Economy of Namibia

The Namibian economy has a modern market sector, which produces most of the
country's wealth, and a traditional subsistence sector. Although the majority of the
population engages in subsistence agriculture and herding, Namibia has more than
200,000 skilled workers, as well as a small, well-trained professional and managerial
class.

Overview
Namibia is a higher middle income country with an estimated annual GDP per capita of
US$5,828 but has extreme inequalities in income distribution and standard of living.[6] It leads
the list of countries by income inequality with a Gini coefficient of 70.7 (CIA)[7] and 74.3 (UN),
[8]
respectively.
Since independence, the Namibian Government has pursued free-market economic principles
designed to promote commercial development and job creation to bring disadvantaged
Namibians into the economic mainstream. To facilitate this goal, the government has actively
courted donor assistance and foreign investment. The liberal Foreign Investment Act of 1990
provides guarantees against nationalisation, freedom to remit capital and profits, currency
convertibility, and a process for settling disputes equitably. Namibia also is addressing the
sensitive issue of agrarian land reform in a pragmatic manner. However, Government runs and
owns a number of companies such as Air Namibia, Transnamib and NamPost, most of which
need frequent financial assistance to stay afloat.[9][10]
The country's sophisticated formal economy is based on capital-intensive industry and farming.
However, Namibia's economy is heavily dependent on the earnings generated from primary
commodity exports in a few vital sectors, including minerals, especially diamonds, livestock, and
fish. Furthermore, the Namibian economy remains integrated with the economy of South Africa,
as the bulk of Namibia's imports originate there.
In 1993, Namibia became a signatory of the General Agreement on Tariffs and Trade (GATT)
signatory, and the Minister of Trade and Industry represented Namibia at the Marrakech signing
of the Uruguay Round Agreement in April 1994. Namibia also is a member of the International
Monetary Fund and the World Bank, and has acceded to the European Union's Lom
Convention.

Regional integration
Given its small domestic market but favourable location and a superb transport and
communications base, Namibia is a leading advocate of regional economic integration. In
addition to its membership in the Southern African Development Community (SADC), Namibia
presently belongs to the Southern African Customs Union (SACU) with South Africa, Botswana,
Lesotho, and Swaziland. Within SACU, no tariffs exist on goods produced in and moving among

the member countries.[citation needed] Namibia is a net receiver of SACU revenues; they are estimated
to contribute 13.9 billion NAD in 2012.[5]
The Namibian economy is closely linked to South Africa with the Namibian dollar pegged to the
South African rand. Privatisation of several enterprises in coming years may stimulate long-run
foreign investment, although with the trade union movement opposed, so far most politicians
have been reluctant to advance the issue. In September 1993, Namibia introduced its own
currency, the Namibia Dollar (N$), which is linked to the South African Rand at a fixed
exchange rate of 1:1. There has been widespread acceptance of the Namibia Dollar throughout
the country and, while Namibia remains a part of the Common Monetary Area, it now enjoys
slightly more flexibility in monetary policy although interest rates have so far always moved
very closely in line with the South African rates.
Ninety percent of Namibia's imports originate in South Africa, and many Namibian exports are
destined for the South African market or transit that country.[citation needed] Namibia's exports consist
mainly of diamonds and other minerals, fish products, beef and meat products, karakul sheep
pelts, and light manufactures. In recent years, Namibia has accounted for about 5% of total
SACU exports, and a slightly higher percentage of imports.
Namibia is seeking to diversify its trading relationships away from its heavy dependence on
South African goods and services. Europe has become a leading market for Namibian fish and
meat, while mining concerns in Namibia have purchased heavy equipment and machinery from
Germany, the United Kingdom, the United States, and Canada. The Government of Namibia is
making efforts to take advantage of the American-led African Growth and Opportunity Act
(AGOA), which will provide preferential access to American markets for a long list of products.
In the short term, Namibia is likely to see growth in the apparel manufacturing industry as a
result of AGOA.

