As 2024 draws to a close, Namibia’s economic outlook demonstrates tenacity in the face of adversity. This year brought to light the challenges of restoring stability in a world that is changing quickly, from the Bank of Namibia navigating rate cuts, to an imbalanced economic recovery and a reassessment of oil discovery, green hydrogen and the first elected female president.
High tensions resulted from political parties exerting tremendous pressure as Namibia’s general elections in 2024 came to an end. Setting Namibia’s economy on a more stable growth trajectory for everyone, and accelerating climate action and sustainable development are both possible if we unlock big, audacious investments.
As a result, the uncertainty surrounding Namibia’s economic prospects is exacerbated by elements like rising interest rates and unemployment. Policies which promote growth and lessen inequality must be the focus of policymakers in order to address these issues.
In 2024, the economy grew slower. Customers were less burdened by the 3% inflation rate. Namibia’s fuel consumption decreased 5.0% year over year to 289.1 million litres in the third quarter of this year. The amount of gasoline and diesel used to decrease by 9.8% and 3.1% annually, respectively, according to the Bank of Namibia.
In July, the price of fuel decreased by 80 cents per litre for petrol, 60 cents per litre for diesel at 50 parts per million, and 70 cents per litre for diesel at 10 parts per million. The prices of gasoline and diesel dropped by N$1.20 and N$1.10 per litre, respectively, in September. The Bank of Namibia stated that the drought also had some effect on this trend because fewer crops were planted and harvested, which decreased the need for fuel, in comparison to normal circumstances. Seasonal factors, however, were a contributing factor in the most recent quarter’s 2.0% quarterly increase in total fuel consumption. A 1.0% decline was observed in the seasonally-adjusted series.
Additionally, the economy grew by 3.5% in 2024, and is projected to grow by 4.0% in 2025. As Namibia’s debt-to-GDP ratio dropped to 59.5%, indicating robust nominal GDP growth, the Bank of Namibia asserts that fiscal conditions have improved. The Namibia Statistics Agency reports that the nominal GDP increased by N$5.3 billion in the third quarter of 2024, from N$56.3 billion to N$61.6 billion.
As real economic activity slowed in the manufacturing, electricity and water sectors, the secondary sector’s real output grew more slowly in the third quarter of 2024. Meanwhile, the construction sector’s output increased.
As non-residential buildings and civil construction increased, so did real economic activity in the construction sector. Although growth in nominal residential property prices remained subdued, the year-on-year rates of increase in the available house price indices accelerated in recent months, improved consumer confidence, and the recent interest rate reductions. In 2024, the official unemployment rate worsened to 33.40%.
In Namibia, the youth unemployment rate is reported to be 39%. Both the number of discouraged job-seekers and those classified as other not economically-active people have increased, contributing to the ongoing growth in the population of people who are not economically-active. However, to address this societal issue, a thorough analysis of the increased unemployment rate, which includes discouraged job-seekers, is necessary.
The slowdown in global consumer price inflation has led to monetary policy easing in many countries in recent months. Domestic inflationary pressures have also receded thus far in 2024, largely reflecting the marked slowdown in fuel price inflation, and the appreciation in the exchange value of the Namibia dollar.
Consumer price inflation remained below the 4.5% midpoint of the inflation target, largely due to a notable easing in goods price inflation, alongside a modest deceleration in services’ price inflation.
During the first few months of 2024, most underlying inflation indicators stayed low, and slowed due to weak consumer demand and the related effects of the Namibia dollar’s gain in value.
With imports totalling N$14.8 billion, up 20.5% from the previous month and 33.7% year-over-year from N$11.1 billion, and exports totalling N$9.0 billion, up 2.9% month-over-month and 17.4% from the same period in 2023, there was a N$5.8 billion trade deficit for the year under review. Namibia should, therefore, think about enacting laws which encourage domestic manufacturing and lessen the country’s need for imports.
Additionally, there has been improved allocation and spending towards critical sectors of the economy such as education, healthcare and infrastructure. These improvements are slightly regional and international benchmarks. The attainment of economic prosperity in 2024 depended on the ability to formulate policies as a driving vehicle to upgrade the open markets.
Moreover, building on future growth, policymakers should work together and inspire action to meet Namibia’s commitment to leave no one behind throughout its implementation of the Sixth National Development Plan (NDP6). It is imperative to reflect on the previous NDP’s shortcomings by coming up with well-researched and well-reasoned mechanisms that prioritise and synchronise activities to yield the desired results, and avoid the economy faltering. The NDP6 could use the flexibility inherent to the informal sector to integrate into the formal sector of economics such as economic diversification, industrialisation, sustainable economic growth, investment and social concerns such as inequality, poverty and well-being.
The industrial policy should be revisited or reformed to incorporate the informal economy. The current industrial policy narratives tended to either neglect the informal economy, or even view the informal sector as potentially threatening to the formal economy, needing elimination and control rather than support and investment for inclusive structural economic transformation.
Furthermore, Namibian oil discoveries are probably going to generate income for the government. In a country which depends largely on petroleum imports, this discovery will greatly increase energy security. Green hydrogen is what I see as the reliable technique to achieve full decarbonisation. Namibia’s agriculture industry needs significant improvements, as well as more government funding. The development of knowledge and abilities is a crucial cross-cutting and value-adding tactic in achieving these objectives. Exciting technical advancements are occurring right now. Namibia must establish policies, and genuinely foresee and position itself to take advantage of the opportunities presented by the Fourth Industrial Revolution. Namibia should strengthen its laws against cybercrime, and reform them.
In conclusion, policymakers should look to build resilience and remain growth-minded, amid a volatile economic backdrop. Understanding the outlook and discovering how to turn potential pitfalls into new prospects, is crucial.