Namibia's Economy

Namibia is a country that not many people think about. It is a small nation, right above South Africa, that bases most of its economy on tourism and mineral exports. However, it is currently on “junk status” meaning that the country will have to pay more for additional loans. In order to gain an understanding of how Namibia reached this economic low point, we must learn from its history.

Namibia gained independence from South Africa on February 9th, 1990 and since then it has pursued “free market principles, commercial development, and job creation for disadvantaged Namibians”. Because of these goals, Namibia’s economy is heavily dependent on the profits from its main commodity exports: minerals, livestock, and fish. Despite gaining independence from South Africa’s old regime, Namibia’s economy is still intertwined with South Africa. For example, the Namibian dollar is valued at a fixed exchange rate of 1:1 to South Africa’s rand. Because of this, Namibia imports almost all of its goods from South Africa and exports a majority of their goods to South Africa. Namibian leaders have realized that their dependence on South Africa’s economy is precarious and have attempted to diversify their relations. They have been doing this by expanding their market to Europe and embracing the African Growth and Opportunity Act. This act provides “preferential access to American markets for a long list of products”.

Despite these attempts to augment their economy, Namibia has been facing numerous problems, including a recession in 2016. Recently, they have seen their public debt explode from 30% of their GDP to 50% of their GDP. A report titled, Fiscal Risk Statement, by the International Monetary Fund, an organization that works to foster global monetary cooperation, showed the urgency of Namibia’s economic downfall. The IMF pointed out four main risks: “state-owned enterprises, municipalities, the dependency on the South African economy, and the lack of economic reforms”. In response, Namibia has worked with advisors from the IMF to create a new, 3 year, fiscal plan. It is incredibly important that this plan works because Namibia is a stunning country with a beautiful balance of wildlife, beaches, and innovation. When I had the opportunity to visit Namibia, I found that everyday Namibians were truly happy despite having little material wealth.