Population 2.156 million
GDP 12.147 US$ billion
@rating
country
Business climate
assessment
| 2010 | 2011 | 2012(e) | 2013(f) | |
|---|---|---|---|---|
|
GDP growth (%)
|
6.6 |
4.9 |
4 |
4.1 |
|
Inflation (yearly average) (%)
|
4.5 |
5.8 |
6.7 |
5.9 |
|
Budget balance (% GDP)
|
-4.7 |
-10.6 |
-6.3 |
-4.5 |
|
Current account balance (% GDP)
|
-1.8 |
-6.3 |
-2.5 |
-3.6 |
|
Public debt (% GDP)
|
16.2 |
24.5 |
27 |
27.7 |
| (e) Estimate (f) Forecast | ||||
STRENGTHS
- Extensive mineral resources (diamonds, uranium, gas, copper)
- Low foreign debt
- Developed financial market
- Considerable tourist potential
- Good transport infrastructures
- Political stability and good governance
WEAKNESSES
- Dependence on mining sector (50% of exports)
- Dependence on South Africa
- Lack of skilled labour and inadequate education levels
- High HIV prevalence (15% of economically active population)
- High unemployment (34%) and great inequalities
Risk assessment
An effort to diversify the economy
Following the slowdown in 2011, which increased in 2012, growth is expected to stabilise in 2013. Domestic demand will remain strong due to slowing inflation, but above all to public investment under the Targeted Intervention Program for Employment and Economic Growth (TIPEEG). The measures will target four sectors (agriculture, tourism, transport and housing construction), which will drive growth. The mining sector (diamonds and uranium), which contributes more than 10% of GDP (but employs only 3% of the working population), will also be buoyant without, however, registering strong growth due to the sluggishness of world demand in a context of a depressed global economy. Areva has suspended the start of operations at the Trekkopje mine because of unfavourable uranium price developments.
Inflation, maintained in 2012 by the high price of food (closely linked to prices in South Africa which supplies 80% of these products) and energy, will ease slightly in 2013.
An improving though still weak fiscal situation
The fiscal deficit, which appeared following the 2008-2009 contra-cyclical measures, has not since declined. The pursuit of an expansionary policy in favour of growth and employment will put pressure on the budget in 2013. The cost of the TIPEEG, estimated at NAD 14.7bn (15% of GDP) over three years will add to the spending burden. One third of fiscal income (94% of revenue) comes from customs duties linked to the country’s membership of the Southern African Customs Union (SACU) and will be affected by the economic slowdown as well as by the possible renegotiation of the formula for sharing out the revenues among the members. The measures aimed at increasing other tax revenues (broadening of the tax base, strengthening of controls, increasing the state’s participation in the exploitation of the mines) will, however, limit the worsening of the deficit.
Namibia’s public debt is increasing but remains sustainable, below the limit set by the state (35% of GDP). Namibia can count on foreign investors (mainly South African) to fund its deficit, as is shown by the success of its first rand bond issue (ZAR 850mn or EUR 75mn) in October 2012. But the debt remains essentially domestic.
Despite a worsening current account balance, the external financial situation remains sound
The current account deficit, which had begun to diminish in 2012, will widen again in 2013 due to rising imports of capital goods necessary for the development of mining infrastructures and also for the manufacturing sector (steel, an industrial glass making unit). Exports will grow less in view of the economic slowdown of its trading partners (South Africa, United Kingdom). Tourism revenues do not make up for increased freight costs and the repatriation of profits by the mining companies is increasing while revenues from SACU duties are falling. Foreign investment, encouraged by the government will remain significant.
Stable but ossified political context
Swapo, in power since independence in 1990, dominates the political stage. The party’s vice president, up for re-election at the end of November 2012, is also the future candidate in the November 2014 presidential elections. Under the Constitution, the current president, Hifikepunye Pohamba cannot stand for a third term. If his health should deteriorate (76), the prime minister will temporarily take over the presidency, which is bound to stoke the divisions within Swapo but unlikely to jeopardise its dominance with only a minority opposition. The gradual fall in unemployment as a result of the employment support programme in the private sector as well as measures to reduce poverty and inequality will help ease social tensions.
The country is among the region’s best-rated countries in terms of governance
Namibia, which has a sophisticated financial system, tops the countries of Sub-Saharan Africa in terms of governance thanks to the efficiency of its institutions, the independence of its judiciary and its respect for the rules of transparency. Corruption is low. A new Investment Code is due to be enacted in 2013.
