Namibia: Stability Without Momentum

Namibia exemplifies a rare African configuration: institutional continuity without economic acceleration. It is a state that mostly works—and an economy that, in the IMF’s baseline, still struggles to convert that continuity into sustained dynamism. Real GDP growth eased from 5.4% in 2022 to 3.7% in 2024 and is projected to settle near 3% over the medium term. Public debt was about 66% of GDP in 2024 and unemployment remains exceptionally high. [IMF Country Report No. 25/132, 2025] (IMF)

The analytical value of Namibia lies in what it rules out. There is no easy explanation that blames coups, hyperinflation, or administrative collapse. The macro framework is conservative, the budget process is legible, and the central bank treats the currency peg as a non‑negotiable anchor. This forces a harder diagnosis: stability is necessary for development, but it does not automatically generate a growth engine. In Namibia, the binding constraints are structural—scale, resource concentration, water and energy scarcity, and a labour market that fails to absorb entrants. (IMF)

The distinction that matters is between governance quality and economic dynamism. Governance is the capacity to set predictable rules and deliver routine public functions. Dynamism is the capacity to reallocate labour and capital towards higher‑productivity activity at scale. Countries can be competent at the first and still weak at the second. Namibia’s risk is not the classic African risk of instability. It is a quieter risk: strategic inertia. (IMF)

Stability, measured properly

By continental standards, Namibia’s institutional profile remains strong. In the 2024 Ibrahim Index of African Governance, Namibia ranks 6th out of 54 countries for Overall Governance in 2023 with a score of 63.9/100, well above the African average, even as the index records a gradual deterioration over the 2014–2023 decade. [IIAG 2024, Namibia Profile]

Rule‑of‑law measures tell a similar story. The World Justice Project ranks Namibia 44th out of 142 countries globally and 2nd out of 34 in Sub‑Saharan Africa in its 2024 Rule of Law Index. [WJP Rule of Law Index 2024] Transparency International reports a Corruption Perceptions Index score of 49/100 (rank 59/180). [Transparency International CPI 2023]

Yet stability has not produced broad labour absorption. The World Bank’s Poverty & Equity Brief (October 2025) reports that the 2023 census shows unemployment of 36.9% among those aged 15+ and youth unemployment of 44.4%, and describes a polarised labour market: a small, sophisticated formal sector alongside a large, low‑productivity subsistence agriculture sector where many of the poor are employed. [World Bank Poverty & Equity Brief, Oct 2025]

Distributional arithmetic is equally unkind. The World Bank brief reports the official national poverty rate at 17.4% in 2015/16 (the most recent household survey) and notes that inequality remains among the world’s highest: the consumption Gini was 59.1 in 2015, only modestly down from 63.3 in 2003. [World Bank Poverty & Equity Brief, Oct 2025] The UNDP’s inequality‑adjusted HDI table likewise reports a Gini of 59.1 (2022) and shows the concentration of income: the poorest 40% receive 8.6%, while the richest 10% receive 47.2%. [UNDP Human Development Report 2025, Statistical Annex Table 3]

A macro framework built for credibility

Namibia’s macroeconomic architecture makes a clear trade‑off: credibility first, flexibility second. The Namibian dollar is pegged one‑for‑one to the South African rand, and the IMF frames monetary policy as “underpinned by the currency peg”, with the Bank of Namibia managing liquidity and monitoring capital flows in a system where policy‑rate alignment with South Africa matters for reserve stability. [IMF Country Report No. 25/132, 2025] (IMF)

In a small, open economy, this is a rational defence against currency risk. It lowers inflation volatility, reduces balance‑sheet uncertainty, and gives investors a longer horizon for pricing. The IMF reports reserve coverage around 4.4 months of imports in 2024 and roughly 120% of its reserve adequacy metric. [IMF Country Report No. 25/132, 2025] Those are not heroic numbers, but they are consistent with a macro stance that treats external confidence as a policy objective. (IMF)

Fiscal policy has been pulled into the same orbit. The IMF reports gross public debt at 66.3% of GDP in 2024 and argues that sustained primary surpluses are needed to entrench debt sustainability. It also notes that part of the SACU windfall has been placed in a sinking fund to pre‑finance the US$750 million Eurobond redemption in October 2025. [IMF Country Report No. 25/132, 2025] (IMF)

The constraint is equally clear. Under a fixed exchange rate, competitiveness cannot be restored by depreciation; it must be earned through productivity and cost reduction. The IMF is explicit that the pegged regime limits the scope for fiscal policy response when pressures hit, which makes buffers more valuable and discretionary stimulus more dangerous. [IMF Country Report No. 25/132, 2025] This is policy conservatism as both asset and restraint. (IMF)

Why stability has not translated into momentum

Namibia’s growth challenge is not that it never grows. It is that growth struggles to compound into structural change. In the IMF’s account, the deceleration from 2022 to 2024 was driven by lower diamond prices and production, offset by stronger gold and uranium prices and a plateau in oil exploration. Medium‑term growth remains constrained by “structural rigidities”. [IMF Country Report No. 25/132, 2025] (IMF)

The World Bank’s longer view underlines the same weakness: negative real GDP per capita growth during 2016–2020 as commodity prices fell and demand weakened, with poverty projected to have risen after the last household survey even as the economy recovered. [World Bank Poverty & Equity Brief, Oct 2025] When the economy cannot reliably generate labour‑absorbing growth, recoveries feel like rebounds rather than shifts.

