Namibia is a small market and is heavily dependent on international trade. It is among the countries with the worst income disparities in the world (a Gini coefficient index of 59.1 in 2023, second highest after South Africa, according to the World Bank). Despite high unemployment, there is a critical shortage of skilled labor. The latest Labor Force Survey (2018 data) estimates the unemployment rate at 33.4 percent, although unofficial estimates are much higher, especially for those under the age of 24. The effects of the COVID-19 pandemic led to job cuts and reduced wages, devastating Namibia’s labor market. Industry data indicated that the unemployment rate hit 40 percent in 2021, Namibia’s worst-ever performance. Although there is generally no local participation requirement for foreign investments (except in some sectors like mining and fishing), the government actively encourages partnerships with historically disadvantaged Namibians. Due to ongoing government land reform efforts, foreigners are generally prohibited from purchasing agricultural land. Employers often cite productivity as one of their major challenges. Furthermore, the process for obtaining work permits for foreign employees, even those working only temporarily in Namibia with skills unavailable in the Namibian workforce, is bureaucratically burdensome and time-consuming.
Namibian law prohibits corruption, and the government has shown some willingness to address it. Nevertheless, the World Bank’s Worldwide Governance Indicators in 2020 reflected that corruption is a problem. Transparency International ranked Namibia 59 out of 180 countries in its 2022 Corruption Perceptions Index, which measures the perceptions of businesses and country analysts about the degree of corruption in a country. Namibia scored 49 on the index (a score of 100 reflects a “highly clean” and 0 reflects a “highly corrupt” nation). In November 2019, Namibian police arrested the now former Minister of Fisheries and Marine Resources, now former Minister of Justice, and additional prominent businessmen following media reports of their alleged involvement in the massive fishing license corruption scandal known as “Fishrot.” The economic consequences of Fishrot in the form of direct loss of government revenue, reduced government tax revenue, job losses, and the crippling of a key industry are estimated to total over USD $1 billion. The accused remain in prison as of September 2023 and face charges of corruption, fraud, tax evasion, and money laundering.
Namibia’s standard (non-mining) corporate tax on earnings is 32 percent, in line with tax rates charged by other countries in the region. Special provisions in some sectors may reduce this tax rate. For mining, the corporate tax rate is 37.5 percent for all but diamonds, for which the rate is 55 percent.
As in much of southern Africa, the demand for electricity outstrips domestic supply. To date, Namibia has escaped any large-scale power outages or load-shedding, but the country remains heavily reliant on buying electricity from South Africa and other members of the Southern African Power Pool. Nonetheless, Namibia has ambitions to become energy self-sufficient via renewables and could become a net exporter of power to the rest of the southern African region.