Namibia’s economy is not growing at a fast enough pace to address the high unemployment rate and inequality.
The International Monetary Fund (IMF) says economic growth remains too weak to make a meaningful dent in unemployment, inequality and poverty.
In its 2026 Article IV consultation, the IMF says Namibia’s economy grew by just 1.7% in 2025, with growth continuing to depend heavily on the mineral sector.
“Economic growth remains insufficient to meaningfully reduce unemployment, inequality, and poverty, which are key government objectives,” the IMF says in its staff appraisal.
The fund says Namibia’s narrow production base remains a major concern, with the economy still concentrated in the public and extractive sectors.
Despite more moderate inflation and support from commodity exports and foreign investment in oil and gas exploration, the IMF says these developments had not yet translated into sufficiently broad-based employment.
“These gains have yet to translate into broad-based, job-rich growth,” the report states.
GROWTH TO STAY SUBDUED
The IMF expects Namibia’s economy to grow by 2.1% in 2026, although it warns that the outlook remains weak and risks are tilted to the downside.
The fund attributes the subdued outlook partly to weak diamond production, declining gold output and elevated fuel prices.
Over the medium term, growth is expected to recover to around 3%, but the IMF warns that structural problems, including skills mismatches and limited economic diversification, will continue to constrain productivity and job creation.
The report identifies several risks to the outlook, including further escalation of the war in the Middle East, volatility in Southern African Customs Union revenue, delays to fiscal reforms, tighter domestic financing conditions, and possible outbreaks of foot-and-mouth disease.
There are, however, opportunities that could improve Namibia’s economic prospects.
“On the upside, progress in oil, gas, and green hydrogen development, together with improved global sentiment, could significantly boost investment and growth,” the IMF says.
FISCAL REFORMS WELCOMED
The IMF welcomes the government’s commitment to fiscal consolidation, saying the 2026/27 budget is a positive step towards improving debt sustainability.
It says the consolidation effort is being driven by expenditure restraint and reforms to the Public Service Employees Medical Aid Scheme.
However, the fund warns that further consolidation will be needed over the medium term.
According to the IMF, additional fiscal discipline will create room for growth-enhancing investment, strengthen social protection and improve Namibia’s ability to withstand economic shocks.
The fund also calls for deeper reforms to the public service, including functional job reviews and the rationalisation of public-sector employment.
Such reforms, it says, could reduce the crowding out of private businesses and improve the efficiency and quality of public services.
PRIVATE SECTOR ROLE
The IMF says Namibia needs to shift towards stronger private-sector-led growth if it is to create enough jobs for its growing workforce.
It calls for improved oversight of public enterprises, stronger public financial management and continued improvements in tax administration.
The fund also points to the importance of capturing a greater share of resource rents, particularly from fisheries.
The proposed Welwitschia Fund legislation, it says, will be important in ensuring future revenue from natural resources if managed prudently.
The IMF also stresses the importance of carefully managing the relationship between the Bank of Namibia’s policy rate and that of the South African Reserve Bank (SARB).
The reduction in the interest-rate gap to 25 basis points, from 75 basis points previously, is described as a positive development.
“Careful calibration of the alignment of the Bank of Namibia’s policy rate with that of the SARB is essential to safeguard the peg,” the IMF says.
While capital flows remain stable, the fund says eventually closing the policy-rate gap will be important to protect foreign-exchange reserves and limit external pressures.
