Overview

Namibia's economy is closely tied to that of South Africa through a number of institutional relationship's - in particular the Southern African Custom's Union and the Common Monetary Area - as well as through extensive trade and financial flows. Namibia has abundant natural resources, good infrastructure and access to markets, but contrary to potential, the economy is not well diversified. Economic activity is concentrated in primary sector activities - the extraction and processing of minerals for export which accounts for 20% of GDP, large scale commercial livestock farming, and fishing. The economy is highly vulnerable to world market price fluctuations of diamonds and uranium, prices and demand remaining crucial to the country’s economic prospects. Government services accounted for some 25% of GDP in 2000.

While Namibia appears to be a prosperous, middle-income country, the estimated GDP per capita of US$ 1,800 camouflages huge income disparities, presenting Namibia one its main economic problems. The majority of the population is poor, with limited access to social services in certain areas. Furthermore, the historic pattern of land ownership means the majority of Namibians are landless or small-scale subsistence farmers.

The local currency value of Namibia's principal exports in the first three-quarters of 2000 was 8% higher than in the same period of 1999, but because of the fall in the value of the Namibian dollar, export earnings declined slightly from US$875m to US$861m.

Labour market and unemployment

Unemployment, including underemployment, is estimated at around 30-40%. Labour force by occupation - agriculture 47%; industry and commerce 20%; services 33%. There has been a contraction in mining employment of almost two-thirds over the past 15 years.

Agriculture, forestry and fishing

The agriculture sector continues to be one of the most important sectors, although only half the country is suitable for farming and is highly susceptible to drought. It contributed 8.4% to GDP in 2000, and it is a major source of income and employment for the bulk of the population. The sector comprises two distinct subsectors – the commercial and subsistence subsectors. Commercial agriculture is concentrated in the southern and central regions, relatively arid regions suitable for livestock ranching. Commercial farming is dominated by livestock ranching - cattle in the north-central districts, sheep (karakul and mutton) and ostriches in the south, which account for 80% of total agricultural output. Livestock ranching usually contributes well over two-thirds of commercial farming output, but is very vulnerable to drought.

Subsistence agriculture is concentrated in the northern, communally held areas areas, which are more fertile and more suited to rain-fed farming. Production is oriented towards food crops (maize and millet), while livestock are produced mainly for local consumption. Due to overgrazing, yields in the north remain low on average.

An estimated 49% of the labour force continue to be employed in farming There is a marked disparity in land access between the mainly white 4,000 commercial farmers who own some 37% of the arable land, and the subsistence farmers (some 70% of the population) who are partly dependent on agriculture for their livelihood and most of whom live or work on communal farm-land, owned by the state. The government’s land reform strategy has come under criticism with calls also being made for reform of the communal farming system. Namibia normally produces some 40% of its maize requirements from commercial farms and is generally self-sufficient in millet, the main food crop grown in the north by communal farmers.

Fishing

A significant player in the international fishing industry, Namibia ranks among the top 10 in the world as to value of catches.  The main species are hake, horse mackerel, pilchard, oysters and mussels. The proclamation of a 200-mile Exclusive Economic Zone in 1990 was the turning point in the recovery of the country's fishing stocks. In 1991-93 the fishing industry recorded strong output growth, averaging 29% annually, and was a major contributor to overall economic growth. There is considerable scope for the expansion of fisheries exports.

Mining

The mining sector is the traditional backbone of the economy, contributing 13% to GDP in 2000 and it still generates the biggest share of Namibia's foreign-exchange earnings. Namibia is the fourth largest exporter of non-fuel minerals in Africa, and the world’s fifth-largest producer of uranium.

The importance of the mining sector – with the exception of diamonds - has declined or remained static since independence. Vulnerable to price fluctuations the sector has experienced unfavourable prices and lower grades. Productivity levels have also declined - despite the country’s efforts in the education sector, the skills level of the labour force are considered inadequate to meet the productivity levels required of the mining sector. Because Namibia’s minerals are mostly exported in raw or semi-processed form, the sector is an enclave with relatively few linkages with the rest of the economy.

Diamond mining has recently shown a strong recovery after weakening considerably in the early 1990s - around 7% of government revenues and a third of the country's foreign exchange earnings come from diamonds, over 95% of which are of exceptionally fine gem quality. Uranium mining is the second largest subsector, but weak global prices resulted in production almost halving in 1991-2, and there has since been little recovery. The rest of the mining industry has generally been weak in recent years. Primary gold production started in 1989 and significant quantities of copper, lead, pyrite, salt and zinc are also produced while there are large unexploited deposits of base, precious and industrial minerals. A key prospect for reviving growth lies in the exploitation of substantial zinc reserves. Marble, granite and semi-precious stones such as rose quartz, tourmaline, amethyst and blue-lace agate are also mined. Larger mines are mainly owned by foreign multinationals from South Africa and the UK.

Industry & manufacturing

A small sector it contributes little to the GDP. Main activities are fish and meat processing, beverages, metal and pre-cast concrete products. The sector is marked by gross regional imbalances with almost half the enterprises based in Windhoek and the coastal towns. 

Because Namibia has had very limited industrial development, it imports most manufactured products, which come mainly from South Africa. Exports and imports are each equivalent to about 50 -60% of GDP, showing the high degree of openness of the economy and vulnerability to external shocks.  Its propensity to import has resulted in a structural deficit on the merchandise trade balance since independence.

Tourism

Namibia's third biggest foreign exchange earner. The country has abundant natural resources and excellent infrastructure.

Government finance & fiscal policy

Since independence the government's main policies have been aimed at achieving sustainable economic growth and a real increase in income per head. It has abstained from any major state intervention, aiming to promote sustainable development by facilitating foreign direct investment inflows into priority sectors - natural resource value added, non-traditional manufacturing and tourism. At the same time it has expanded the role of the state through the creation of a number of new parastatals. Black empowerment and affirmative action are being implemented, although progress in the private sector is slow.

Economic policy is focussed on the stimulation of activity in the private sector, notably in the manufacturing sector, in an effort to reduce vulnerability by diversifying away from the primary sector, policy. Growth, poverty reduction and reducing unemployment are focus areas. In the 2001/02 budget the government introduced a medium-term expenditure framework designed to strengthen fiscal policy management and provide a more targeted focus on the allocation of available resources.

Regional  and International economic grouping/alliances:
		African Union
		Common Monetary Area (CMA)
		Southern African Customs Union (SACU)
		Southern African Development Community (SADC)
		Common Market for Eastern and Southern Africa (Comesa)
		The EU-ACP Convention