48596 POPULATION 2.1 million SUB-SAHARAN GDP $6.7 billion AFRICA FIGURES GNI PER CAPITA $ 5,120 (PURCHASING POWER PARITY) LIFE EXPECTANCY 53 years KEY NAMIBIANAMIBIA COUNTRY BRIEF Namibia CountryBrief Washington, DC ©2009TheInternationalBankforReconstructionandDevelopment/ TheWorldBank 1818HStreetNW WashingtonDC20433 Telephone:202-473-1000 Internet:www.worldbank.org E-mail:books@worldbank.org Allrightsreserved 123412111009 Theboundaries,colors,denominations,andotherinformationshownonany mapinthisvolumedonotimplyonthepartoftheInternationalBankfor ReconstructionandDevelopment/TheWorldBankanyjudgmentonthe legalstatusofanyterritoryortheendorsementoracceptanceofsuch boundaries. 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Allotherqueriesonrightsandlicenses,includingsubsidiaryrights,shouldbe addressedtotheOfficeofthePublisher,TheWorldBank,1818HStreetNW, Washington,DC20433,USA;fax:202-522-2422;e-mail:pubrights@worldbank.org ISBN:978-0-8213-7870-0 eISBN:978-0-8213-7871-7 DOI:10.1596/978-0-8213-7870-0 Unlessotherwisenoted,datainthisreportarefromthe2008editionofthe WorldBank'sWorldDevelopmentIndicatorsdatabase.Dollarfiguresarecurrent U.S.dollarsexceptwherenoted. ThisCountryBriefreflectsdevelopmentsthroughDecember2008. TheCountryBriefseriesismanagedbyStephenMcGroarty(smcgroarty@ worldbank.org)andDanaVorisek(dvorisek@worldbank.org). KimDiDonato-Murrellprovidedresearchandwritingsupport.AttiyaZaidi providedresearchassistance.WearegratefultoSaschaDjumenaoftheWorld Bank'sAfricaregionforguidanceonthetopicscovered,andtoEricSwanson, DavidA.Cieslikowski,andRichardFixoftheDevelopmentDataGroupfor theircollaborationondatacollectionandreview. Namibia Contents Map of Namibia vi Fast Facts about Namibia vii People and Poverty 1 A small population facing formidable challenges 1 Poverty has declined, but remains common 1 Apartheid's legacy of dualism 2 Health indicators have improved since independence 2 HIV prevalence is among the highest in Sub-Saharan Africa 4 Tuberculosis inflicts a heavy toll on the population 5 School enrollment has improved, but quality of education remains low 5 Low skills levels are a major factor in unemployment 5 The government undertook a new development strategy in 2007 6 Namibia is making progress toward meeting some of the Millennium Development Goals 6 Economy 7 Rising GDP and a healthy outlook 7 The service sector is a big driver of growth 7 Good infrastructure has bolstered tourism's expansion 8 The mining sector is the largest source of foreign exchange earnings 8 But its contribution to growth is expected to decline 9 Agriculture retains its dualistic structure 9 There are export opportunities in meat and horticulture 9 Processed fish, a key export, has been hit by depleted fish stocks 10 The manufacturing base is one of the least diversified in Africa 11 But the government is committed to supporting broader-based industrialization 11 Job creation is not rapid enough to absorb lost agricultural jobs 12 Inflation has intensified over the past year 12 Prudent policies have created a stronger fiscal position 12 There are uncertainties about future SACU revenue, however 13 The government needs to strengthen tax collection and improve quality of public spending 13 Namibia is benefiting from a favorable external environment 13 The medium-term outlook reflects several risks 14 Environment 15 Home to diverse natural wealth 15 Poor policies have been a catalyst in environmental degradation 15 A range of environmental challenges require attention 16 Freshwater scarcity is a perennial issue 16 Unsustainable land use leads to land and resource degradation 17 Deforestation is an unnecessary waste of woodland resources 17 Coastal and marine resources are fragile 17 Inadequate regulatory framework for minerals 18 Increasing pressure on biodiversity 18 WorldBankCountryBrief:Namibia iii Namibia Urban pollution will be a future challenge 19 Climate change poses a threat to the natural resources-based economy 20 The cost of climate change in Namibia could be very significant 20 Namibia is signatory to many international environmental frameworks 20 Government spending on environmental protection varies by country 21 Governance and Business Environment 22 Rankings of Namibia's business and competitiveness environment present a mixed picture 22 Namibian firms are productive, and unit labor costs are low 24 Microenterprises, however, are considerably less productive 25 Firms view the investment climate as relatively conducive to business 26 The legal environment surrounding private investment needs overhauling 26 Infrastructure is not a major constraint to business 27 Trade policy is biased against exports 28 The financial sector is strong and increasingly well regulated 29 Pension funds are well developed 29 Access to finance remains limited, however 30 Global Links 31 Strong economic links within Africa and beyond 31 South Africa and the EU are Namibia's largest trade partners 31 Terms of trade have improved considerably in recent years 32 A net outflow of workers since 2000, but still a much larger stock of immigrants than of emigrants 32 Foreign direct investment jumped in 2005 before falling back slightly in 2006 33 A rising but still very low level of remittances 33 The United States and Germany are the largest sources of official development assistance 33 Higher foreign exchange earnings and growing foreign reserves 34 The 25 percent debt ceiling was undershot in 2007/08 34 Namibia and the World Bank Group 35 World Bank portfolio 35 International Finance Corporation portfolio 35 Multilateral Investment Guarantee Agency portfolio 35 Notes 36 References 37 Data Appendix 40 Boxes Box 1 From colonial rule to stable democracy 3 Box 2 The success story of table grapes 10 Box 3 A high level of biodiversity within the Succulent Karoo ecosystem 19 Figures Figure 1 Namibia's very young people represent a smaller percentage of its total population than in Sub-Saharan Africa as a whole 1 Figure 2 Namibia's population structure, AIDS and no AIDS scenarios, 2015 4 ivWorldBankCountryBrief:Namibia Namibia Figure 3 Unemployment rates by level of education 5 Figure 4 Namibia's economy is growing, but at a slower rate than in Sub-Saharan Africa as a whole 7 Figure 5 Tourism receipts, selected countries 8 Figure 6 Mining accounts for a larger proportion of GDP in Namibia than in South Africa, but a smaller proportion than in comparator countries 9 Figure 7 Though Namibia's fiscal balance is lower than that of most of its SACU counterparts, its current account surplus is one of the strongest 13 Figure 8 Labor productivity in manufacturing SMLEs in Namibia is high compared to that in other Sub-Saharan African countries 24 Figure 9 Productivity growth in Namibia has been higher than that in most neighboring countries in recent years 25 Figure 10Though the basic corporate tax rate in Namibia is high, incentives can reduce the effective rate so that it is lower than in most comparator countries 27 Figure 11Compared with manufacturing firms from other middle-income countries, relatively few firms in Namibia export 28 Figure 12Namibia's exports go mostly to the EU and South Africa, while imports come overwhelmingly from South Africa 31 Figure 13FDI to Namibia outpaces official development assistance and workers' remittances by a wide margin 33 Tables Table 1 Namibia's health indicators are generally better than those of Sub-Saharan Africa, but worse than those of lower-middle- income countries 3 Table 2 Namibia's progress toward meeting the MDGs is mixed 6 Table 3 Environmental indicators in Namibia versus Sub-Saharan Africa and middle-income countries 16 Table 4 Environmental expenditure in Namibia and comparator countries 21 Table 5 Namibia made slight improvements registering property and getting credit in 2008, but backtracked or remained the same in other areas 22 Table 6 Namibia outperforms Sub-Saharan Africa on 35 of 41 business environment indicators 23 Table 7 Namibia is an average performer among comparator countries, according to Transparency International's Corruption Perceptions Index 26 Table 8 Financial sector depth in Namibia is better than that in comparator countries 29 Table 9 Immigration numbers were many times higher than emigration numbers as of 2005 32 Table 10 Projects in Namibia supported by IBRD and the GEF, fiscal 2008­mid-09 35 Table 11 Projects in Namibia supported by the IFC, fiscal 2008­mid-2009 35 WorldBankCountryBrief:Namibia v Namibia IBRD 36712 NAMIBIA SELECTED CITIES AND TOWNS TRUNK ROADS REGION CAPITALS MAIN ROADS NATIONAL CAPITAL RAILROADS RIVERS REGION BOUNDARIES INTERNATIONAL BOUNDARIES 15°S 15°E 20°E 25°E A N G O L A To Z A M B I A Lubango OSHANA OHANGWENA Kunene Oshikango Uutapi TI Lusaka Oshakati Katima Ondangwa oT Opuwo Okavango Rundu KongolaMulilo OSHIKOTO Bagani N OMUSA K AVA N G O CAPRIVI Etosha a Pan mSesfontein Tsumeb Omatako To Okaukuejo Maun i Mts. b Otavi Grootfontein D K U N E N E Ulavi Tsumkwe 20°S Outjo O T J O Z O N D J U PA 20°S e Khorixas s Otjiwarongo