Namibia registered positive economic growth every year since Independence, with the sole exception of 1993. In terms of GDP per capita, the first decade (1990-2000) recorded a moderately positive rate of growth (1.4% CAGR), but between 2000-2015, Namibia embarked upon a rapid growth acceleration, outperforming many regional peers , with an average annualized rate of growth per capita of 3.1%. During this period, the rate of poverty halved and Namibia narrowed the income gap with South Africa, from 36% in 2000 to 20% in 2015. Household consumption per capita mirrored the growth acceleration and expanded at a similar pace as GDP per capita.
Namibia has made rapid and impressive strides in gaining global market share for key minerals. Foreign direct investment (FDI) more than tripled between 2005-2014. The year 2014 was the last year of the commodity boom and FDI peaked at 10% of GDP, heavily concentrated in a few prominent primary sectors: extraction, electricity and manufacturing. As the commodity super-cycle came to an end, limiting the fiscal space, Namibia experienced a trend reversal. After a few years’ of recurrent droughts and recessionary conditions, COVID-19 and its accompanying destruction of global and local demand, as well as disruptions in the supply chains exacerbated the situation. While the space for consumer and Government spending is limited, Namibia remains endowed with unique and attractive investment opportunities, good infrastructure, rule of law and a stable democratic foundation. In addition, Government is in possession of world class assets, which will be curated to attract meaningful investments.
Given this challenging backdrop, the Economic Advancement Pillar has been redesigned to focus on three (3) Goals, with a focus on maximizing Namibia’s investment potential, as a catalyst for fostering a rapid and sustainable growth trajectory. The Pillar will apply a deliberate bias towards marshalling resources beyond the limited balance sheet of Government as it looks to match optimally priced capital to the investment opportunities, with a view to promote inclusive growth and job creation. In so doing, there is resolute commitment from the Government to provide the requisite enabling environment and where necessary, partner with the private sector to unlock opportunities. This focus is adopted with an acknowledgement that Government has many competing priorities which must be championed by OMAs, including the containment of operational expenditure relative to developmental expenditure, to secure fiscal sustainability.
Five of the twelve desired outcomes from HPPI were attained. Access to SME finance was improved from 22 percent to 50 percent as targeted, 121 rural youth enterprises were created nationwide and 10 targeted industry growth programmes were launched by November 2016. Under HPPI, the Small and Medium Enterprises (SME) sector received a policy boost when the SME Financing Strategy was developed and approved in Cabinet, resulting in the formation of four vehicles through which SMEs would receive tailored assistance. The four (4) interventions included the Credit Guarantee Scheme, the Mentoring and Coaching Programme, Skills Based Lending Facility and the Venture Capital Fund. The optimal implementation of the SME Financing Strategy is critical to combatting unemployment. HPPII will continue to prioritize this sector and other key interventions from HPPI. Key outcomes that proved to be out of reach included maintaining a debt to GDP ratio of less than the self-imposed 35% ceiling and maintaining an investment grade credit rating. The nature and severity of the challenge the Nation now faces necessitates a commensurately bolder and focused approach to the prioritization of opportunities, in order to achieve asymmetrically larger desired outcomes.