By Iipumbu Sakaria NAMIBIA has a small open economy. Economic growth over the past 25 years has averaged around 4.5 percent and public finances are considered well managed. The debt ratio is one of the lowest in Africa, and in the world, and the budget balance hardly spirals out of the fiscal policy in a manner that could raise too much concern. The economy is dominated by the mining sector, with diamonds and uranium exports accounting for a large share of foreign currency. The overall contribution to GDP is dominated by the tertiary, primary and then secondary industry. The tertiary sector largely comprises wholesale and retail trade, transport and communication, real estate and business as well as the public sector. Since Namibia was a colony, its economy is highly interlinked with the trade industry of South Africa and the rest of the world. In 1980, the tertiary industry accounted for around below 40 percent of GDP, which rose to a good 60 percent in 1990. By 2000, this share of GDP reduced to around 55 percent - where it remained, according to the latest statistics in 2013. The primary sector’s share of GDP, on the other hand, has been declining ever since 1980. It is still the dominant foreign currency earner but its share declined from 40 percent in 1980 to less than 20 percent in 2013. At independence, in 1990, the primary sector’s share of GDP stood below 30 percent and declined to less than 20 percent in 2000. Thereafter, its share rose again and reached a peak of above 25 percent in 2009. After that it declined to its current contribution of below 20 percent of GDP. The primary sector is dominated by the diamond and uranium sectors. Namibia produces one of the best gem diamonds in the world and its diamonds are used as sweeteners for world diamonds. From 1980 until 1991, diamonds were responsible for roughly 40 percent of primary sector output. This increased to over 80 per cent from 1993 until 2009. Uranium, which literally did not have any meaningful contribution to GDP since 1980, increased its share significantly from 2002 onwards reaching a peak in 2010. Other minerals such as gold, copper and precious stones, among others, were responsible for the rest of the contribution to GDP. Agriculture and forestry also plays a significant role in the economy of Namibia. Livestock and crop farming, and forestry dominate this sector. Agriculture and forestry’s contribution was significant in the 1980s but is showing a steady decline. This sector is largely affected by weather such as rainfall in the country. For example, in 1980 and 1981, the contribution of the agricultural sector to GDP stood at 7 and 9 percent, respectively. Until 1992, the contribution to GDP averaged between 6 and 7 percent. This, however, changed drastically in 1993 and 1994, which coincided with severe droughts in the country. At that time, the contribution declined to 4 percent respectively. Thereafter, from 1995 onwards, the contribution of agriculture to GDP went up significantly to 7 percent. Namibia’s agricultural sector is dominated by livestock farming, followed by crop farming. The difference, however, had been huge in the 1980s but reduced significantly since 1996. Indeed, between 2001 and 2005, crop farming contributed more to the GDP than livestock farming. Thereafter, livestock farming took its rightful place again and contributed more to GDP than crop farming. Namibia is also endowed with an ocean. The cold Benguela current passes along Namibia’s coastline and is largely responsible for the abundant high quality of fish produced in Namibia. However, this fish is largely exported to Europe, mainly Spain and Portugal. The remaining fish is processed on board and its share of contribution has significantly increased since 1980. This is largely due to government policy of adding more value to the natural resources. In 1980, the contribution of fishing and fish processing on board was around 0.5 percent of GDP, this steadily rose and reached about 1.3 percent in 1990. By 2000, its contribution stood at 4.2 percent while it reached a peak of 4.7 percent in 2004. However, a sharp decline has been observed since 2010, with a constant decline to reach 2.7 percent in 2013. From a macroeconomic perspective our economy is sound and fine. The challenge is now to spread this to the micro economy as well. *Iipumbu Sakaria is the Deputy Director for Strategic Communications at the NSA.
New Era Reporter
2015-03-09 07:27:33 3 years ago