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

The diamond sector fuels the recovery

After contracting sharply due to the impact of the COVID-19 pandemic on tourism (11% of GDP in 2019) and external demand, the economy returned to growth in 2021. In 2022, despite persistent constraints, activity should be more robust. Mining (10% of GDP), particularly diamond mining and, to a lesser extent, uranium mining, should spearhead the recovery. The resumption of activity at the Elizabeth Bay mine, the agreement to extend the life of the Namdeb land-based mines (50/50 joint venture between De Beers and the government), and the deployment of a new Debmarine diamond recovery vessel (another De Beers/government JV) early in the year will help boost gem production. Although they will remain below pre-pandemic levels and are vulnerable to a resurgence of the epidemic, tourism revenues are expected to continue the slow rebound that began in 2021, supporting the positive contribution of net exports to activity. Private consumption (70% of GDP) should remain a significant driver of growth thanks to the expected progress of the COVID-19 vaccination campaign (less than 15% of the population was fully vaccinated by the end of 2021), which will fuel business and household confidence. The precarious situation of the public finances – why the activity has been so weak since 2016, particularly in the construction sector – will likely constrain the contribution from public investment. This could also limit opportunities for private investment.


Food and transport prices are expected to fuel higher inflation in 2022.


Authorities resume the long road to fiscal consolidation

The COVID-19 crisis exacerbated fiscal challenges, increasing the deficit in 2020/21. While the deficit is expected to narrow in 2021/22 and 2022/23, it will remain high. As the economy recovers, government revenues will increase and be supported in 2022/23 by an expected increase in payments from the Southern African Customs Union (SACU). Expenditure growth is expected to be very contained as the authorities resume the path of fiscal consolidation initiated in 2016/17 but interrupted by the crisis. Capital spending will remain restrained, while measures are expected to be taken to curb the public wage bill, which absorbs about 50% of revenues, and restructure state-owned enterprises. Expenditures associated with debt servicing (more than 16% of revenues) are set to continue to rise. Fiscal consolidation aims to halt the upward trajectory of the debt, which is expected to continue in 2022/23. To reduce the risk associated with indebtedness, the authorities are attempting to diversify their sources of financing, increasing external borrowing (more than 30% of the public debt stock) and extending maturities on domestic debt, mainly composed of government securities.


In 2022, the current account deficit was expected to narrow because of increased mining exports and transfers related to SACU customs revenues. This will result in a reduction in the structural trade deficit and an increase in the secondary income surplus, respectively. While the services balance should benefit from a revival in tourism, it is unlikely to record surpluses similar to those seen before the crisis. The repatriation of investment income will fuel the primary income deficit by multinational enterprises. External borrowing and investment flows are expected to finance the deficit. Furthermore, in the context of the pandemic, capital transfers in the form of donations of vaccines and medical equipment are helping to finance imports related to the health emergency. With foreign exchange reserves equivalent to more than six months of importance, the country’s external position should help maintain the peg to the South African rand.


Hage Geingob’s succession at stake at SWAPO’s elective congress

Dominating the political scene since the country’s independence in 1990, SWAPO secured another victory in the November 2019 general elections, winning 63 of the 96 seats for contention in the National Assembly. President Hage Geingob, the leader of SWAPO, 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 and the loss of 14 seats in the assembly nevertheless confirmed the erosion of SWAPO’s 30-year hold on power. A difficult economic situation since 2016, aggravated by the COVID-19 pandemic, and the persistence of significant inequalities play a part in this loss of influence. The contentious issue of land redistribution to the black population, which, despite being the majority, owns only 16% of farmland, remains symptomatic of the country’s divisions. Before the 2024 election, land reform could be an issue at the 2022 SWAPO Congress, when the party is expected to choose a new leader and a likely presidential candidate in 2024 to succeed Hage Geingob.


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 (02/2022)