Namibia: Risk Assessment

Country Risk Rating

A4 A somewhat shaky political and economic outlook and a relatively volatile business environment can affect corporate payment behavior. Corporate default probability is still acceptable on average.

Business Climate Rating

A4 The business environment is acceptable. Corporate financial information is sometimes neither readily available nor sufficiently reliable. Debt collection is not always efficient and the institutional framework has shortcomings. Intercompany transactions may thus run into appreciable difficulties in the acceptable but occasionally unstable environments rated A4.


  • Extensive mineral (diamonds, uranium, copper) and gas resources
  • Significant tourism potential
  • Good transport infrastructures
  • Political stability


  • Dependence on the mining sector (50% of exports)
  • Dependence on South Africa
  • Very high unemployment (34%) and high levels of inequality

Current Trends

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Growth to stabilize in 2016

Namibia's economic activity is expected to remain fairly stable in 2016. The manufacturing sector is expected to continue to suffer from shortcomings in the supply of electricity, with the country's three main suppliers (South Africa, Zambia, Zimbabwe) themselves having to contend with production difficulties. Construction, boosted in recent years by the development of major mining projects, could benefit from extension works at the Walvis Bay port and public infrastructure projects (transport, hydroelectricity). The exploitation of new mines (Otjikoto gold mine, Tschudi copper mine) should prevent a downturn in industrial sector activity in the face of weak demand and low prices for mining products. Investment will be driven by public spending. Steps to control household borrowing are, by contrast, expected to moderate the rise in private consumption which has, however, been encouraged by a relatively expansionary budget policy. Inflation, fueled by high prices in South Africa, Namibia's main supplier, especially of foodstuffs, is likely to remain strong in 2016. The fairly tight monetary policy could prevent it from exceeding the 6% target set by the monetary authorities.

Worsening public finances and stubborn current account deficit

The government's drive to sustain growth in a context of lower revenues is likely to lead to a wider budget deficit in 2016. The measures aimed at improving tax collection are unlikely to have an impact in the short term. Tax receipts from the mining sector have been curtailed by unfavorable market conditions (demand and prices). Finally, customs duties returned to Namibia under the South African Customs Union (SACU), which contributes about a third of the country's tax receipts, are likely to fall due to a decline in trade in Southern Africa. Spending under the national program promoting growth, employment and infrastructures, is unlikely to be revised downwards. Wages too are expected to continue to rise, although modestly, and to sustain household demand. Government debt will rise to cover this growing deficit. In 2016, the public debt could, therefore, exceed the cap of 35% of GDP set by the government. In essence (70%) this comprises local debt, mostly denominated in the Namibian dollar and in the rand. However, the small size of the local market means that the country has to turn to the international markets, on which the government, therefore, raised USD 750 million in October 2015 through a bond issue.

The current account deficit could worsen sharply in 2016. Imports are expected to rise to meet growing demand for capital goods (for infrastructure projects) as well as consumer goods. At the same time, Namibian exports are likely to be hampered by weak growth in South Africa (the country's main trading partner, accounting for almost 25% of exports) and low prices for certain mining products (copper, zinc, iron ore). The expected increase in prices and demand for diamonds (almost 27% of exports), after a year of diamond marked decline in 2015, is unlikely to be enough to prevent the current account from deteriorating. The country will, however, be able to rely on foreign investments to finance its deficit. In 2016, the Namibian dollar, pegged to the South African rand, will continue to be hit by the South African currency's depreciation and strong volatility.

Stable political context and satisfactory performance regarding governance

The South West Africa People's Organization (SWAPO), in power since independence (1990), dominates the political stage. Its candidate, Hage Geingob, was elected as President with 87% of the votes cast in November 2014, succeeding Hifikepunye Pohamba, who, under the Constitution, was unable to stand for a third term. The measures in favor of education, social spending and employment should continue to contain social tensions, even though progress on combating poverty, inequalities and unemployment remains slow. Namibia has a sophisticated financial system and the country is among the best placed Sub-Saharan countries on the World Bank's governance indicators. While performances on rule of law and political freedom are improving, those on combating corruption (ranked 79th in 2014 compared with 72nd in 2012) have declined but are still better than those of most countries in the region.


Coface (09/2016)