Eiseb e Okakarara Kalkfeki r Ugab Brandberg t Epata Uis (2,606 m) To Omaruru O M A H E K E Livingtsone E R O N G O Okahandja B O T S W A N A Karibib WINDHOEK Gobabis Swakopmund K H O M A S To Gaborone Walvis Bay Rehoboth K a l a h a r i ATLANTIC Kalkrand Aranos Stampriet Nossob D e s e r t OCEAN NH A R D A P Mariental Maltahohe a 25°S 25°S m ib Fish D Bethanien Keetmanshoop Luderitz e s e K A R A S Great r Karas To Kimberley 0 50 100 150 200 Kilometers Mts. t Grünau Karasburg To NAMIBIA 0 50 100 150 Miles Gaborone Oranjemund Orange This map was produced by the Map Design Unit of The World Bank. S O U T H The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any To A F R I C A endorsement or acceptance of such boundaries. Bitterfontein 15°E 20°E JANUARY 2009 viWorldBankCountryBrief:Namibia Namibia Fast Facts about Namibia · NamibiaisalargecountryinSouthernAfricathatborderstheSouthAtlanticOcean,between AngolatothenorthandSouthAfricatothesouth.Withasurfaceareaof824,290square kilometers,itissimilarinsizetoMozambiqueandabouthalfthesizeoftheU.S.stateof Alaska. · Namibiahasasmallpopulationofapproximately2.1millionpeople.Itisalsooneoftheleast denselypopulatedcountriesinSub-SaharanAfrica,withanaveragedensityofapproximately 2.5peoplepersquarekilometer,comparedto34peoplepersquarekilometerfortheregion asawhole. · NamibiawasthelastcolonizedcountryinSub-SaharanAfricatobecomeindependent.After nearly70yearsofSouthAfricanrule,NamibiagaineditsindependenceonMarch21,1990. · Until1990,Namibia'sofficiallanguageswereGerman,Afrikaans,andEnglish.Following independence,Englishbecametheofficiallanguage,althoughitisthefirstlanguageofonlya verysmallpercentageofNamibians.Oshiwambodialectsarethemothertongueof approximatelyhalfofthepopulation. · Namibia--alower-middle-incomecountry--hasoneofthehighestlevelsofpercapita incomeinSub-SaharanAfrica. · NamibiaisoneofveryfewcountriesinSub-SaharanAfricathatmaintainsasocialsafetynet fortheelderly,thedisabled,orphansandvulnerablechildren,andwarveterans.Italsohasa SocialSecurityActthatprovidesformaternityleave,sickleave,andmedicalbenefits. · Namibiahasoneofthemostproductivefishinggroundsintheworld.Thefishingindustryis animportantsourceofforeignexchangeandasignificantemployer. · ThetourismindustryinNamibiaissimilarinsizetothatinBotswanaandisthecountry's third-largestforeignexchangeearner. · Namibiaisoneofthelargestproducersofgemqualitydiamondsintheworld.Itisestimated that98percentofitsmineddiamondsaregemquality.In2006,almosthalfoftotalproduc- tionwasrecoveredfromoffshoresources. · Inexistenceforatleast55millionyears,theNamibDesertisconsideredtheworld'soldest desert.Atapproximately81,000squarekilometers,itisalsoAfrica'ssecond-largestdesertand containssomeoftheworld'shighestsanddunes. · NamibiaisthedriestcountryinSub-SaharanAfrica,withdesertsoccupyingmuchofthe country.Ithasnoperennialriversoranyotherpermanentwaterbodies.Duetothelowand erraticrainfallandscarcegroundandsurfacewater,lessthan5percentofthecountryis arable,includingthroughirrigation. · Namibiawasthefirstcountryintheworldtoincorporateenvironmentalprotectionintoits constitution.Nearly6percentofitslandisnationallyprotected,includinglargeportionsof coastalareaswithintheNamibDesert. WorldBankCountryBrief:Namibia vii Namibia Namibia is performing well in several areas . . . · Namibiahasenjoyedpoliticalandeconomicstabilitysincegainingindependencein 1990whiledeepeningitsdemocraticinstitutionsandadoptingawidearrayof reformsandpoliciestotransformthesocialfabricofthecountry. · Accordingtoa2003/04nationalhouseholdsurvey,Namibiaexperiencedasignificant declineintheshareofpoorandextremelypoorhouseholdscomparedtoadecade prior.Some28percentofhouseholdswereclassifiedaspoorand4percentas extremelypoor,comparedto37.1and8.2percenttenyearsearlier. · Namibia'sconstitutionisoneofthemostliberalinAfrica.Theruleoflawisrespected andguaranteesthedivisionofpowersandresponsibilitiesbetweentheexecutive, legislative,andjudicialbranchesofgovernment.Thecourtsareindependent. Nongovernmentalorganizations(NGOs)arenumerousandrepresentawiderangeof interests. · Accesstobasiceducationhasbecomemoreequitableandprimaryhealthcare coveragehasbecomemorewidespreadinrecentyears.Namibiaiscurrentlyamong thetop10countriesworldwideinshareofGDPspentoneducation,andsecondonly toSouthAfricaontheAfricancontinentinpercapitaexpenditureonhealth. · NamibiahasoneofthemoresophisticatedanddevelopedfinancialsystemsinAfrica, withfourcommercialbanks,astockexchange,about30insurancecompanies,500 pensionfunds,anumberofassetmanagementcompanies,andalargenumberof microlendinginstitutions. · ThebusinessenvironmentinNamibiahasbeenstrengthenedbythedevelopmentof stronginstitutions,aliberalforeigninvestmentframework,andanindependent judiciary. · Namibiahasexperiencedacurrentaccountsurpluseveryyearsincegaining independencein1990,arecordextremelyunusualamonglower-middle-income countries. · In2005,Namibiawasgivenalong-termissuerdefaultratingofBBB­bytheglobal creditratingagencyFitch.Namibiamaintainedthatratingin2008. viiiWorldBankCountryBrief:Namibia Namibia . . . yet major development challenges remain · Namibia'saveragelifeexpectancyatbirthwasonly53yearsasof2006,asignificant dropfrom62yearsin1995. · Asinmanyofitsneighboringcountries,thewellbeingofNamibiansisseriously threatenedbyHIV/AIDS.In2007,anestimated200,000peoplewerelivingwithHIV. ThecountryhasoneofthehighestadultHIVinfectionratesinSub-SaharanAfrica,at 19.6percentin2005. · Namibia'stuberculosis(TB)incidencerateof767casesper100,000peoplein2006is almosttwiceashighastheSub-SaharanAfricanregionalaverageof368casesper 100,000,placingitamongthetopthreeworstTB-affectedcountriesintheworld, nexttoSwazilandandLesotho.AbouttwothirdsofpeoplewithTBarealso HIV-positive,andNamibiahasthefourth-highestdocumentedrateofTB-HIV co-infectioninAfrica. · A2003WorldBankstudyshowedthatalargeproportionofadultswhocompleted primary--andevensecondary--educationarefunctionallyilliterate.Lowacademic performanceingeneraleducationleadstoproblemsintertiaryeducation,including exceptionallylowuniversitycompletionrates:20percentinscience,35percentin humanities,and44percentineducation. · Unemploymenthastrendedupwardinrecentyears.Over1991­2005,theunemploy- mentraterosefrom19percentto37percent.Unemploymentisparticularlyhigh amongtheyoung,reaching57percentamong20­24-year-olds.Thosewithlessthan secondaryeducationfaceanunemploymentrateofmorethan30percent. · Namibiahashadlimitedindustrialdevelopmentsinceindependenceandcontinues toimportmostmanufacturedgoodsfromSouthAfrica.AWorldBanksurveyonthe investmentclimatefoundanumberofconstraintstogrowthinthemanufacturing sector,includingdifficultyobtainingfinance,poorworkerskills,andananti-export biasreflectedbyahighcommonexternaltariff. · WhileNamibiaoutperformsSub-SaharanAfricaasawholein35of41business environmentrankingsaccordingtotheWorldBankandIFC'slatestDoingBusiness report,itperformsinthebottomthirdofcountriesrankedintermsofregistering propertyandtradingacrossborders. · AlthoughNamibiahasanopen,trade-dependenteconomy,andtradepolicy(mostly determinedattheSouthAfricanCustomsUnion(SACU)level)favorslarge,capital- intensivefirms.Onlyone-thirdoffirmsexportanything,however,amuchlower sharethaninfellowSACUmembersSouthAfrica,Lesotho,andSwaziland. WorldBankCountryBrief:Namibia ix Namibia People and Poverty Asmallpopulationfacingformidablechallenges Namibia has a small population of approximately 2.1 million people. With a surface area of 824,290 square kilometers and an average population density of approximately 2.5 people per square kilometer, it is one of the least densely populated countries in Sub-Saharan Africa, where average population density is 34 people per square kilometer. Approximately two-thirds of the Namibian pop- ulation lives in rural areas, predominantly in the north and northeast of the coun- try. The remaining one-third lives in urban areas, including the capital, Wind- hoek, and coastal towns such as Swakopmund, Walvis Bay, and Lüderitz. Like most Sub-Saharan African countries, Namibia was forged by colonial forces and contains diverse ethnic groups. Missionary work during the 1800s converted much of the population to Christianity, which is now the dominant faith, though indigenous religions are also practiced. Namibia has many advantages, including considerable mineral resources, political stability, a strategic location along the Atlantic Ocean with access to deep-water ports, and one of the highest levels of per capita income in Sub- Saharan Africa. However, it faces considerable ongoing challenges: a still-high level of poverty, extremely high HIV/AIDS prevalence, decidedly inequitable income distribution, and a high level of unemployment. As in many Sub-Saharan African countries, the population of Namibia is Figure 1: Namibia' very young people represent a smaller percentage of its total population than in young, with 38 percent of people under Sub-Saharan Africa as a whole the age of 15 (figure 1). This rate is down from 42 percent in 2000, how- Namibia Sub-Saharan Africa ever. A mere 4 percent of the popula- Male Female Male Female tion is 65 or older. Population growth, 75+ 75+ at an annual rate of 1.31 percent, is substantially below the Sub-Saharan 60­64 60­64 African average rate of 2.36 percent, but well above the World Bank's 45­49 45­49 e e lower-middle-income country group Ag Ag 30­34 30­34 average of 1.01. 