Best Bitcoin Exchange for Namibia

Economic sectors

Primary sector

The mining industry, with its main pillar of diamonds, is still the backbone of Namibian exports with a share of about 50%. Due to the high degree of mechanization, however, it offers only relatively few (approx. 7,000 – 8,000), but well paid jobs. Now that onshore deposits have been largely exploited, diamond production has been predominantly off-shore for years. In offshore production, the diamond-bearing sediments of the Oranje off the mouth of the river near Oranjemund and along the coastal strip to the north of it are extracted from the seabed with sludge excavators and filtered for diamonds.

By far the most important company in diamond mining is NamDeb, a consortium in which the Namibian government and the South African De Beers Group each hold 50% of the shares. NamDeb’s last two onshore mines will soon be closed. Offshore production will continue for a number of years, but offshore deposits will also be depleted sometime in the next few decades.

With the recent ‘opening’ of Oranjemund, the centre and hub of the Namibian diamond industry, the government and NamDeb are gradually preparing the region for the post-mining era. Oranjemund was until recently a ‘Closed City’ under the full control of NamDeb. Not with NamDeb employees (or other companies involved in diamond mining), access to the city was only possible with special security clearance. Although Oranjemund was formally granted city status in 2011, the city was not really opened to the public until October 2017. This means that Oranjemund has now finally (at least formally) become a normal Namibian city, which anyone can visit without further permission and in which every Namibian can now live and work.

Uranium mining in Namibia has long been synonymous with the name of Rössing. The huge Rössing open pit uranium mine near Arandis, which has been producing uranium since 1976, is the oldest still producing uranium mine in the world and for a long time was also the largest uranium mine in the world. The majority of Rössing’s shares are held by the Australian mining giant Rio Tinto, while the remaining shares are held by various other owners, including, interestingly enough, the state of Iran (!). Originally it was assumed that the uranium deposits of the Rössing mine would be exhausted by 2015, but the mine is still producing. Now it is assumed that the mine will be closed from about 2025.

In 2006/2007 a second uranium open pit mine was added with the Langer Heinrich mine of the Australian Paladine Energy Group and in 2011/12 a third with the Trekkopje mine of the French mining group Areva (renamed and restructured since January 2018 in “Orano”). The Trekkopje mine was put into Care & Maintenance mode immediately after completion in May 2013 due to the currently far too low world market price for uranium, in the hope that the world market price for uranium will eventually reach a commercially profitable level. The uranium price required for this is at least $US 70 / pound uranium oxide. In recent years, however, the price has generally been well below $US 30.

At the end of April 2018, Paladin Energy Ltd. also announced that the Langer Heinrich mine will now also cease production, as the current extremely low world market prices for uranium mean that cost-covering production is no longer possible. The planned closure will eliminate approximately 600 jobs. According to Paladin Energy, only a maintenance team of about 20 people will remain on site. Since 2016, the huge Husab mine, 90% of which is Chinese owned, has also been in operation. On December 30, 2016, Husab produced the first barrel of uranium oxide. The Husab mine will be the second or third largest uranium mine in the world when it reaches full production capacity in August 2018.

As a result of the low price of uranium, the importance of uranium mining for Namibian exports and Namibia’s share of GDP has fallen considerably. While the share of uranium mining in the value added of the mining sector still amounted to just under 40% in 2009 (and was thus even higher than the share of diamond mining for a short time), the corresponding share (despite the new Husab mine) is currently only about 6%. Diamond mining has clearly dominated the mining sector since 2010 at the latest, with a value-added share that varies between 55% and over 70% depending on the year. Uranium has only contributed a meager 1 – 2% to the GDP since 2011, while diamond mining – depending on the year – now accounts for 6 – 9%.

In addition to the mining of uranium and diamonds, numerous other mineral resources are mined in Namibia, including gold, zinc, copper, lead and fluorite. Apart from the zinc production of the Scorpion Mine near Rosh Pinah (which is expected to end in 2021 at the latest), the importance of this ‘other mining’ in Namibia is relatively low, at least if one takes the value added and the number of jobs as a yardstick (see table and figure below).

