Namibia’s Finance and Social Grants Management Minister Ericah Shafudah has flagged the diamond sector’s ongoing underperformance as a significant vulnerability to the country’s economic stability, warning that subdued activity in the industry is contributing to slower national growth and fiscal strain.
Presenting the national budget for the 2025-2026 financial year in Parliament this week, Shafudah highlighted the urgency of economic diversification to reduce reliance on volatile commodity sectors, particularly diamonds.
“Nonetheless, the continued weaknesses in the diamond sector and the subsequent adverse impact on domestic activities remain a key source of vulnerability. Thus, measures to further diversify the economy will go a long way to lessen the impact [of] external shocks on economic outcomes,” said Shafudah.
The Minister’s remarks come as the Namibia Statistics Agency (NSA) reported a slowdown in economic growth, with gross domestic product (GDP) expanding by 3.7% in 2024 down from 4.4% in 2023.
The NSA attributed the deceleration primarily to weakened global demand for key exports such as diamonds, compounded by adverse weather conditions that hit the agricultural sector.
“Domestic economic prospects remain broadly positive, although activities weakened marginally during 2024. The moderation in growth was largely on account of muted global demand for key commodity exports such as diamonds coupled with drought conditions which decreased agricultural production,” she said.
Government revenue is projected to rise modestly to N$92.6 billion in FY2025/26, representing a 1.9% increase from the revised estimate of the previous year.
However, the fiscal space remains constrained due to a steep N$6.9 billion decline in receipts from the Southern African Customs Union (SACU), now estimated at N$21.1 billion.
“Similarly, activities in the diamond sector remain subdued resulting in muted contributions to the fiscus,” the Minister added.
This comes as the Namibia Revenue Agency (NamRA) expects tax revenue from diamonds to decline by N$6 billion this year due to depressed global prices.
NamRA Commissioner Sam Shivute attributed the decline to the poor performance of the diamond sector but emphasised that improved revenue collection in the mining, fishing and tourism sectors had helped offset the loss.
“We have collected N$83 billion for the 2024-2025 financial year. From a diamond sector perspective, this year we are not getting about N$6 billion compared to last year. But despite the fact that we are not getting N$6 billion from the diamond sector, we are still able to exceed our revenue target come March 2025,” he said.