15­19 15­19 Povertyhasdeclined,butremains common 0­4 0­4 Since the 1970s, almost all regions in 20 10 0 10 20 20 10 0 10 20 the world have seen a progressive Percent of population Percent of population improvement in their human develop- Source: WorldBank2008f(datafor2006). WorldBankCountryBrief:Namibia 1 Namibia ment indicators. The major exception is Sub-Saharan Africa, which has seen its development progress stagnate since 1990, partly because of economic reversal but principally because of the catastrophic effect of HIV/AIDS on life expectancy. The 2003/04 Namibia Household Income and Expenditure Survey (NHIES) indicated that 28 percent of households were classified as poor and 4 percent were classified as extremely poor.1 These estimates reflect a significant decline in the share of poor and extremely poor households from the survey a decade before, when levels were 37.1 and 8.2 percent, respectively. Rural regions, where more than 60 percent of the population lives, have particularly high pov- erty levels. More than one-third of Namibian households depend on subsistence farming as their only source of income, and almost half depend on it as their primary source of income. In these households, average consumption is about half the national average (IMF 2006). Although there has been a reduction in the share of poor households in all regions, the differences between urban and rural areas remain large. By international standards, Namibians fare worse: 49.1 percent of the population lives below the $1.25-per-day poverty line, while 62.2 percent is below the $2-per-day threshold (World Bank 2008e). According to World Bank figures, Namibia's per capita annual income, mea- sured using purchasing power parity (PPP) in current international dollars, was $5,120 in 2007, one of the highest levels in Sub-Saharan Africa and above the lower-middle-income country average of $4,543. Using the World Bank's Atlas method, per capita income was $3,360 in 2007, far higher than the lower- middle-income country average of $1,887. Broad measures of human development, such as those calculated by the UN Development Programme's Human Development Index (HDI), show signs of deterioration and confirm that Namibians remain poor compared with the rest of the world. Namibia's HDI rank was 125th out of 177 countries in the 2007/08 Human Development Report, unchanged from the 2006 report, and down from a rank of 116th of 174 countries in 1996.2 Apartheid'slegacyofdualism Namibia won its independence from South Africa in 1990 (box 1); it was the last colonized country in Sub-Saharan Africa to become independent. Before 1990, apartheid policies led to the emergence of a highly dualistic society, with income and wealth skewed toward the minority white elites, creating one of the most highly inequitable societies in the world. Though the 2003/04 NHIES indicates declining inequality, it remains high. Namibia has a Gini index of 60;3 this repre- sents a sharp improvement from the index of 70 in the survey 10 years before.4 According to the NHIES, per capita income for the 90 percent of households with the lowest income is about $262, a hundredth of the $25,000 for the richest 2 percent of the households (World Bank 2007b). Healthindicatorshaveimprovedsinceindependence Namibia has made great progress in addressing some of the structural problems resulting from the dual economy inherited at independence. Primary health care coverage is more widespread, and Namibia is second only to South Africa on the continent in per capita expenditures on health (World Bank 2007b). Country- wide immunization campaigns, coupled with parallel strengthening of the overall public health infrastructure, yielded a significant reduction in the infant mortality 2WorldBankCountryBrief:Namibia Namibia Box 1 From colonial rule to stable democracy Afternearly70yearsofSouthAfricancolonialrule,Namibiagaineditsindependence onMarch21,1990.AprotractedarmedstrugglewagedbytheSouthWestAfrica People'sOrganization(SWAPO)beganin1966aftertheUNGeneralAssemblyrevoked SouthAfrica'smandateoverNamibia.Sinceindependence,Namibiahasmaintaineda multipartyparliamentarydemocracywithgoodgovernance,basiccivilfreedoms, respectforhumanrights,andafairlycontainedlevelofcorruption.Theconstitution establishesabicameralparliamentandprovidesforgeneralelectionseveryfiveyears, withapresidentelectedforafive-yearterm.SamNujoma,leaderofSWAPO,was presidentfromindependenceuntil2005,servingthreeterms. Namibiahasthreetiersofgovernment:national,regional,andlocal.Thecountryis dividedinto13regions.Membersofthe72-seatNationalAssemblyareelectedfroma partylistonaproportionalbasis,andSWAPOheld55ofthe72seatsfollowingelections inNovember2004.Voterturnoutforthenationalelectionwasextremelyhighat85 percentandreasonablyhighfortheregionalelectionsat54percent(Bertelsmann Stiftung2007).Namibiansarerightlyproudofthetransitiontheyhavemadefrom colonialruletoindependence.Followingthe2004elections,Namibiasignaledits emergenceasastabledemocracywhenoutgoingpresidentNujomahandedoverpower toHifikepunyePohamba,whowon76percentofthevote. Namibia'sconstitutionisoneofthemostliberalinAfrica.Theruleoflawisrespected andguaranteesthedivisionofpowersandresponsibilitiesbetweentheexecutive, legislative,andjudicialbranchesofgovernment.Thecourtsareindependentandjudges actinaccordancewiththeconstitution.Civilsocietyorganizationssuchastradeunions andchurchesareguaranteedtherighttoestablishbytheconstitutionandarelargely unrestrictedintheiractions.NGOsareextremelynumerousandrepresentawiderange ofinterests. rate between 1990 and 2006, from 60 to 45 per 1,000 live births (under-5 mor- tality, though, remains substantially higher than in lower-middle-income coun- tries as a group). Access to clean water has been dramatically increased. Table 1: Namibia's health indicators are generally better than those of Sub-Saharan Africa, but worse Namibia is also one of very few coun- than those of lower-middle-income countries tries in Sub-Saharan Africa that main- Sub-Saharan Lower-middle- Namibia Africa income countries tains a social safety net for the elderly, Lifeexpectancyatbirth(years) 53 51 69 the disabled, orphans and vulnerable Accesstoimprovedwater(percent) 93 58 88 children, and war veterans. It also has a Accesstoimprovedsanitation(percent) 35 31 54 Social Security Act that provides for Maternalmortality(modeledestimate,per100,000livebirths) 210 900 300 Infantmortality(per1,000livebirths) 45 94 41 maternity leave, sick leave, and medi- Under-5mortality(per1,000) 61 157 54 cal benefits (World Bank 2007b). Malnutrition,weightforage(percentofunder-5children) 30 27 25 By most measures, Namibia's health Malnutrition,heightforage(percentofunder-5children) 20 44 35 indicators are substantially better than Pregnantwomenreceivingprenatalcare(percent) 91 72 84 Contraceptiveprevalence(percentofwomenages15­49) 44 22 69 those of Sub-Saharan Africa as a group, Measlesimmunization(percentofchildrenages12­23months) 63 72 77 but lagging those of lower-middle-in- Tuberculosisincidence(per100,000people) 767 368 135 come countries as a group (table 1). Life Source: WorldBank2008f. expectancy, though, is one measure by Note: Alldataarefor2005or2006,exceptNamibia'smalnutrition,prenatalcare,andcontraceptiveprevalencefigures,whicharefor2000. WorldBankCountryBrief:Namibia 3 Namibia which Namibia performs particularly poorly. On one hand, in 2006, 93 percent of Namibia's population had access to an improved water source, compared with 57 percent in 1990. Access to improved sanitation, on the other hand, increased by a much smaller margin over the same period, from 26 to 35 percent (though cover- age for the urban population is 66 percent). Public taps are an important source of water for most poor households, though a large share of the population still relies on unprotected wells and flowing water, exposing them to health risks. Primary health care facilities in Namibia cover a substantial proportion of communities. The mean distance to a hospital or clinic is 17.6 kilometers for poor households and 10.1 kilometers for nonpoor households (World Bank 2007e). HIVprevalenceisamongthehighestinSub-SaharanAfrica Namibia has been--and will continue to be--hard hit by HIV/AIDS. Prevalence of HIV among adults was 15.3 percent in 2007, more than three times the rate of 5.9 percent for Sub-Saharan Africa as a whole in 2006 (UNAIDS, WHO, and UNICEF 2008; UNAIDS and WHO 2006). Since the first HIV infection was reported in 1986, the epidemic grew rapidly until 2002, when it began to level off in the adult population.5 Since then, prevalence has declined by a small mar- gin each year. There are significant regional variations, however: in Caprivi, for example, in the northeast