In addition to mining, fishing plays an important role for Namibia. Namibia belongs – what only few know – to the ‘top ten’ fishing nations worldwide in terms of catch value, but is hardly perceived by the public as a fishing nation. On the one hand, this is due to the fact that fishing and further processing are concentrated primarily in Walvis Bay and (albeit with considerable cutbacks) Lüderitz. On the other hand, much of the value added in fishing unfortunately goes abroad (see below).

Fishing makes an important contribution to GDP, fluctuating greatly from year to year. In 2013, fishing accounted for US$365 million of the country’s GDP, about half the share of agriculture in GDP ($US 727 million), although the contribution of fishing was achieved with a fraction of the number of workers needed in agriculture.

Unfortunately, a large part of the value added by further processing is not done in the country, but fishing licences are issued to foreign companies, which then either process the fish on board or in their home countries (especially Spain). Nevertheless, about 15,000 Namibians work in the fishing industry, half of them at sea and half in the fish processing industry on land. About 90% of the fishery is exported, mainly to Spain.

Due to its concentration on Walvis Bay and Lüderitz, fishing is little present in the public perception. Fishing and on-board processing at sea are included in the primary sector, while the value added by fish processing on land is recorded as part of the secondary sector (processing industry).

Due to the low, unreliable and often unfavourable rainfall throughout the year, crop production in Namibia is risky and relatively unproductive. Arable farming can be found mainly in the (relatively) rainy areas of the north, especially in the so-called ‘corn triangle’ between Tsumeb, Otavi and Grootfontein, as well as north of Etosha Park and in Caprivi. The rest of the country is only suitable for extensive grazing due to the low and unreliable rainfall.

An exception are the border rivers at the northern and southern borders of the country and the area around the Hardap dam near Mariental. There and in two or three other places in the country there is some irrigated agriculture. Additional irrigation areas will be created after completion of the Neckartal dam near Keetmanshoop in the south of the country. The latter is now largely completed (as of April 2018). Final completion is currently suffering from the cash flow problems of the Namibian government. This is likely to delay the final completion by at least one year.

The very limited irrigation areas are used primarily for growing vegetables and fruit, but they are not sufficient to meet the needs of the domestic market. The only notable export product of Namibian irrigated agriculture are table grapes grown along the Orange River, the border river with South Africa. The grapes are of very high quality and can be marketed internationally very well, as only a few other countries can supply high-quality table grapes at harvest time on the Orange.

The main products and also the main export products of Namibian agriculture are beef and sheep meat, whereby the animals are partly exported alive (especially to South African slaughterhouses), partly as frozen meat and partly as processed meat products. Although agriculture provides a large part of the employment opportunities (especially for low-skilled Namibians), it contributes relatively little to GDP with only 3.7%.

In Namibia, two completely different forms of agricultural production can be distinguished. In the municipal areas north of the veterinary fence, personnel-intensive subsistence agriculture (cattle breeding and some arable farming) dominates on comparatively small farmland. By contrast, the farms in the so-called ‘commercial areas’ south of the veterinary fence are large to very large, strictly commercial ranch-like farms that operate extensive livestock breeding with little personnel but high capital expenditure. The high-quality beef and sheep meat produced here is produced for the world market and exported to South Africa and Norway in particular. By contrast, the agricultural products produced in the communal areas are mainly for the local population’s own use, the rest being marketed locally and regionally.

Secondary sector

Although the GDP share of the secondary sector is now higher than that of the primary sector – as is explicitly the political aim – a closer look at the sub-sectors reveals some problems. For example, the construction sector is increasingly dominated by Chinese firms, which are displacing domestic construction firms. According to newspaper reports, around four out of five (state-financed) major building and civil engineering projects are now being awarded to Chinese companies. The expansion of the airport (plans have been put on hold for the time being) and the port of Walvis Bay has also been awarded to Chinese companies. At present (April 2018), the construction industry in Namibia is still suffering from a severe recession. This is primarily a consequence of the current poor economic situation in Namibia and the resulting reluctance to award large construction projects to the public sector.

