economy of Namibia is heavily dependent on the extraction
and processing of minerals for export. Mining accounts
for 20% of GDP. Rich alluvial diamond deposits make
Namibia a primary source for gem-quality diamonds. Namibia
is the fourth-largest exporter of nonfuel minerals in
Africa, the world's fifth-largest producer of uranium,
and the producer of large quantities of lead, zinc,
tin, silver, and tungsten. The mining sector employs
only about 3% of the population while about half of
the population depends on subsistence agriculture for
its livelihood. Namibia normally imports about 50% of
its cereal requirements; in drought years food shortages
are a major problem in rural areas. A high per capita
GDP, relative to the region, hides the great inequality
of income distribution; nearly one-third of Namibians
had annual incomes of less than $1400 in constant 1994
dollars, according to a 1993 study. The Namibian economy
is closely linked to South Africa with the Namibian
dollar pegged to the South African rand. Privatization
of several enterprises in coming years may stimulate
long-run foreign investment, although with the labour
movement opposed, so far most politicians have been
reluctant to advance the issue.
The Namibian economy has a modern market sector,
which produces most of the country's wealth, and a
traditional subsistence sector. Although the majority
of the population engages in subsistence agriculture
and herding, Namibia has more than 200,000 skilled
workers, as well as a small, well-trained professional
and managerial class.
The country's sophisticated formal economy is based
on capital-intensive industry and farming. However,
Namibia's economy is heavily dependent on the earnings
generated from primary commodity exports in a few
vital sectors, including minerals, especially diamonds,
livestock, and fish. Furthermore, the Namibian economy
remains integrated with the economy of South Africa,
as the bulk of Namibia's imports originate there.
Since independence, the Namibian Government has pursued
free-market economic principles designed to promote
commercial development and job creation to bring disadvantaged
Namibians into the economic mainstream. To facilitate
this goal, the government has actively courted donor
assistance and foreign investment. The liberal Foreign
Investment Act of 1990 provides for freedom from nationalisation,
freedom to remit capital and profits, currency convertibility,
and a process for settling disputes equitably. Namibia
also is addressing the sensitive issue of agrarian
land reform in a pragmatic manner.
In September 1993, Namibia introduced its own currency,
the Namibia dollar, which is linked to the South African
Rand. There has been widespread acceptance of the
Namibia dollar throughout the country and, while Namibia
remains a part of the Common Monetary Area, it now
enjoys slightly more flexibility in monetary policy
although interest rates have so far always moved very
closely in line with the South African rates.
Given its small domestic market but favorable location
and a superb transport and communications base, Namibia
is a leading advocate of regional economic integration.
In addition to its membership in the Southern African
Development Community (SADC), Namibia presently belongs
to the Southern African Customs Union (SACU) with
South Africa, Botswana, Lesotho, and Swaziland. Within
SACU, no tariffs exist on goods produced in and moving
among the member countries.
Ninety percent of Namibia's imports originate in
South Africa, and many Namibian exports are destined
for the South African market or transit that country.
Namibia's exports consist mainly of diamonds and other
minerals, fish products, beef and meat products, karakul
sheep pelts, and light manufactures. In recent years,
Namibia has accounted for about 5% of total SACU exports,
and a slightly higher percentage of imports.
Namibia is seeking to diversify its trading relationships
away from its heavy dependence on South African goods
and services. Europe has become a leading market for
Namibian fish and meat, while mining concerns in Namibia
have purchased heavy equipment and machinery from
Germany, the United Kingdom, the United States, and
Canada. The Government of Namibia is making efforts
to take advantage of the American-led African Growth
and Opportunity Act (AGOA), which will provide preferential
access to American markets for a long list of products.
In the short term, Namibia is likely to see growth
in the apparel manufacturing industry as a result
In 1993, Namibia became a GATT signatory, and the
Minister of Trade and Industry represented Namibia
at the Marrakech signing of the Uruguay Round Agreement
in April 1994 . Namibia also is a member of the International
Monetary Fund and the World Bank, and has acceded
to the European Community/Union's Lomé Convention.
Mining and energy
Mining contributed 13.7% of GDP in 1999, of which
diamond mining activities represented 9%. Diamond
production totaled 1.5 million carats (300 kg) in
2000, generating nearly $500 million in export earnings.
Other important mineral resources are uranium, copper,
lead, and zinc. The country also is a source of gold,
silver, tin, vanadium, semiprecious gemstones, tantalite,
phosphate, sulfur, and salt.
During the pre-independence period, large areas of
Namibia, including offshore, were leased for oil prospecting.
Some natural gas was discovered in 1974 in the Kudu
Field off the mouth of the Orange River, but the extent
of this find is only now being determined.
Although Namibian agriculture contributes only 12%
of Namibia's GDP, about 70% of the Namibian population
depends on agricultural activities for livelihood,
mostly in the subsistence sector. In 2000, agriculture
products constituted roughly 10% of total Namibian
In the largely white-dominated commercial sector,
agriculture consists primarily of livestock ranching.
Cattle raising is predominant in the central and northern
regions, while karakul sheep, goat, and ostrich farming
are concentrated in the more arid southern regions.
Subsistence farming is confined to the "communal
lands" of the country's populous north, where
roaming cattle herds are prevalent and the main crops
are pearl millet, sorghum, and peanuts.
The government introduced its long-awaited agricultural
land reform legislation in September 1994, and a companion
bill dealing with the communal areas will be presented
later. The government remains committed to a "willing
seller, willing buyer" approach to land reform.
As the government addresses the vital land and range
management questions, water use issues and availability
The clean, cold South Atlantic waters off the coast
of Namibia are home to some of the richest fishing
grounds in the world, with the potential for sustainable
yields of 1.5 million metric tons per year. Commercial
fishing and fish processing is the fastest-growing
sector of the Namibian economy in terms of employment,
export earnings, and contribution to GDP.
The main species found in abundance off Namibia are
pilchards (sardines), anchovy, hake, and horse mackerel.
There also are smaller but significant quantities
of sole, squid, deepsea crab, rock lobster, and tuna.
At the time of independence, fish stocks had fallen
to dangerously low levels, due to the lack of protection
and conservation of the fisheries and the overexploitation
of these resources. This trend appears to have been
halted and reversed since independence, as the Namibian
Government is now pursuing a conservative resource
management policy along with an aggressive fisheries
Manufacturing and infrastructure
In 2000, Namibia's manufacturing sector contributed
about 20% of GDP. Namibian manufacturing is inhibited
by a small domestic market, dependence on imported
goods, limited supply of local capital, widely dispersed
population, small skilled labor force and high relative
wage rates, and subsidized competition from South
Walvis Bay is a well-developed, deepwater port, and
Namibia's fishing infrastructure is most heavily concentrated
there. The Namibian Government expects Walvis Bay
to become an important commercial gateway to the Southern
Namibia also boasts world-class civil aviation facilities
and an extensive, well-maintained land transportation
network. Construction is underway on two new arteries--
the Trans-Caprivi Highway and Trans-Kalahari Highway--which
will open up the region's access to Walvis Bay.
While most Namibians are economically active in one
form or another, the bulk of this activity is in the
informal sector, primarily subsistence agriculture.
In the formal economy, official estimates of unemployment
range from 30% to 40% the work force. A large number
of Namibians seeking jobs in the formal sector are
held back due to a lack of necessary skills or training.
The government is aggressively pursuing education
reform to overcome this problem.
Namibia's largest labor federation, the National
Union of Namibian Workers (NUNW) represents workers
organized into seven affiliated trade unions. NUNW
maintains a close affiliation with the ruling SWAPO