of the country, 43 percent of pregnant women were infected with HIV in 2005 (UNAIDS and WHO 2006). A significant propor- tion of the working-age Namibian population, particularly the female popula- tion, is expected to succumb to AIDS in the coming years (figure 2). As of 2007, an estimated 200,000 people were reportedly living with HIV, 14,000 of whom were children (Namibia, Ministry of Health and Social Services 2007). By 2006, among those under the age of 18, 4.6 percent had lost their mother and 10 percent had lost their father to HIV/AIDS, which has become a prime cause of death in all age groups. Life expectancy has been reduced to 53 years in 2006, similar to the life expectancy rate in Sub-Saharan Africa, but an unfavorable comparison with the life expectancy of 69 years for lower-middle- income countries. Compounding the tragic human Figure 2: Namibia's population structure, AIDS and no AIDS scenarios, 2015 effects of HIV/AIDS in Namibia are the disease's enormous economic and Female Age Male social costs. In an effort to control the 75+ epidemic, the government has adopted 60­64 a multisectoral approach and is work- ing with numerous partners. Spending 45­49 on HIV increased from $35 million in 2003 to $130 million in fiscal year 30­34 2006. Almost two-thirds of govern- ment resources go to care and treat- 15­19 ment, primarily antiretroviral (ARV) 0­4 treatment. The government's Third 0 0 Medium-Term Plan (MTP III) has so 140,000120,000 100,000 80,000 60,000 40,000 20,000 20,000 40,000 60,00080,000100,000 120,000 140,000 far been successful in terms of treat- Number of people Number of people ment. In 2006, an estimated 28,000 AIDS NoAIDS people living with HIV received ARV Source: IMF2006. therapy out of 58,000 in need, 4,800 4 WorldBankCountryBrief:Namibia Namibia women received a complete course of antiretroviral therapy prophylaxis for pre- vention of mother-to-child transmission, and 76,000 people completed the coun- seling and testing process (all data in this paragraph from Namibia, Ministry of Health and Social Services 2007). Tuberculosisinflictsaheavytollonthepopulation Namibia's tuberculosis (TB) incidence rate of 767 cases per 100,000 people in 2006 is almost twice as high as the Sub-Saharan African regional average of 368 cases per 100,000, placing it among the top three worst TB-affected countries in the world, next to Swaziland and Lesotho. According to USAID (2006), about two-thirds of people with TB are also HIV-positive, and Namibia has the fourth highest documented rate of TB-HIV coinfection in Africa. Namibia's high HIV/ AIDS prevalence poses serious problems for the successful treatment of TB. USAID also reports that although Namibia has sustained DOTS (directly observed treatment, short course) case detection rates above the global target of 70 percent, its DOTS treatment success rate of 67 percent (2001­07) is below the global target of 85 percent. Schoolenrollmenthasimproved,butqualityofeducationremainslow Following independence, Namibia put great emphasis on increasing access to education and training and is currently one of the biggest spenders on this sector in Africa (about 9 percent of GDP in 2002/03) (World Bank 2007e). Net pri- mary school enrollment was 76 percent as of 2006, higher than the Sub-Saharan African average of 70 percent. Gross secondary enrollment has increased substan- tially, from 45 percent in 1991 to 57 percent in 2006. And at 5.8 percent in 2006, gross tertiary enrollment is higher than the Sub-Saharan African average of 5.2 percent. Nonetheless, it is widely acknowledged that general education is ineffective and the quality extremely low (World Bank 2007e). Namibia ranks lowest among its peers in the Southern African Development Community (SADC) in student performance on reading and mathematics. Although the adult literacy rate is relatively high (85 percent as of 2001), a 2003 World Bank assessment showed that a large proportion of adults who completed primary-- and even secondary--education are functionally illiterate (World Bank 2007c). Access to basic education, notwith- Figure 3: Unemployment rates by level of education standing qualitative issues, has become more equitable. Dis- tances to primary school are 7.1 kilometers for nonpoor Teacher'straining households and 11.5 kilometers for poor households (World Postgraduatedegree Bank 2007e). University Lowskillslevelsareamajorfactorinunemployment Afterstandard10certificate Level of education influences poverty levels in Namibia Seniorsecondaryeducation because people with higher levels of education are more likely to be employed (figure 3). Although the advantages of Juniorsecondaryeducation education are well known, the magnitude of relative earn- Primaryeducation ings between educated and less educated workers in Namibia is large. Skilled workers earn about five times the wage of Noeducation unskilled workers, and for professional and managerial work- 0 10 20 30 40 50 ers, wages are about 10 times higher (IMF 2008b). More- Percentage over, unlike more developed economies, where unemploy- Source: IMF2008b. WorldBankCountryBrief:Namibia 5 Namibia ment also affects educated workers, an IMF study has shown that unemployment in Namibia is primarily an unskilled phenomenon (IMF 2006). Thegovernmentundertookanewdevelopmentstrategyin2007 The government of Namibia has developed a long-term strategy, Vision 2030, as a broad framework for accelerating growth and social equity. Vision 2030 sets an ambitious goal for Namibia to become a high-income, knowledge-based econ- omy with a quality of life for all Namibians comparable to that of the developed world. The attainment of this goal demands a substantially heightened and sus- tained contribution of all sectors of the economy to core national development goals: accelerating growth, reducing unemployment (especially youth unemploy- ment), reducing poverty and social inequality, and curbing the spread of HIV/ AIDS. Vision 2030 is to be realized through a series of National Development Plans. The Third National Development Plan (NDP3) runs from 2007 to 2011 (World Bank 2007c). Table 2: Namibia's progress toward meeting the MDGs is mixed A recent World Bank study found 1990 1995 2000 2007 that Namibia's education would not Goal 1: Halve the rates of extreme poverty and malnutrition deliver on the expectations of Vision Povertyheadcountratioat$1.25aday(PPP,%ofpopulation) ­ ­ ­ 49.1 2030, particularly in terms of quality, Povertyheadcountratioatnationalpovertyline(%ofpopulation) ­ ­ ­ ­ Incomeshareheldbylowest20% ­ 1.4 ­ ­ equity, relevance, and responsiveness Malnutritionprevalence,weightforage(%ofchildrenunderage5) 21.5 ­ 20.3 ­ to HIV/AIDS (Marope 2005). In addi- Goal 2: Ensure that children are able to complete primary schooling tion, skills shortage in the labor force, Primaryschoolenrollment(%net) 85.9 ­ 75.4 76.4 Primarycompletionrate(%ofrelevantagegroup) ­ 74.1 81.6 76.4 as discussed above, has been identified Secondaryschoolenrollment(%gross) 44.8 ­ 56.7 56.9 as one of the binding constraints to Youthliteracyrate(%ofpeopleages15­24) 88.1 ­ 92.3 ­ productivity growth. Goal 3: Eliminate gender disparity in education and empower women Ratioofgirlstoboysinprimaryandsecondaryeducation(%) 106.4 ­ 103.3 103.8 Womenemployedinthenonagriculturalsector(%ofnonagriculturalemployment) ­ ­ 47.5 ­ Namibiaismakingprogresstoward Proportionofseatsheldbywomeninnationalparliament(%) 7 18 22 27 meetingsomeoftheMillennium Goal 4: Reduce under-5 mortality by two-thirds DevelopmentGoals(MDGs) Under-5mortalityrate(per1,000) 86 77 69 61 Infantmortalityrate(per1,000livebirths) 60 55 50 45 Adopted by the United Nations in Measlesimmunization(proportionofone-year-oldsimmunized,%) 57 68 69 63 2001, the eight Millennium Develop- Goal 5: Reduce maternal mortality by three-fourths ment Goals comprise 18 targets and 48 Maternalmortalityratio(modeledestimate,per100,000livebirths) ­ ­ ­ 210 Birthsattendedbyskilledhealthstaff(%oftotal) 68.2 ­ 75.5 ­ indicators to be achieved by 2015. Contraceptiveprevalence(%ofwomenages15­49) 28.9 ­ 43.7 ­ They set quantitative targets for pov- Goal 6: Halt and begin to reverse the spread of HIV/AIDS and other major diseases erty reduction and improvements in PrevalenceofHIV,total(%ofpopulationages15­49) ­ ­ 14.6 15.3 Incidenceoftuberculosis(per100,000people) 306.3 458.3 664.1 766.6 health, education, gender equality, the TuberculosiscasesdetectedunderDOTS(%) ­ 21.3 77.1 82.9 environment, and other aspects of Goal 7: Halve the proportion of people without sustainable access to basic needs human welfare. For some goals, such as Improvedwatersource(%ofpopulationwithaccess) 57 70 81 93 those on environmental sustainability Improvedsanitationfacilities(%ofpopulationwithaccess) 26 29 32 35 Forestarea(%oftotallandarea) 10.6 ­ 9.8 9.3 and gender equality, Namibia has Nationallyprotectedareas(%oftotallandarea) ­ ­ ­ ­ met--or is on track to meet--the tar- CO2emissions(metrictonspercapita) 0.0 1.0 0.9 ­ gets (table 2). For others, including GDPperunitofenergyuse(constant2005PPP$perkilogramofoilequivalent) 8.1 6.8 7.1 6.7 Goal 8: Develop a global partnership for development reducing the incidence of under-5 mor- Telephonemainlines(per100people) 3.7 4.7 5.9 6.7 tality by two-thirds and halving the Mobilephonesubscribers(per100people) 0.0 0.2 4.4 38.6 rate of malnutrition, Namibia is behind Internetusers(per100people) ­ 0.0 1.6 4.9 Personalcomputers(per1,000people) ­ ­ 4.0 24.1 schedule. For many of the individual indicators, however, it is difficult to Source: WorldBank2008f. track progress because of lack of data Note: Dataareestimatesclosesttotheyearsshown,plusorminustwoyears.Figuresinitalicsareforyearsotherthanthosespecified.