
The banking sector is highly developed and boasts modern infrastructure, including Online Banking and Cell phone Banking. The central bank is The Bank of Namibia (BoN). There are four commercial banks authorised by BoN: Bank Windhoek, First National Bank, Nedbank and Standard Bank.
There are several legislative policies in place to alleviate poverty and the high unemployment rate. Such as the labour act which protects employees from job discrimination arising from pregnancy and HIV/AIDS. The Government tender board announced in 2010 that 100% of all unskilled and semi-skilled labour would be sourced locally.
Namibia’s formal economy is sophisticated in that it is highly capitalintensive and farming focused. It relies on export profits in sectors such as minerals, livestock, and fish. The majority of the country’s imports come from South Africa.
A free-market economy has been actively pursued by the government since independence. The hope is that these principles will aid job creation and commerce growth and thus allow Namibians access to the mainstream economy. This has been done through the courting of foreign donors and investors with a nudge from the liberal Foreign Investment Act of 1990.
The economy is actively integrated in the region and is supported through a number of trade partnerships. As part of the Common Monetary Area (CMA), Namibia is partnered with Lesotho, Swaziland, and South Africa. As a result, the South African rand and the Namibian dollar are legal tender in Namibia.
Considering the minimal domestic market, Namibia is located favourably in the region as a transport base. Together with the strong communications base, Namibia is at the forefront of advocating economic regional integration. Other partnerships include membership in the Southern African Development Community (SADC), and the Southern African Customs Union (SACU) with South Africa, Botswana, Lesotho, and Swaziland – and allows for tariff free movement of goods. Located in Windhoek, SACU has a Trade, Investment and Development Co-operation Agreement (TIDCA) with the United States, and also is negotiating free trade agreements with China, India, Kenya, and Nigeria.
Namibia aims to move away from its reliance on South Africa and to diversify imports and trade. Namibia supplies a large portion of fish and meat to Europe, and has also purchased mining machines and equipment in concessions from the UK, Germany, Italy, the US, as well as Canada.
- GDP (2009): $9.4-billion (World Bank); • Annual growth rate (2009): 1% (World Bank);
- Per capita GNI (2009): $4,338 (World Bank);
- Average annual inflation rate (2010): 4.5% (Namibia Central Bureau of Statistics);
- Natural resources: Diamonds, uranium, zinc, gold, copper, lead, tin, fluorspar, salt, fisheries, and wildlife;
- Agriculture (2009): 5.1% of GDP (livestock and meat products, crop farming and forestry – Namibia Central Bureau of Statistics);
- Mining (2009): 10% of GDP (Gem-quality diamonds, uranium, zinc, copper, other – Namibia Central Bureau of Statistics);
- Fishing and fish processing on board (2009): 3.6% of GDP (Hake, horse mackerel, lobster, other – Namibia Central Bureau of Statistics);
- Trade: Major partners are South Africa, Angola, European Union (EU), U.S, Canada, China, and India (WTO);
- Exports (2010): $5.71-billion (diamonds, uranium, zinc, copper, lead, beef, cattle, fish, karakul pelts, and grapes);
- Imports (2010): $5.14-billion (foodstuffs, construction material, manufactured goods).
Mining provides Namibia with 35% of its revenue and is the biggest economical contributor. The country is also the fourth largest exporter of non-fuel minerals in Africa. Namibia is renowned as a primary source of gem-quality diamonds from its rich alluvial deposits, which gave birth to Namdeb (jointly owned by the Namibian government and De Beers who have recently sold to ANGLO American). The dip in Diamond mining pre-2010 has rebounded, with nearly 1.5-million carats being recovered in 2010.
Namibia holds around 10% of uranium oxide production world-wide and as a result is the world’s fourth-largest producer of uranium with two uranium mines in operation. There are plans to open two or three new uranium mines in the next five years, which would essentially double production, putting it on track to become the largest exporter by 2015.
The other main mineral resources are zinc, copper, lead, gold, fluorspar, salt, manganese, tungsten, tin, granite and marble, with semiprecious stones mined on a smaller scale. Extraction of offshore gas deposits in the Atlantic Ocean is planned in the future.
Electricity generation mainly comes from thermal and hydroelectric plants, as well as a small mix of non-conventional methods. The country plans to build the first nuclear power station by 2018 as a result of the rich uranium deposits with uranium enrichment planned to happen locally.
In 1974, natural gas was discovered near the mouth of the Orange River and is thought to hold over 1.3trillion cubic feet in reserves. Known as the Kudu Fields, the government changed the ownership structure in 2009. Namibia leased large areas for oil prospecting in the years after independence. These areas included onshore and offshore. There are currently around eight companies searching for oil and gas in Namibia. With a well-developed framework and legislature in place, Namibia will be able to continue governing the oil business accordingly.
Half of the Namibian population is dependent on agriculture for employment and subsistence for their livelihood, even though only 1% of Namibian land is arable. Some of the food produced is still imported, such as meat and fish products. The GDP per capita is five times that of the poorest countries in Africa but most Namibians live in rural areas and live on subsistence farming, mostly in the communal lands of the north. This has resulted in Namibia having a very high income inequality rate as the urban economy contrasts directly with an almost cash-less rural economy.
Several enterprises are to be privatised in coming years in the hope that interested foreign investment will be generated. Wildlife conservation is one of the fastest growing areas of economic development in Namibia and is vital for the unemployed rural population in particular.
Livestock ranching is the primary agricultural sector in Namibia including cattle, karakul sheep and goat farming. Main crops include millet, sorghum, corn, and peanuts. Table grapes are a crop of growing importance as they have become commercially viable and provide seasonal labour.
Namibia’s coastline is met by the South Atlantic Sea and as a result of its clean and cold waters is one of the most abundant fishing grounds in the world. The potential sustainable yields are up to 1.5-million metric tons per year. Sardines, anchovy, hake, and horse mackerel are the main species but there are also smaller numbers of sole, squid, deep-sea crab, rock lobster, and tuna. The Namibian Government is pursuing a conservative resource management policy along with an aggressive fisheries enforcement campaign, which has seen an increase in fish stocks. Namibia is a signatory of the Convention on Conservation and Management of Fisheries Resources in the South-East Atlantic (Seafo Convention) and part of the Benguela Current Large Marine Ecosystem (BCLME) program, which sustainably manages the shared marine resources of Namibia, Angola and South Africa.
Trade and Investment
Namibia may seem to be a remote country, but has seaports, airports, highways, and railways. The country aims to become a regional transportation hub as it is perfectly positioned with a key seaport and several landlocked neighbours. The Central Plateau is a major transportation corridor to South Africa.