Country Risk Rating

A very uncertain political and economic outlook and a business environment with many troublesome weaknesses can have a significant impact on corporate payment behavior. Corporate default probability is high. - Source: Coface

Business Climate Rating

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.


  • Significant mineral resources (diamonds, uranium, copper) and fisheries
  • Good transport infrastructure
  • Good governance
  • Tourism potential


  • Dependent on the mining sector
  • High unemployment and persistent inequalities
  • Agricultural sector exposed to climatic hazards
  • Dependent on South Africa

Current Trends

A modest return to growth

In 2020, the lockdown measures implemented to control the COVID-19 pandemic particularly affected key sectors of activity (tourism, mining, transport, trade and construction), pushing the economy into a second consecutive year of recession. Growth is expected to pick up modestly in 2021, supported especially by an increase in mineral exports (diamonds, uranium, zinc), which accounted for more than 45% of the total in 2019, benefiting from a gradual recovery in external demand. Tourism revenues should also rebound from the low base established in 2020, but will remain constrained by the uncertainty related to the spread of the pandemic. The mining sector’s recovery should benefit the transport and trade sectors. Private investment, particularly in the mining sector, is also expected to recover, supporting the return to growth. Interest rate cuts by the Bank of Namibia and the announcement of an investment incentive plan by President Hage Geingob could help to drive the recovery. However, the precarious state of public finances – the reason why activity has been so weak since 2016, particularly in the construction sector – will likely constrain the contribution from public investment. While private consumption will benefit from the lifting of strict lockdown measures in the second quarter of 2020, any recovery will be checked by unemployment, estimated at over 20% before the pandemic-related crisis, and per capita income, which has been declining over the past five years.


Fiscal challenges accentuated by the pandemic

The crisis related to the COVID-19 pandemic accentuated fiscal challenges, widening the deficit in 2020/21. In 2021/22, the deficit is expected to start shrinking but will remain high. Increasing tax revenues should help to bring it down, but will remain constrained by persistently weak economic activity. Moreover, given the one-year lag in their payment, Southern African Custom Union (SACU) revenues will be affected by the impact of the crisis on growth and regional trade. On the expenditure side, the expiration of measures taken to address the urgent economic and health crisis and the resumption of the fiscal consolidation program should make it possible to reduce the deficit. Even so, the government wage bill, which absorbs half of the revenues, and the precarious health of state-owned enterprises will continue to exert spending pressure. Furthermore, increased borrowing will result in higher debt-servicing costs, which will account for about 14% of revenues in 2020/21. Although sovereign risk is mitigated by the large share of domestic debt (about two-thirds of the stock) and debt denominated in local currency or the South African rand (to which the Namibian dollar is pegged; about 70% of the total), the trajectory and level of public debt are a constraint on public finances.

After narrowing as a result of increased SACU transfers and import compression, the current account deficit is expected to widen in 2021. The pick-up in domestic demand will impact the trade deficit, as the rebound in imports exceeds that of exports. The expected decline in transfers related to SACU customs revenue will also contribute to the higher current account deficit. While the services balance should benefit from a rebound in tourism, it is unlikely to record surpluses similar to those before the crisis. The income deficit will be fuelled by repatriation of investment income by multinational companies. External borrowing and investment flows are expected to finance the deficit. With foreign exchange reserves equivalent to about four months of imports, the country's external position should ensure that the peg to the South African rand is maintained.


A challenger to SWAPO?

Dominating the political scene since the country's independence in 1990, SWAPO won another victory in the November 2019 general elections, taking 63 of the 96 seats in the national assembly put to the vote. President Hage Geingob, SWAPO's leader, was re-elected for a second five-year term in the first round with 56% of the vote. Down 31 points from 2014, the president's score, along with the loss of 14 seats in the assembly, nevertheless confirmed the erosion of SWAPO’s 30-year hold on power. A difficult economic situation over the past five years, aggravated in 2020 by the COVID-19 pandemic, and the persistence of major inequalities, are playing a part in this loss of influence. The controversial issue of land redistribution to the black population, which, despite being in the majority, owns only 16% of agricultural land, particularly encapsulates the country's divisions. Panduleni Itula, a former member of SWAPO and runner-up in the 2019 presidential election (29% of the vote), has emerged as the main opponent, thanks to the support of young people in urban areas. He launched a new party in August 2020, the Independent Patriots for Change (IPC), to challenge SWAPO's grip in the coming years.

Although relatively favorable compared with other African countries, the business climate suffers from red tape and is subject to competition from many African countries that have made this issue a pillar of their development strategies.



Coface (02/2020)