A serious weakness of the Namibian economy is its poorly developed manufacturing industry. Namibia still produces only very few and almost exclusively relatively simple products with low added value. Apart from the special case of uranium oxide, a few recently established diamond grinding shops and a little leather processing, Namibia’s processing industry still has not much more to offer in 2018 than some meat and fish processing and a (very good) brewery. The Ohorongo cement plant near Otavi also produces only a relatively simple basic material.

On the other hand, even the simplest consumer goods of daily use – be it a plastic bowl, a ballpoint pen or even paper clips – are imported almost without exception, mainly from South Africa and to a lesser extent from China and Germany. The country is still as far away from a Namibian production of somewhat more complex goods with correspondingly higher added value (e.g. in mechanical engineering, electronics, chemical and pharmaceutical products) as it was from independence in 1990.

Between 2001 and 2008 there was an (actually well-intentioned) attempt, with the help of a foreign investor (Ramatex), to establish a personnel-intensive textile industry in Windhoek and thus also create jobs for the low-skilled. Unfortunately, this undertaking failed miserably after only a few years. The Malaysian investor went bankrupt, but before that he took his most valuable machines out of the country. His management staff left the country in time and left behind an ecological, social and economic shambles.

Overall, it can be said that Namibia’s manufacturing industry has hardly developed since independence. The little that has happened in this area has not been developed from within Namibia, but has been made possible almost exclusively by importing know-how from abroad (see Ohorongo Cement, Ramatex, Diamond Grinding, Uranium Mines).

Namibia lacks essential prerequisites for the development of a processing industry that is competitive on the world market. Besides the necessary technical know-how and an ‘entrepreneurial culture’ Namibia also lacks the necessary capital, a receptive sales market in its own country and in the region and a good connection to the world market. Further factors like frequent strikes, lack of qualified, highly motivated (and disciplined) labour force and the resulting low productivity compared to other countries do not make Namibia very attractive for potential investors. This is also reflected in the corresponding international competitiveness rankings (see also chapter “Economic problems”).

Namibia simply cannot keep up with emerging countries in South and Southeast Asia in particular. The goals set out in the so-called ‘Vision 2030’ for the expansion (or rather the establishment) of a manufacturing industry as an essential pillar of the Namibian economy appear less realistic in view of the increasing globalisation and far more competitive international competition. After this easy to prove fact had been a taboo topic for years at the political level and even in the public discussion, this is gradually being realised as the target year 2030 is approached and it is now clearly stated that important parts of the ‘Vision 2030’ can hardly be achieved.

Tertiary sector

There is light and shadow in the tertiary sector. At first glance, the high share of GDP (now just under 60%) appears to be pleasing, but it gives a misleading picture. A considerable proportion of the tertiary sector is produced by a clearly oversized public administration. Although their services contribute to GDP, they do not generate any ‘tradable’ added value for the country. Also, most of these services could easily be provided more efficiently and with far fewer staff, provided that they were better trained, better equipped, better motivated and better paid. The public service and the semi-state state-owned enterprises in Namibia are also overstaffed and – with a few exceptions – correspondingly sluggish and inefficient (and often corrupt).

The more than 70 state-owned enterprises (also known as “parastatals” or “state-owned-enterprises” (SOEs)) are the main source of serious problems. The national carrier Air Namibia, among others, regularly makes negative headlines. Air Namibia almost lost its airline license in June 2014 because it failed to renew it in time or meet the requirements of the licensing authority. At the same time, the supervisory board and management are engaged in fierce trench warfare. According to newspaper reports, Air Namibia was again on the verge of insolvency at the beginning of 2018, despite (or precisely because of?) the regularly high state subsidies that have been in place for many years, without which the airline would have been insolvent long ago.