Sectors
Namibia is heavily dependent on the extraction and processing of minerals for export. Taxes and
royalties from mining account for 25% of its revenue.[11] The bulk of the revenue is created by
diamond mining, which made up 7.2% of the 9.5% that mining contributes to Namibia's GDP in
2011.[12] Rich alluvial diamond deposits make Namibia a primary source for gem-quality
diamonds. Namibia is a large exporter of uranium and over the years the mining industry has
seen a decline in the international commodity prices such as uranium, which has led to the reason
behind several uranium projects being abandoned. Experts say that the prices are expected to rise
in the next 3 years because of an increase in nuclear activities from both Japan and China. The
mining industry in Namibia is supposedly going to reach US1.79bn by the year 2018.[5][13]

Mining and energy

Main article: Mining in Namibia
Diamond production totalled 1.5 million carats (300 kg) in 2000, generating nearly $500 million
in export earnings. Other important mineral resources are uranium, copper, lead, and zinc. The

country also is a source of gold, silver, tin, vanadium, semiprecious gemstones, tantalite,
phosphate, sulphur, and salt.[citation needed]
Namibia is the fourth-largest exporter of nonfuel minerals in Africa, the world's fifth-largest
producer of uranium, and the producer of large quantities of lead, zinc, tin, silver, and tungsten.
Namibia has two uranium mines that are capable of providing 10% of the world mining output.
[6] The mining sector employs only about 3% of the population while about half of the
population depends on subsistence agriculture for its livelihood. Namibia normally imports about
50% of its cereal requirements; in drought years food shortages are a major problem in rural
areas.
During the pre-independence period, large areas of Namibia, including off-shore, were leased for
oil prospecting. Some natural gas was discovered in 1974 in the Kudu Field off the mouth of the
Orange River, but the extent of this find is only now being determined.

Agriculture
Main article: Agriculture in Namibia

Welcoming sign of the Burgsdorf-farm in Hardap.

About half of the population depends on agriculture (largely subsistence agriculture) for its
livelihood, but Namibia must still import some of its food. Although per capita GDP is five times
the per capita GDP of Africa's poorest countries, the majority of Namibia's people live in rural
areas and exist on a subsistence way of life. Namibia has one of the highest rates of income
inequality in the world, due in part to the fact that there is an urban economy and a more rural
cash-less economy. The inequality figures thus take into account people who do not actually rely
on the formal economy for their survival. Although arable land accounts for only 1% of Namibia,
nearly half of the population is employed in agriculture.[14]
About 4,000, mostly white, commercial farmers own almost half of Namibia's arable land.[15] The
governments of Germany and Britain will finance Namibia's land reform process, as Namibia
plans to start expropriating land from white farmers to resettle landless black Namibians.[16]
Agreement has been reached on the privatisation of several more enterprises in coming years,
with hopes that this will stimulate much needed foreign investment. However, reinvestment of
environmentally derived capital has hobbled Namibian per capita income.[17] One of the fastest
growing areas of economic development in Namibia is the growth of wildlife conservancies.
These conservancies are particularly important to the rural generally unemployed population.

An aquifer called "Ohangwena II" has been discovered, capable of supplying the 800,000 people
in the North for 400 years.[18] Experts estimate that Namibia has 7720 km3 of underground water.
[19][20]

Fishing
The clean, cold South Atlantic waters off the coast of Namibia are home to some of the richest
fishing grounds in the world, with the potential for sustainable yields of 1.5 million metric
tonnes per year. Commercial fishing and fish processing is the fastest-growing sector of the
Namibian economy in terms of employment, export earnings, and contribution to GDP.
The main species found in abundance off Namibia are pilchards (sardines), anchovy, hake, and
horse mackerel. There also are smaller but significant quantities of sole, squid, deep-sea crab,
rock lobster, and tuna.
At the time of independence, fish stocks had fallen to dangerously low levels, due to the lack of
protection and conservation of the fisheries and the over-exploitation of these resources. This
trend appears to have been halted and reversed since independence, as the Namibian Government
is now pursuing a conservative resource management policy along with an aggressive fisheries
enforcement campaign. The government seeks to develop fish-farming as an alternative.