--=not available. for the early 1990s. 6 WorldBankCountryBrief:Namibia Namibia Economy Namibia is a small, relatively open economy closely linked to South Africa. Its natural resources--both renewable and nonrenewable--are an important source of growth for the economy. Since independence, the country has experienced steady growth, generally moderate inflation, strong external surpluses, and low indebtedness. This is a result of generally prudent fiscal policies, a stable political environment, a fairly developed infrastructure, and a strong legal and regulatory environment. The Namibian dollar, pegged at par to the South African rand, has helped to maintain long-term macroeconomic stability. The peg has also helped integrate the Namibian economy to that of South Africa, with benefits for the promotion of trade and financial development. However, Namibia faces a num- ber of economic challenges, including lingering high levels of poverty, high unem- ployment, and unequal distribution of wealth and income. RisingGDPandahealthyoutlook Namibia's gross domestic product (GDP) growth averaged 4.2 percent over 2005­07 (figure 4). From an expenditure perspective, private consumption accounts for about 50 percent of GDP, while government consumption accounts for 25 percent and investment for 30 percent. Net exports were ­1 percent of GDP in 2006 and deteriorated to ­5 percent of GDP in 2007. According to the IMF, minerals account for more than half of exports, with diamonds by far the largest category. Overall, the economy is dominated by the services sector--both public and private--which accounts for around 59 percent of output. The indus- trial sector, including mining, contributes around 30 percent Figure 4: Namibia's economy is growing, but at a slower rate than in to GDP; agriculture and fishing account for another 11 per- Sub-Saharan Africa as a whole cent of output (World Bank 2008f). Overall growth is expected to weaken to 3.6 percent in 2008 and drop to 3.1 7 percent in 2009 before recovering in 2010 (World Bank Sub-SaharanAfrica 6 2009). e $) 5 Theservicesectorisabigdriverofgrowth chang 2000 4 The structure of Namibia's economy has remained fairly entc es, Namibia stable over the past decade, dominated by the services sec- per pric 3 et tor, which also contributes much of the growth (World 2 Bank 2007e). Public administration, education, and health Annual (mark witnessed strong employment growth, gaining close to 1 20,000 jobs between 1997 and 2004, but further growth of 0 the government sector, a key employer, is not considered 1991­2000 2006 2007 2008e 2009f 2010f sustainable (World Bank 2007e, figure 2.4). Job growth in Source: WorldBank2009. private services, such as wholesale and retail trade and hotels Note: e=estimate;f=forecast. WorldBankCountryBrief:Namibia 7 Namibia and restaurants, seems to indicate that Namibia has been able to replace some of the lost agricultural jobs with new service sector employment. The service sec- tor's contribution to growth has been commensurate with that of South Africa and superior to that in other neighboring countries. Goodinfrastructurehasbolsteredtourism'sexpansion Tourism6 is a significant foreign exchange earner, generating receipts of $473 mil- lion in 2006. According to the United Nations World Tourism Organization (UNWTO), tourism receipts contributed 7.2 percent to Namibia's GDP in 2006, one of the highest relative percentages in Sub-Saharan Africa. In absolute terms, the tourism industry is similar in size to that of Botswana (figure 5). The bulk of the jobs generated in the tourism sector originate from services (for example, accommodations, restaurants, and tour safari operations). According to the Namibian Tourism Board (NTB), some 24,150 people were directly employed in travel and tourism in 2004, which accounts for 6.2 percent of total employment (World Bank 2008a). Tourist arrivals were estimated to be 750,000 in 2005, up from 250,000 in 1990, with tourism output increasing 13 percent between 1998 and 2003 (World Bank 2008a). More than half the arrivals are people from South Africa and Angola on trips for business, shopping, or visiting relatives. The majority of European tourists come to visit the country's national parks. Nature tourism is characterized by a large number of small firms. Although Namibia's tourism sector continues to be dominated by tour operators based in Windhoek offering coach tours (approxi- mately 250 such companies exist), the market for self-drive tourists has grown rapidly, facilitated by Namibia's extensive road network (World Bank 2007e). The Namibia Tourism Board, which is responsible for tourism promotion, is focusing on developing high-value, low-volume tourism. This underscores the need to adopt a sustainable ecotourism approach to protect the country's fragile natural resources. Theminingsectoristhelargestsourceofforeignexchangeearnings Namibia's economy relies heavily on the extraction and processing of minerals. It is well endowed with nonrenewable natural resources, including gem-quality diamonds, uranium, copper, lead, Figure 5: Tourism receipts, selected countries zinc, arsenic, cadmium, antimony, pyrite, silver, gold, and semiprecious 1,400 35 stones. Despite the mining sector's 1,200 30 share of GDP declining from around 18 percent in 1990 to 14 percent in 1,000 25 ts 2002 and to slightly more than 9 per- leftaxis 800 20 cent in 2007, the sector is still the expor largest source of foreign exchange millions 600 15 $ otalt earnings. of rightaxis 400 10 % Diamonds are the most important mining product, accounting for about 200 5 70 percent of output and more than 40 0 0 percent of foreign exchange earnings in Zambia Mozambique Namibia Botswana Ghana Tanzania Kenya the sector. Namibia is one of the larg- Source: WorldBank2008f(datafor2006). est producers of gem-quality diamonds 8 WorldBankCountryBrief:Namibia Namibia in the world: about 98 percent of its mined diamonds are Figure 6: Mining accounts for a larger proportion of GDP in Namibia than gem-quality. More than 2.3 million carats of gem-quality in South Africa, but a smaller proportion than in comparator countries diamonds were produced in 2006 (Mobbs 2008). Since independence, taxes and royalties on diamonds have aver- Swaziland aged 6.5 percent of central government revenues. In recent Argentina years, as land-based mines have become depleted, offshore Lesotho diamond production utilizing advanced marine prospecting and mining technology has accelerated. In 2006, almost half SouthAfrica of total production was recovered at sea. Over 90 percent of Namibia Namibia's diamonds are produced by Namdeb, a 50-50 joint venture between the government of Namibia and Malaysia DeBeers (source of data in this paragraph is IMF 2008b Botswana except where noted). 0 10 20 30 40 Percentage of GDP Butitscontributiontogrowthisexpectedtodecline Source: WorldBank2008f(2006data). An IMF study concluded that while mineral production constitutes a large portion of value added in Namibia's economy, it has so far had minimal impact on the level and volatility of growth (IMF 2008b). In fact, for Namibia the mining sector is relatively less important compared with that of several comparator economies (figure 6). In Botswana, for example, mining and quarrying (mainly diamonds) value added accounts for more than one-third of GDP, while in Angola, oil and gas exports averaged 65 percent of GDP and contributed fiscal revenues of 34 percent of GDP over the past 10 years (IMF 2008b). However, given the inherent risk of declining terms of trade, the IMF is forecasting declining real output growth in the min- ing sector (IMF 2008b). The industry is constrained by lack of water and lim- ited availability of electricity. Agricultureretainsitsdualisticstructure There are two distinct farming systems in Namibia: a large-scale commercial sec- tor that dominates output, and a small-scale communal farming sector that is largely subsistence in nature. About 70 percent of the population relies on agri- cultural activities for its livelihood (World Bank 2007e). Agriculture's share of GDP averaged 11 percent over the period 2003­07, but annual growth in the sector is highly volatile because of regional and local droughts. Although agricul- ture's contribution to growth has been weak and slightly