Trade structure makes the mechanism visible. In the IMF’s export composition for 2024, “other minerals” account for about 40% of exports and diamonds about 14%, while processed fish is around 16% and manufactured products are comparatively small. [IMF Country Report No. 25/132, 2025] Mining can lift GDP and revenues without lifting employment at scale. The economy becomes externally driven and internally sticky: volatile enough to disrupt planning, but not dynamic enough to reallocate labour quickly.

External balances reinforce the point. The IMF reports a current account deficit of 15.3% of GDP in both 2023 and 2024, and notes that oil‑exploration‑related imports (about 9.1% of GDP in 2024) contribute materially; excluding those imports, the deficit would be nearer 6.2% of GDP. [IMF Country Report No. 25/132, 2025] Investment episodes therefore raise activity while widening external deficits—an uncomfortable arithmetic for a pegged currency. (IMF)

Structural constraints: water, energy, scale

Several of Namibia’s constraints are physical, not merely bureaucratic. Water is the most obvious. An IMF Selected Issues Paper notes that 92% of Namibia’s land is classified as arid and ranks the country among the world’s most water‑stressed, with drought in 2023–2024 reducing crop farming output and increasing fiscal pressures. [IMF Selected Issues Paper No. SIP/2025/091] (IMF)

Water scarcity is not only an agricultural constraint. It shapes mining expansion, coastal development, urban growth, and the feasibility of new energy projects. The same IMF paper records a cumulative budgetary allocation of about 0.9% of GDP across FY2023/24 and FY2024/25 to respond to drought impacts. [IMF Selected Issues Paper No. SIP/2025/091] A state can manage such shocks competently and still be dragged into recurring, productivity‑reducing expenditure.

Energy is the second constraint. The IMF climate paper reports high electricity import dependence, with imports averaging around 67% of total demand in the second half of the year over 2020–2024, when hydropower generation is lower. [IMF Selected Issues Paper No. SIP/2025/091] This acts as a competitiveness tax: it raises input costs across the economy and makes diversification into processing and data‑heavy services more difficult.

Scale and openness do the rest. Namibia’s population is around 3 million and per‑capita GDP about US$4,472 in 2024. [IMF Country Report No. 25/132, 2025] The World Bank brief notes that the 2023 census revised population estimates upward by about 15%, mechanically lowering GDP per capita and contributing to a reclassification from upper‑ to lower‑middle‑income. [World Bank Poverty & Equity Brief, Oct 2025] Small domestic scale means growth must be export‑oriented; high openness means shocks and cycles are imported quickly. (IMF)

A capable fiscal state, with a crowded budget

Namibia’s public sector is functional, but its budget composition limits the state’s ability to buy growth. The IMF records revenue and grants at 36.5% of GDP in 2024, supported by exceptionally large SACU receipts (11.2% of GDP). Expenditure is higher at 40.4% of GDP, producing an overall deficit of 3.9% of GDP. [IMF Country Report No. 25/132, 2025] (IMF)

The crowding is visible in the wage bill. Personnel expenditure is about 14.1% of GDP in 2024 in the IMF’s fiscal table, while capital expenditure is being increased but remains below 4% of GDP. [IMF Country Report No. 25/132, 2025] In a pegged regime, this composition leaves limited space to scale productivity‑raising investment without pushing debt higher. (IMF)

Dependence on SACU receipts adds volatility. The IMF highlights a sharp expected drop in SACU receipts as a key risk and treats that volatility as a reason to rebuild buffers. [IMF Country Report No. 25/132, 2025] When a large share of revenue is externally determined, the political economy becomes defensive: fiscal management focuses on smoothing rather than on restructuring. (IMF)

Governance quality versus economic dynamism

Namibia’s case demonstrates a point that matters for policymakers and investors: governance quality reduces uncertainty, but growth requires reallocation. Predictable institutions make it less risky to invest; they do not, by themselves, create competitive pressure, lower network costs, or fix skills mismatches.

