The Growth Lab has been working with the Government of Namibia since 2020 on a project to disentangle the factors that inform Namibia’s economic prospects. The research outputs of this initiative may in turn contribute to the policymaking process in the country and inform policymakers abroad facing similar issues. The project covers a wide range of research activities, including but not limited to: understanding the drivers of macroeconomic sustainability, diagnosing the constraints to growth and identifying the most binding structural barriers preventing Namibia from realizing sustainable growth and diversification opportunities, studying inequality and labor market dynamics across the country, and analyzing the economic and export diversification opportunities by applying the framework of complexity analysis.
A generation into independence, Namibia displays significant progress towards long-term development. The country has made strides in overcoming a legacy of exclusion, biases in the development of state capabilities and access to public goods. Namibia has also established public institutions that increased civic engagement and participation; and achieved significant socio-political stability.
Namibia registered positive economic growth every year since its Independence in 1990, with the sole exception of 1993. In terms of GDP per capita, the first decade (1990-2000) recorded a moderately positive rate of growth (1.4% CAGR), but between 2000-2015, Namibia embarked upon a rapid growth acceleration, outperforming its African peers with an average annualized rate of growth per capita of 3.1%. During these fifteen years, poverty rates halved, and Namibia closed its income gap with South Africa by 45%, going from an income gap of 36% in 2000 to 20% in 2015. Household consumption per capita echoed the growth acceleration and expanded at a similar pace as GDP per capita. The growth acceleration was driven by the global commodity super cycle – which translated into favorable terms of trade, an investment boom in the mining industry, and exports coming from that sector.
However, by 2015, many of the factors behind the acceleration started to wane. The external shock of falling commodity prices, compounded with a plummeting of investment and a push for fiscal consolidation, leading to an overall contraction– Namibia contracted by 2.1% on average between 2015-2019.
By this point, at the beginning of 2020, Namibia was facing three concurrent structural challenges: reigniting economic growth, achieving a path towards fiscal sustainability, and effectively promoting pathways to opportunity for all its citizens. Onto this stage came the global pandemic of COVID-19, which only amplified these challenges and exposed the vulnerabilities in the economy.
The collaboration between the Growth Lab and the Government of Namibia aims to provide research-based inputs and active policy support that can inform policy approaches to address these structural challenges in an holistic fashion, in the global context of the post COVD-19 economic trends.