Manufacturing and infrastructure

In 2000, Namibia's manufacturing sector contributed about 20% of GDP. Namibian
manufacturing is inhibited by a small domestic market, dependence on imported goods, limited
supply of local capital, widely dispersed population, small skilled labour force and high relative
wage rates, and subsidised competition from South Africa.
Walvis Bay is a well-developed, deepwater port, and Namibia's fishing infrastructure is most
heavily concentrated there. The Namibian Government expects Walvis Bay to become an
important commercial gateway to the Southern African region.
Namibia also boasts world-class civil aviation facilities and an extensive, well-maintained land
transportation network. Construction is underway on two new arteriesthe Trans-Caprivi
Highway and Trans-Kalahari Highwaywhich will open up the region's access to Walvis Bay.
The Walvis Bay Export Processing Zone operates in the key port of Walvis Bay.

Tourism

An example of Namibian wildlife, the Plains Zebra, one focus of tourism

Main article: Tourism in Namibia
Tourism is a major contributor (14.5%) to Namibia's GDP, creating tens of thousands of jobs
(18.2% of all employment) directly or indirectly and servicing over a million tourists per annum.
[21]
The country is among the prime destinations in Africa and is known for ecotourism which
features Namibia's extensive wildlife.[22]
There are many lodges and reserves to accommodate eco-tourists. Sport Hunting is also a large,
and growing component of the Namibian economy, accounting for 14% of total tourism in the
year 2000, or $19.6 million US dollars, with Namibia boasting numerous species sought after by
international sport hunters.[23] In addition, extreme sports such as sandboarding, skydiving and
4x4ing have become popular, and many cities have companies that provide tours. The most
visited places include the Caprivi Strip, Fish River Canyon, Sossusvlei, the Skeleton Coast Park,
Sesriem, Etosha Pan and the coastal towns of Swakopmund, Walvis Bay and Lderitz.[24]

Labour
While many Namibians are economically active in one form or another, the bulk of this activity
is in the informal sector, primarily subsistence agriculture. A large number of Namibians seeking
jobs in the formal sector are held back due to a lack of necessary skills or training. The
government is aggressively pursuing education reform to overcome this problem.
Namibia has a high unemployment rate. "Strict unemployment" (people actively seeking a fulltime job) stood at 20.2% in 1999, 21.9% in 2002, and spiraled to 29,4 per cent in 2008.[25] A 2012
study by the Namibia Statictics Agency (NSA) determined the rate of unemployment to be
27.4%. This study included subsistence farmers, work without pay, and any non-zero amount of
weekly working hours, and did not count as unemployed people not actively seeking for a job.[4]
Under a much broader definition (including people that have given up searching for
employment) two different studies determined the unemployment rate to be 36.7% (2004) and
51.2% (2008), respectively. This estimate considers people in the informal economy as
employed. 72% of jobless people have been unemployed for two years or more. Labour and
Social Welfare Minister Immanuel Ngatjizeko praised the 2008 study as "by far superior in scope
and quality to any that has been available previously",[3] but its methodology has also received
criticism.[25]

The total number of formally employed people stood at 400,000 in 1997 and fell 330,000 in
2008, according to a government survey. The NSA 2012 study counted 396,000 formal
employees. Of annually 25,000 school leavers only 8,000 gain formal employmentlargely a
result of a failed education system.[4][26]
Namibia's largest trade union federation, the National Union of Namibian Workers (NUNW)
represents workers organised into seven affiliated trade unions. NUNW maintains a close
affiliation with the ruling SWAPO party.

Household Income
In the financial year March 2009 February 2010, every Namibian earned 15,000 N$ (roughly
2,000 US$) on average. Household income was dominated by wages (49.1%) and subsistence
farming (23%), with further significant sources of income being business activities (8.1%,
farming excluded), old-age pensions from government (9.9%), and cash remittance (2.9%).
Commercial farming only contributed 0.6%.[27]