The situation at the Namibia Airport Company (NAC), which manages the Namibian airports, is hardly any better. In November 2017, the Namibia Civil Aviation Authority (NCAA) even threatened NAC with the closure of Windhoek’s Hosea Kutako International Airport, Namibia’s gateway to the world, if urgent renovation and upgrade work is not carried out immediately. This could then (initially) be avoided, but just a few months later NAC is back with a miserable press in the headlines of Namibian newspapers.

But also the news agency Nampa, the state-owned TV and radio station NBC, the state-owned railway company TransNamib, and the University of Namibia (UNAM) are repeatedly in the headlines because of mismanagement, corruption, incompetence and personnel quarrels.

In the meantime, however, the previously very long-suffering government has also collapsed, and the Parastatals are to be put on a much shorter leash with immediate effect and now have to submit detailed annual reports. Even the special ministry founded in 2015 after Hage Geingobs came to power to improve the coordination and monitoring of the SOEs has not yet led to any significant improvement. On the contrary: the bankruptcies and internal trench warfare in important SOEs such as TransNamib, Air Namibia, Namibian Airport Company and several other state-owned enterprises continue unchanged. There are only a few positive exceptions for the Parastatals. The very professional Bank of Namibia, the University of Science and Technology (NUST, Polytechnic of Namibia until September 2015), the Namibia Statistics Agency (NSA) and the state-owned water monopolist NamWater should be mentioned here.

One success story, on the other hand, is the development of tourism, at least in the private sector. The parastatal company Namibia Wildlife Ressort (NWR), which manages the service facilities and accommodation of the Namibian national parks, unfortunately has similar management and efficiency problems to the other parastatal companies mentioned above.

The number of tourist arrivals has risen continuously since independence in (almost) every year, from just over 200,000 in 1991 to 600,000 in 1998 and 778,000 in 2005. In 2011, tourist arrivals exceeded the one million mark for the first time. All in all, tourism in Namibia, which is essentially supported by the private sector, has developed after independence into a professionally managed economic factor that needs no comparison worldwide. Tourism not only contributes increasingly to GDP, but also creates many jobs. From a macroeconomic point of view, the tourism industry is now the third important factor for the country’s gross domestic product (GDP) and one of the most important sources of foreign exchange, alongside mining and fishing.

Unlike mining and fishing, which create relatively few jobs for the local population, the tourism industry is also employment-intensive. Apart from agriculture, it is the only sector of the economy that provides (and continues to provide) more jobs, especially for medium and low-skilled workers. According to the latest (2018) Economic Impact of Travel & Tourism Report of the World Travel & Tourism Council, 14% of all Namibian jobs in 2017 were directly or indirectly dependent on tourism, with the trend continuing to rise.

The basis of this success was and is above all the entrepreneurial initiative of the many small companies that characterise Namibia’s tourism sector. An enormous range of lodges, guest and hunting farms, tour operators, specialised car rental companies, etc. provide the various target groups with innovative and flexible tailor-made offers. A further basis for success is the development and implementation of the ‘Conservancy’ concept and the Community Based Natural Resource Management Strategy (CBNRM) based on it. With CBNRM, Namibia has broken new ground and created and successfully implemented an internationally pioneering tourism concept.

In addition to the tourism sector, the logistics sector is another positive exception. The port of Walvis Bay has developed into one of the best (if not the best) and most efficient ports in Africa and will continue to be consistently developed into a freight hub for the so-called land-locked neighbouring countries, in particular Zambia, Botswana, Zimbabwe, but also Angola and DRC (Congo). Namibia consistently uses the comparative advantage resulting from Walvis Bay’s strategically favourable location in relation to its neighbouring countries (see also chapter ‘Economic Development Potential’).

But back to Namibia’s Vision 2030: There is hardly anything to be seen in 2018 of the “transformation into a knowledge-based society” with its focus on ICT (information and communication technologies), which was presented as a national goal in ‘Vision 2030’ in 2004. Unlike Botswana, for example, Namibia (apart from small IT service providers) does not even have the pre-stage for an efficient ICT sector and the production of hardware and software products that are competitive on the world market is at best wishful thinking on the part of Namibian politicians.