The African Development Bank (AfDB) says since the mining industry is very capital-intensive, its direct employment effect (1.7% in 2018) is relatively low compared to the monetary value of its output.
The Bank’s 2024 Country Focus Report noted that the mining sector, which is dominated by diamond, uranium and gold, remains the backbone of Namibia’s economy in terms of contribution to the gross domestic product (GDP 16.2% in 2023), government revenue and foreign exchange earnings.
“Tourism has emerged as a major industry, contributing about 7% to foreign exchange reserves and providing substantial employment (11.4% of total employment in 2018) and cash-income opportunities in remote areas,” it noted.
The wealth created by the mining sector has moved Namibia into the upper middle-income country (UMIC) category with a per capita income of N$79,431 in 2022, equivalent to US$4,849.2.
However, “Namibia remains one of the most unequal countries in the world, with a Gini-coefficient of 0.56 in 2015/163 and 63.3 in 2022. This, in addition to the size of its population, limits the demand for domestic goods and services,” said AFDB.
The Bank noted that although progress has been made in creating wealth for all, income equality and job creation remain a major challenge.
Furthermore, the proportion of people classified as poor or severely poor was halved between 2003/04 – from 37.5% to 17.4% and from 21.8% to 10.7% respectively, said the bank.
“Life expectancy at birth dropped by almost ten years from 61.5 years to 53.6 years between 1990 and 2005, before improving rapidly until 2017 to 64.9 years. This improvement reflects the substantial efforts made to combat HIV/AIDS,” said AFDB.
This comes as Namibia’s recent economic performance was stronger than expected driven by the mining sector, including investments in oil exploration.
AFBD highlighted that the economy has recovered to its pre-pandemic level, but many key sectors, including job-rich construction and financial services, continue to lag.