The IMF’s structural priorities are instructive because they focus on the microeconomics of dynamism: reduce skill mismatches, decrease red tape, optimise regulations, strengthen public investment management, and reform SOEs that provide network services. [IMF Country Report No. 25/132, 2025] These are the levers that turn stability into productivity. If they remain partial, stability becomes a form of equilibrium management—competent, but not transformative. (IMF)

Resource upside, and the risk of waiting

Oil and green hydrogen are the most discussed upside scenarios. The IMF is notably cautious: it notes that offshore oil discoveries show promise but that no company has committed to investment given complex physical characteristics of explored fields, and it excludes oil and green hydrogen mega‑projects without firm investment decisions from its baseline. [IMF Country Report No. 25/132, 2025] (IMF)

That caution should shape strategy. Even if investment decisions arrive, hydrocarbons and hydrogen are capital‑intensive: they can lift GDP and revenues faster than they lift employment. The bigger risk is narrative. The expectation of a future resource dividend can delay reforms that are needed regardless of resource outcomes—wage‑bill reform, competition and procurement efficiency, network pricing, and skills pipelines. This is where stability turns into inertia: the system works well enough that it can postpone difficult change without immediate crisis.

The IMF’s response is to push for sequencing: create a strong governance framework for a sovereign wealth fund and a natural resource management framework, and strike a balance between local beneficiation and an attractive investment climate. [IMF Country Report No. 25/132, 2025] Namibia’s institutional strengths make this sequencing plausible. The danger is assuming the sequencing will happen automatically. (IMF)

The labour market is the macro problem

In Namibia, unemployment is not a downstream social statistic. It is the central macro variable shaping fiscal choices and political incentives. The IMF devotes a box to unemployment measurement, noting both a strict definition and a broad definition that includes discouraged workers. Under the strict definition, unemployment reached 36.9% in 2023 (44.4% for youth); under the broad definition it reached 54.8% (61.4% for youth). It also notes methodological improvements in 2023 that complicate direct comparisons. [IMF Country Report No. 25/132, 2025] (IMF)

The implication is uncomfortable but clarifying: even if growth rises from 3% to 4%, it is unlikely to absorb labour at the required pace unless the composition of growth changes. Capital‑intensive minerals and episodic exploration cannot carry the labour market. Employment requires labour‑absorbing tradables and scalable urban services, and those require lower input costs and faster firm entry and expansion.

What momentum would look like

Namibia does not need theatrical policy shifts. It needs targeted changes that lower the cost base, widen the tradable set, and build capability over a decade.

First, treat employment as the organising principle of growth policy, not as a downstream outcome. That implies aligning skills policy with employer demand, easing bottlenecks in hiring scarce skills (including through controlled skilled immigration), and designing incentives around job‑creating sectors rather than around “projects”. The IMF explicitly recommends reducing skill mismatches and red tape and fostering digitalisation to promote private‑sector‑led growth. [IMF Country Report No. 25/132, 2025] (IMF)

Second, attack network costs. In a small economy, electricity, water, logistics, and data pricing decide competitiveness. The IMF’s climate paper shows why water and energy are binding constraints, not background risks. Public and blended finance that improves water security, grid integration, and resilience is therefore not only social spending; it is productivity spending. [IMF Selected Issues Paper No. SIP/2025/091]

Third, shift the state’s footprint from “employer of first resort” to “enabler of scaling”. That is why civil service reform and SOE governance matter: not because smaller government is a slogan, but because the wage bill crowds out space for investment and because network SOEs shape economy‑wide costs. The IMF repeatedly stresses containing the wage bill and reforming SOEs that provide network services. [IMF Country Report No. 25/132, 2025] (IMF)

Finally, treat oil and hydrogen as upside options, not as the base plan. The base plan remains diversification in existing sectors—mining services, fisheries value chains, tourism, logistics, and digitally enabled services that can export regionally. Resource governance frameworks should be built before revenue arrives, not after. [IMF Country Report No. 25/132, 2025] (IMF)

Implications for policymakers, DFIs, and strategic investors

For policymakers, the task is to make stability productive: preserve macro credibility while removing micro barriers that prevent private scaling. Stability provides the space to sequence reforms carefully; it does not remove the need to reform.

For DFIs, the opportunity is to finance the “unfashionable” infrastructure that unlocks private investment—grid integration, water security, logistics corridors, and digital public infrastructure. The World Bank’s FY2025–FY2029 Country Partnership Framework places job creation, renewable and green energy access, an improved enabling environment for private sector development, and digital transformation at the centre of its approach. [World Bank CPF Press Release, Jan 2025]

For strategic investors, Namibia offers a rare combination: institutional continuity with investable needs in energy, water, logistics, and resource‑linked services. Many opportunities are network‑dependent; returns will be shaped by grid access, water licensing, and procurement design as much as by commodity prices. Stability is real, but it is not automatic momentum.

Namibia is one of the few countries in the region where a long plan can be credible. The risk is not collapse; it is drift—stable institutions managing an economy that does not shift. The remedy is deliberate, cumulative reform that turns predictability into productivity, and productivity into employment.