The recent mining expo and conference took place from 5 -7 August, under the theme ‘Mining for Namibia’s Future: Job Creation, Local Empowerment and Economic Transformation’. Many mining exhibitors showcased the industry’s vibrancy. 

More practically, mining has significantly contributed to socio-economic development as shown by its steady annual economic growth, contribution to the gross domestic product, employment creation, income generation and its role as a major source of government revenue and foreign exchange earnings. 

The mining sector’s impact is documented through national accounts, fiscal data and annual reviews by the Chamber of Mines. 

However, at the micro-level, mining expertise remains guarded, with only limited information shared about its socio-economic benefits. 

Namibia has not fully adopted the global standard of extractive industry transparency initiatives, though the last expression of this commitment was in the Harambee Prosperity Plan II.

In 2024, the mining sector contributed an average of 13.3% to GDP annually, down from 14.8% in 2023, indicating a 1.2% contraction. 

In contrast, in 2023, the contribution was 14.4%, compared to 11.9% in 2022. 

Although considered an engine of the Namibian economy, the sector’s growth appears inconsistent, moving forward one step and back two steps each year. 

The sector remains volatile and lacks ownership. 

It is well-known that raw material exports yield high mineral rents, especially when global prices are high. 

However, questions remain about how much of these rents governments can capture, and whether they are effectively used for national development. Additionally, commodity prices are highly volatile, and with foreign multinationals dominating major mines, the potential for domestic forward and backwards linkages remains limited.

Namibia’s corporate tax rate for mining (55% for diamonds, 37.5% for other mining companies) is considered high by international standards, where the average is around 30%. 

This may reduce Namibia’s competitiveness despite its resource wealth.

Despite mining being our primary sector, employment in the sector remains between 1% and 3%, reflecting limited job creation relative to export activity. 

The 2023 labour force report reveals that the largest employment sector is agriculture, forestry and fishing, with 16.1%. 

Other significant sectors include wholesale and retail trade, motor vehicle repairs, and manufacturing and administrative support services, accounting for 10.0%, 9.8% and 9.3%, respectively.

A key issue is that the Namibian mining sector has not significantly shifted from extracting and exporting raw minerals to adding value locally. 

In 2023, the government approved a ban on exporting unprocessed crushed lithium ore, cobalt, manganese, graphite and rare earth elements, marking the latest development.

Article 100 of the Namibian Constitution says that the State has sovereignty over natural resources, granting it authority to issue mining and exploration permits. 

While taxes, royalties and limited employment benefits are generated from these activities, the current model may not achieve Pareto efficiency, the point where no stakeholder can be made better off without making another worse off. 

If this is true, can the benefits truly reach the ordinary Namibian citizen? 

By promoting domestic processing of key exports like diamonds and uranium, and increasing local participation in the value chain, Namibia could create more jobs, foster industrial growth, and improve income distribution without losing government revenue. 

This approach would help ensure that benefits are allocated more fairly and efficiently.

Furthermore, the government should empower State-owned enterprises, such as Epangelo, to become major shareholders in the critical minerals industry. 

Epangelo should serve as Namibia’s vehicle to represent national interests. 

Currently, most mine ownership is held by foreign companies, who mainly extract and export minerals abroad, with foreign ownership accounting for 88.1% of mining assets, compared to 11.9% for Namibian interests. 

The key question remains: Does Namibia have the capacity to manage and own these resources effectively?

*Tio Nakasole, analyst at Monasa Advisory and Associates. -theoerastus@gmail.com