The country's economic outlook remains bleak, with the International Labour Organization highlighting concerns over its deeply divided workforce and the introduction of a historic national minimum wage.

Economic forecasts have cast a shadow over Namibia’s future, with the African Development Bank projecting a decline in the nation’s Gross Domestic Product (GDP) by 3.3% in both 2024 and 2025. This is primarily attributed to global demand weaknesses and a contraction in agriculture, exacerbated by recurring droughts. However, optimism remains among some officials, with Namibia's Minister of Mining and Energy, Tom Arlindo, expressing confidence that the nation could double its GDP growth to around 8% within the next decade, citing potential gains from the oil and gas sector.

"Namibia is still in a challenging position, if not worse, than before the elections," said Namibian economist Dr Omu Tuajoroka Kakujaha-Matundu. "The elections themselves were disorganized, with reports of ballot paper shortages leading to significant frustration among voters. As a result, many people were unable to vote, though not in large numbers. Tensions remain high, particularly within the opposition, which has hinted at protests in response to the election's management. For now, however, the situation is calm, and the country’s political landscape remains uncertain."

Regarding the country’s economic outlook, Kakujaha-Matundu  questioned projections that suggest a 3.3% decline in GDP, pointing out that other sources, such as the World Bank, forecast a more modest slowdown in growth, estimating a 3.4% increase. He suggests that the forecasted decline could be based on comparisons to the unusually high growth seen in 2023, which he believes may not have been entirely accurate. "It’s important to distinguish between a slowdown in growth and an actual contraction," he noted.

The African Development Bank's projections, which indicate a decline in real GDP growth, are driven by challenges in key sectors such as agriculture. With a persistent drought and external economic pressures, Namibia faces an uphill battle. Moreover, the country’s unemployment rate remains a major concern, standing at nearly 30%, with youth unemployment hovering around 50-60%, a factor that continues to stifle the economy.

Kakujaha-Matundu also expressed his scepticism about the government’s reliance on the oil and gas sector to drive future growth. While recognising that Namibia’s recent offshore oil discoveries in the Orange Basin could potentially transform the economy, he cautioned that similar resource booms in other African countries, such as Ghana, have not always resulted in sustainable economic development. "If oil and gas are managed well, they could stimulate growth, but if not, they could prove disastrous," he warned.

In addition to oil, Namibia is betting on the emerging green hydrogen sector, with significant investments from Germany and other European nations. However, Dr. Matando remains cautious about the viability of green hydrogen, questioning whether Europe will maintain its interest in Namibia’s hydrogen exports in the long term, especially given the shifting geopolitical landscape and competition from neighbouring countries.

Despite the risks, he acknowledges that oil and gas could, if successfully harnessed, help meet the government’s ambitious growth target. "In 10 years, if the oil and gas sector materialises as expected, it could indeed propel Namibia’s growth. However, it’s not guaranteed," he concluded.

Kakujaha-Matundu also raised concerns about Namibia’s over-reliance on diamonds, a sector increasingly threatened by synthetic alternatives and global political tensions. As diamond exports come under pressure, especially due to sanctions affecting key markets in Russia, Namibia may need to diversify further.

Ultimately, Kakujaha-Matundu emphasised that for Namibia to achieve meaningful economic growth, it must focus on diversifying its economy beyond mining, especially by investing in value-added agriculture and expanding trade within the African Continental Free Trade Area. Without addressing these issues, he believes that the country’s future growth could remain sluggish, despite the government's optimistic projections.

Looking ahead, Kakujaha-Matundu suggested that the election result, should South West Africa People's Organisation party lose its majority to opposition leader, Panduleni Itula of the Independent Patriots for Change party,may not disrupt the interests of major foreign companies like Total Energies, Chevron, Shell, and Exxon Mobil. "Itula is a market liberal, so foreign companies will likely continue their operations without much change," he said, highlighting that political shifts may have limited impact on the interests of multinational corporations.

--ChannelAfrica--