negative at times, its average performance has been comparable to that in neighboring countries (World Bank 2007e). Since 1997, the agricultural sector has lost about 40,000 jobs; however, strong sector growth was recorded in 2005, driven by improve- ment in the livestock industry (SADC 2007). Thereareexportopportunitiesinmeatandhorticulture The agricultural sector is dominated by livestock farming--cattle, sheep, goat, and pig--though this share has declined from 70 percent in 1995 to 59 percent in 2004. Crop farming, on the other hand, has more than doubled to 17 percent in 2004 from only 8 percent of the total output of the sector in 1995 (World Bank 2007e). Mahangu (pearl millet) is the major crop and the staple food in the north and central regions of the country, but unlike wheat and maize, it is not exported. WorldBankCountryBrief:Namibia 9 Namibia Box 2 The success story of table grapes Namibiaraiseshigh-qualityseedlesstablegrapesforexporttoEurope,China,andthe MiddleEast.Itscompetitiveadvantageresultsfromclimaticconditionsthatenable thegrapestoripenquickly.Thedevelopmentofgrapeexportswasdrivenbythe reductionoftheEuropeanUnion(EU)tariffonseedlesstablegrapesexportedby African,Caribbean,andPacific(ACP)countries,includingNamibia,from8percentto zeroin2000.Consequently,grapeproductioninNamibiaincreasedfrom2,298metric tonsin1995to8,473metrictonsin2004,andsome3,500jobshavebeencreated.This advantage,however,hasbeensomewhaterodedbycompetitionfromChile,as attestedbyagradualdeclineinthepriceofgrapessince1999.Increasinggrape exportsisdependentonfindingnewmarketsandnewgrapeby-products(suchas brandyandgrapejuice).In2006,NamibiangrapesqualifiedforexporttotheUnited States. Source: WorldBank2007e. Meat contributes 90 percent of agricultural export earnings and 15 percent of total export earnings (World Bank 2007e). The meat export trade represents a key opportunity for Namibia, although it is currently constrained by the veteri- nary cordon fence (VCF)7 that defines the line between the disease-free south and the possibly diseased north of the country. Commercial beef production declined from 1.2 million head in 1992 to 0.9 million between 2000 and 2004, but in 2005 the number of cattle marketed was estimated to have increased by 27 percent (SADC 2007). Difficulties with marketing beef for export because of the VCF are currently the subject of negotiations between the government of Namibia and its trading partners. Beef exports will reach their potential when the VCF is expanded northward. A number of horticultural products raised in Namibia have export potential: avocados, bananas, beans, beets, broccoli, but- ternut squash, cabbage, carrots, chilies, cucumbers, dates, grapes, lemons, let- tuce, mangos, naartjies (a type of citrus fruit), onions, oranges, pears, pineapples, and potatoes (box 2). Processedfish,akeyexport,hasbeenhitbydepletedfishstocks Namibia's commercial fishing fleet has grown steadily since independence. Fish- ing and fish processing (both on board and on shore) accounted for almost 7 percent of GDP in the period 1995­2005 and for 17 percent of Namibia's exports (World Bank 2007e). The fisheries sector employed around 13,000 workers in 2004, up from around 7,000 in 1997, with 60 percent working in processing plants (World Bank 2007e). After annual growth of around 3 percent between 1995 and 2005, recent years have seen sharp declines (SADC 2007). Higher fuel prices, the appreciation of the Namibian dollar, and lower catches have all had an adverse impact on fishing costs and have not been offset by higher world fish prices. Depleted fish stocks caused by overfishing have hampered the development of the fishing industry, despite the imposition of quotas on catch. Total allowable 10WorldBankCountryBrief:Namibia Namibia catches of the most valuable species (hake, monk, and kingklip) are strictly regu- lated. The government lowered the catch numbers again in the 2006/2007 fish- ing year and introduced a four-week moratorium on some species. From 2003 to the end of 2007, Namibia's fishing industry relied on preferential access to the EU market under the Cotonou Agreement--more than 90 percent of fish caught were exported, mainly as processed fish to Europe (70 percent) and South Africa (20 percent) (World Bank 2007e). ThemanufacturingbaseisoneoftheleastdiversifiedinAfrica Since independence, Namibia has had very limited industrial development and continues to import most manufactured goods from South Africa. Manufactur- ing makes up an unusually low share of national output (10 percent), employ- ment (7 percent), and exports (35 percent) (World Bank 2007e), compared with other lower-middle-income countries like South Africa. Moreover, the average growth rate of the manufacturing sector has been relatively slow compared with that of the overall economy, at 3.1 percent over 2003­07. Significantly faster growth in 2007--of nearly 14 percent--was in large part the result of increased prices for processed copper, zinc, and polished diamonds and is therefore vulner- able to international market conditions for these products. The World Bank's Investment Climate Assessment reports a number of constraints to growth in the manufacturing sector, including difficulty accessing finance, poor worker skills, and an antiexport bias reflected by the high common external tariff (World Bank 2007e). The diversification of the manufacturing sector is very low and comparable to that in Lesotho. Processing of raw materials is the predominant industrial activ- ity. Food and beverage production, which comprises preserved and processed fish and meat, beer and soft drinks, dairy, and other food products, accounts for about 80 percent of manufacturing value added. Output growth in the construction sector is estimated to have surged by 20 percent in 2005, supported by the con- tinuation of large-scale capital projects such as the Northern Railway project, the State House, and other civil construction activities such as roads (SADC 2007). Butthegovernmentiscommittedtosupportingbroader-based industrialization Government-sponsored initiatives support broadening and diversifying the indus- trial base. Namibia's export processing zone (EPZ) program was launched in Walvis Bay in 1995, but firms granted EPZ status can set up companies anywhere in the country. The benefits are generous, including zero corporate tax; zero import duties on imported capital equipment and raw materials; and zero value added tax (VAT), stamp, or transfer duties. According to the World Bank, the EPZ program has not been a success, with only 21 firms operating in EPZs (World Bank 2007e). Asian-owned firms made large investments in apparel assembly operations to take advantage of Namibia's African Growth and Opportunity Act (AGOA) status, which allows duty-free access to the United States for a long list of prod- ucts, and to take advantage of spare textile and apparel quotas under the now- expired World Trade Organization's Agreement on Textiles and Clothing (ATC). It was anticipated that the opening of the Ramatex apparel factory in WorldBankCountryBrief:Namibia 11 Namibia Windhoek in 2003 would act as a catalyst to attract new international invest- ments to the EPZs. Exports of textiles and apparel to the United States have increased significantly in recent years, from $6.7 million in 2002 to $78.8 mil- lion in 2004, representing a third of all exports to the United States (World Bank 2007e). Although the ramifications of the 2005 expiration of the ATC have not yet been fully realized, the consequent increased competition from producers in Asia has led some clothing factories in Namibia to relocate abroad. Others are relying on government support to maintain their operations (World Bank 2007e). Jobcreationisnotrapidenoughtoabsorblostagriculturaljobs Despite relatively robust GDP growth since independence, unemployment increased from 19 percent in 1992 to 37 percent in 2004 (IMF 2008b), with a net loss of 20,000 jobs between 1997 and 2004 (World Bank 2007e). The failure to generate sufficient jobs has led to a decrease in labor force participation rate to 48 percent in 2004, compared with 65 percent in South Africa in 2006 (IMF 2008b). Rural unemployment is higher than urban (45 percent compared with 20 per- cent); women are more likely to be unemployed than men (43 percent compared with 30 percent); and unemployment is especially high among young people, reaching 57 percent in the 20­24 age group (IMF 2008b). Those with less than secondary education face unemployment rates of more than 30 percent (IMF 2008b). By a wide margin, unemployment is widely perceived to be the most important economic problem facing the country today. Inflationhasintensifiedoverthepastyear Recent estimates by Namibia's Central Bureau of Statistics show that monthly consumer price inflation stood at 0.4 percent in October 2008, a decline of 0.1 percentage point over the September rate of 0.5 percent that was brought about by a decrease in transport prices (Namibia, Central Bureau of Statistics 2008). National statistics indicate that despite monthly inflation declining in August, September, and October, inflation is still set to be dramatically higher in 2008 as a whole than in 2007 (the annual rate was 12 percent as of October, compared to 6.6 percent one year earlier). In 2009, however, the steep decline in global fuel prices that began in 2008 should contribute to an annual decline in inflation in Namibia. Prudentpolicieshavecreatedastrongerfiscalposition Namibia's strong record of macroeconomic stability since independence is based in part on a credible peg to the South African rand through its membership in the Common Monetary Area (CMA),8 which also links Namibia to South Africa's inflation-targeting framework. For 2003­07, Namibia's average output growth of about 4.7 percent exceeded that of other CMA countries, Lesotho, South Africa, and Swaziland. Inflation, however, picked up in 2006 and 2007 as the global commodity boom intensified. On balance, the government has pursued prudent fiscal policies, reducing the deficit9 from 7.5 percent of GDP in 2003/04 to 3.4 percent in 2004/05 and crossing over to a surplus of 3.4 percent in 2006/07 (IMF 2008c). A fiscal surplus of 2.6 percent is projected for 2007/08, which should help reduce public debt to 23 percent of GDP, undershooting the debt-to-GDP ceiling by 2 percentage points (IMF 2008c). 12WorldBankCountryBrief:Namibia Namibia Thereareuncertaintiesaboutfuture Figure 7: Though Namibia's fiscal balance is lower than that of most of its SACUrevenue,however SACU counterparts, its current account surplus is one of the strongest The improvement in fiscal performance was largely the Overall fiscal balance 06/07 (including grants), % GDP result of a surge in Southern African Customs Union (SACU) 20 revenue, rather than to expenditure restraint. SACU receipts are estimated to have contributed 43 percent of total reve- 16 nue and grants in 2006/07 and are estimated to be about the 12 same for 2007/08 (figure 7). This source of revenue has GDP of 8 increased greatly since 1997/1998, when it was only about % 30 percent of the total. Over the medium term, to 2012, the 4 IMF projects that SACU revenue will be around 11­12 per- 0 cent of GDP, financing about one-third of public spending Botswana Lesotho Namibia SouthAfrica Swaziland (IMF 2008c). However, these receipts are vulnerable to revision of the revenue-sharing formula agreed by SACU Current account balance, % GDP members, an issue already under discussion. 20 Thegovernmentneedstostrengthentaxcollection 15 andimprovequalityofpublicspending 10 With a strong primary balance, the budget is well placed to GDP weather declines in SACU revenues without breaching the 5 of deficit ceiling. Given the volatility associated with SACU % 0 receipts, however, the government needs to strengthen tax ­5 administration to mobilize domestic revenue. In the new medium-term expenditure framework (MTEF), the govern- ­10 Botswana Lesotho Namibia SouthAfrica Swaziland ment introduced a number of reforms, including a system of rewards and penalties for line ministries to encourage them Sources: Upperfigure,IMF2008c(2006/07data);lowerfigure,WorldBank2008f(2006data). to make greater efforts to collect revenue for the services they deliver and to clamp down on tax evaders through targeted audits (OECD 2007). Namibia's public wage bill relative to GDP is one of the highest in Africa, despite having declined to 13 percent of GDP in 2006/07 from a high of 15 per- cent three years prior (IMF 2008c). The government understands the desirability of reorienting spending away from wages and subsidies toward priority sectors such as health, education, and infrastructure. To this end, the government has put in place an integrated financial management system that will improve the manage- ment of all the transactions between the Ministry of Finance and line ministries. Namibiaisbenefitingfromafavorableexternalenvironment In recent years, booming exports in diamonds and other minerals, reflecting higher international prices, have narrowed the trade deficit, while the surge in SACU revenues has increased the current account surplus. The surplus was 16 percent of GDP in 2006, a sharp increase over 5 percent in 2005 that has risen even more in subsequent years. In fact, Namibia has experienced uninterrupted current account surpluses since independence in 1990, a record unusual among lower-middle-income countries. Almost all of the strong performers were export- ers of petroleum products or, like Namibia, mineral exporters, benefiting from high global commodity prices. Large current account surpluses, however, have raised questions about currency valuation. Debate surrounding the fixed- exchange-rate regime as a result of Namibia's membership in the CMA reveals WorldBankCountryBrief:Namibia 13 Namibia mixed arguments in favor of and against the current regime. There is a view that as a small, open economy, Namibia's exchange-rate policy should primarily be directed toward the achievement of price stability. But the promotion of export competitiveness will become increasingly important as Namibia diversifies its exports structure to non-resource-based products and the exchange rate becomes a critical variable (World Bank 2007e). Themedium-termoutlookreflectsseveralrisks The medium-term outlook for Namibia has deteriorated in recent months, despite the country's pursuit of solid macroeconomic and structural policies, as the global economic slowdown has taken hold. Specifically, Namibia faces weak- ened demand for its mineral exports (with adverse effects on fiscal revenues), a likely slowdown in foreign investment resulting from the global liquidity short- age, and higher import prices due to the depreciation of the Namibian dollar along with the South African rand (IMF 2008d). Economic growth is expected to decline in 2009. Inflation, though, which increased dramatically through much of 2008, eased enough by December that Namibia's central bank cut its bench- mark interest rate by half a percentage point, the first reduction in more than three years. 14WorldBankCountryBrief:Namibia Namibia Environment Hometodiversenaturalwealth Despite being the most arid country in Sub-Saharan Africa, Namibia is known for its highly diverse ecosystems and species. Its 823,000 square kilometers range from desert (16 percent) to woodlands (20 percent) to savannas (64 percent). Because of the low and erratic rainfall and scarce ground and surface water, less than 5 percent of the country is considered fit for arable agriculture, including through irrigation (World Bank 2006). The two main deserts are the Namib (bordered by the Atlantic Ocean) and the Kalahari (bordered by Botswana in the east). These deserts are home to mineral resources (such as diamonds, semipre- cious stones, uranium, and copper) that support a large mining industry, in addi- tion to myriad plant and animal species. The broad-leafed forests and woodlands located in the northern and northeastern parts of the country provide livelihoods from the sale of firewood, building materials, medicinal plants, wildlife, and food. The central area is covered by wooded grassland and bushland and supports crops and livestock for a majority of the population, in addition to diverse wildlife that form the basis of a large and growing tourism industry (Namibia, National Plan- ning Commission 2008). Poorpolicieshavebeenacatalystinenvironmentaldegradation One of Namibia's key challenges since independence has been to redress the inequitable colonial policies that led to the overexploitation of the country's nat- ural resources. Unregulated fishing in coastal waters, for example, led to the depletion of many fish species. Policies that allocated land along racial groups forced people into communal areas and led to overgrazing and overcultivation. The absence of land tenure and ownership rights is an ongoing issue addressed in key pieces of legislation: the National Land Policy of 1998 and the National Resettlement Policy of 2001 (Namibia, National Planning Commission 2008). Since independence, however, government recognition that conservation of Namibia's natural resources is key to the country's economic and social welfare has been enshrined in legislation and policies, as well as in the country's participa- tion in international environmental commitments. The government of Namibia adopted an environmental agenda detailed in the Green Plan in 1992. Subse- quently, the Ministry of Environment and Tourism (MET), together with other line ministries, have formulated and implemented a range of cross-sector legisla- tion and policies to conserve natural resources while improving local communi- ties and the national economy. These policies are consistent with the govern- ment's Vision 2030 objectives, integrated with the national development plans (NDPs), and aligned with the MDG of ensuring environmental sustainability (World Bank 2008a). WorldBankCountryBrief:Namibia 