Namibia - Overview of economy

With a gross domestic product (GDP) per capita of US$1,940 in 1998 ( purchasing power parity of US$4,300 in 1999), Namibia is relatively prosperous in the African context, where the average is US$480 per head. This comparative wealth reflects a large and fairly diversified mining sector. Namibia's economy is export-driven, focussing mainly on mining and fish processing. Since independence, exports of diamonds, uranium, zinc, and fish products have grown significantly.

Rural people, however, remain largely unaffected by the growth of modern economic activities in their country and generally support themselves through subsistence agricultural activities and herding. According to UN reports, Namibia has one of the most uneven distributions of income in the world, meaning that the average income for the white minority is significantly higher than that for the majority black population. The reason for this imbalance lies in the economic structure that was imposed by colonial history. Ranches were established as white settlers displaced Africans on two-thirds of the viable farmland, an outcome that is beginning to concern the government following the land-issues explosion in Zimbabwe. The government's current objectives are to raise per capita income, to develop the private sector , and to encourage manufacturing activities and tourism. It is also committed to restraining growth in public spending.

The economy remains narrowly based, growth being determined largely by mining and agriculture, especially fishing. The mining sector generates high incomes but is not well integrated with the rest of the economy. About 90 percent of the goods produced in Namibia are exported, and about 90 percent of the goods used in the country, including about one-half of the food, are imported. Despite frequent drought, large ranches generally provide significant exports of beef and sheepskins.

During the early 1980s, Namibia experienced a deep economic recession , intensified by war, severe drought, and low world prices for the country's mineral products and for sheepskins. In real terms, output declined by more than 20 percent over the period 1977-84, representing a fall of about one-third in real purchasing power. From the mid-1980s there was a modest economic recovery. The GDP increased by 3 percent in 1986 compared with a decline of 0.8 percent in 1995, and there were further increases in the following year until 1989 when it declined by 0.6 percent. This sluggish rate of growth was due to a number of factors, including depressed international prices for the country's mineral products, a corresponding decline in mining production, and poor performance of the South African economy, to which the Namibian economy is closely linked.

The 1990s have been better. The real GDP increased by 5.1 percent in 1991 and 3.5 percent in 1992 owing primarily to higher diamond output and increases in the output of the fishing and construction sectors. The GDP grew by 6.6 percent in 1994 after a decline of 2.0 percent in 1993, by 3.3 percent in 1995, and 2.9 percent in 1996. It slowed down to 1.8 percent in 1997 largely due to the impact of adverse climatic conditions on agriculture and fishing. The government estimated the GDP growth of 2.6 percent in 1998, with considerable advancement in the fishing and manufacturing sectors partially offset by the adverse impact of the Asian economic crisis on the mining sector.