15 Namibia Arangeofenvironmentalchallengesrequireattention Natural and man-made issues threatening Namibia's habitats and ecosystems include water scarcity, land and soil degradation, deforestation, human-wildlife conflicts, coastal and marine overexploitation, unrehabilitated mines, biodiver- sity loss, urban pollution, and global warming. Table 3 compares key environ- mental data for Namibia, Sub-Saharan Africa, and middle-income countries. Usage of biomass products for energy--and especially electricity generation using fossil fuel--in Namibia compare very favorably with the two composites. Defor- estation, however, is occurring in Namibia at a rate roughly four times that of middle-income countries as a group. A high proportion of Namibia's population (about 93 percent) has access to an improved water source, a rate approximately equal to that of Botswana and South Africa and higher than in Angola, Zambia, or Zimbabwe. Access to improved sanitation facilities, however, is significantly lower than in all neighbor- ing countries and just 4 percentage points above the Sub-Saharan African regional average. Peru, for example, another lower-middle-income country, is performing better than Namibia on most measures of environmental sustainability. The out- break of cholera in Namibia in May 2008 and the high incidence of malaria in the northern parts of the country are a manifestation of poor sanitation facilities. The government, along with other stakeholders, therefore, must take aggressive steps in implementing policies and programs aimed at improving sanitation, especially in rural areas, where only 18 percent of the population has access to improved sanitation facilities. Freshwaterscarcityisaperennialissue Namibia's environment is generally considered water-constrained. Rainfall is relatively low and highly variable, and droughts are a normal and common occur- rence. Rainfall ranges from less than 50 millimeters per year in deserts to more Table 3: Environmental indicators in Namibia versus Sub-Saharan Africa and middle-income countries than 600 millimeters per year in wet- Sub-Saharan Middle-income lands and savannas (Namibia, Ministry Namibia Africa countries of Environment and Tourism n.d.(b)). Agriculture Agriculturalland(%oflandarea) 47 44 35 The country has no perennial rivers or Irrigatedland(%ofcropland) 1.0 3.5 18.2 any other permanent water bodies. Fertilizerconsumption(100gramsperhectareofarableland) 19 ­ 1,331 The large inland dams suffer from high Ruralpopulationdensity(ruralpopulationpersquarekilometersofarableland) 161 351 471 Forests evaporation rates. Namibia's limited Forestarea(%oflandarea) 9.3 26.5 33.8 supply of surface water means that it is Deforestation(averageannual%,1990­2005) 0.9 0.7 0.2 highly dependent on groundwater Nationallyprotectedareas(%oftotallandarea) 5.6 11.3 11.7 sources for human consumption, live- Energy GDPperunitofenergyuse(constant2005PPP$/kilogramofoilequivalent) 6.7 2.7 4.0 stock watering, and agricultural irriga- Percapitaenergyuse(kilogramsofoilequivalent) 683 681 1,486 tion, as well as for industrial processes. Energyfrombiomassproductsandwaste(%oftotal) 13.5 56.3 10.3 Groundwater sources are facing Energyimports,net(%ofenergyuse) 76 ­61.7 ­27 Electricitygeneratedusingfossilfuel(%oftotal) 3.0 76.1 71.5 increasing pollution from pesticides Electricpowerconsumption(kilowatt-hourspercapita) 1,428 542 1,928 and excess fertilizers. The Namibian Emissions and pollution Drought Policy and Strategy of 1997 CO2emissionsperunitofGDP(kilograms/2005PPP$GDP) 0.3 0.6 0.7 CO2emissions(metrictonspercapita) 1.2 0.9 3.95 encourages farmers to adopt self-reliant Particulatematter(urban-population-weightedaverage,micrograms/cubicmeter) 42 60 56 approaches to drought risk and to min- Source: WorldBank2008c. imize degradation of the natural Note: ­=notavailable.DataforNamibiaisfor2003,2004,or2005. resource base during drought (DRFN 16 WorldBankCountryBrief:Namibia Namibia 2007). Currently, the demand for water exceeds supply. To meet future demand, particularly in urban areas, expensive new water sources such as desalination plants and new dams will need to be developed. Unsustainablelanduseleadstolandandresourcedegradation Land degradation, along with environmental threats such as extreme seasonal flooding or droughts, potentially linked to the long-term impacts of climate change, can lead to disaster situations in a fragile country such as Namibia. Evi- dence of land and resource degradation includes groundwater depletion; soil ero- sion; declining land productivity; and loss of woody vegetation, shrub, and ground cover. Research indicates that open access, habitat conversion, and overexploita- tion of resources are among the main causes of land degradation in Namibia. Bush encroachment (invader bush), for example, is estimated to have affected 26 million hectares of savanna and woodland in Namibia and led to an estimated loss of income from livestock farming of up to $1 million per year (DRFN 2007). In general, identification of sustainable land management practices is essential10 to preserve habitats and ecosystems to benefit farmers and other users of other natu- ral resources (World Bank 2006). Deforestationisanunnecessarywasteofwoodlandresources Forests and woodlands form an integral part of the livelihood of poor rural house- holds in Namibia, who can generate significant income from selling firewood for fuel, building materials, charcoal, food, and medicinal plants. Plant foods are among the most important nonwood forest products, and fruits, nuts, and tubers form a large proportion of the diet of poorer segments of the population. Of the 157 tree species in Namibia, 35 percent are a source of food (FAO 2006). Defor- estation, however, occurred at an annual average of 0.9 percent over 1990­2005, faster than in Sub-Saharan Africa as a whole (World Bank 2008c). The rate is worrisome, given that forests represent only 9 percent of land area in Namibia. Deforestation, caused by inappropriate farming methods, ill-conceived subsidies, extensive land clearing, and repeated burning, has been most severe where popu- lation density is highest. It has led to soil erosion from increased rainfall runoff, changes in the local water cycle, and loss of biodiversity. In addition, inequitable access to woodlands and insufficient tenure over woodland resources lead to unsustainable resource usage. The Forest Act of 2001 created communal forests, whereby all resources, including grazing and water, are jointly managed. Income-producing schemes (such as setting aside forest areas specifically for charcoal production) are being piloted. As of 2006, 13 commu- nity forests, covering about 1.3 million hectares accessible by about 239,000 people, have been established, and another 16 community forest areas are planned (Namibia, National Planning Commission 2008). One study indicates that rural households can accrue up to 4,000 Namibian dollars (N$) per year through income generation plans implemented through the community forest program (Namibia, National Planning Commission 2008). Coastalandmarineresourcesarefragile Namibian coastal ecosystems are extremely fragile and are increasingly being dis- turbed by growing economic development and human activities that increase levels of pollution. The offshore environment is a source of many important WorldBankCountryBrief:Namibia 17 Namibia sectors of the economy: fisheries, mining, and energy. Despite this, Namibia has one of the most productive fishing grounds in the world, and these grounds are an important source of foreign exchange and a significant employer. Sustainable yields of commercially exploitable fish species fluctuate because of climatic con- ditions and overfishing. The increase in shallow- and deepwater diamond mining over the 130 kilometers of coastal strip north of the Orange River is also adding to the competition for resources. Although research studies suggest that there is no causal relationship between increased marine diamond mining and the decline in fish catch rates experienced in recent years, the issue remains a source of con- flict between the two industries. The formation of committees on which all the major stakeholders are represented appears to be the current trend for preempt- ing and resolving conflicts as they arise (Clark et al. 1999). Inadequateregulatoryframeworkforminerals The mining industry is regulated by the Mineral Act of 1992, which was promul- gated after independence to repeal old legislation inherited from the colonial regime. Because of inadequate coordination between the Ministry of Mines and Energy and the Ministry of Environment and Tourism, there is currently little effective environmental management within the industry. New health and safety regulations, a mining charter, and new minerals legislation are all under review. While mining makes a very important contribution to the economy, it has also contributed to environmental degradation. Diamond mining in the Sperrgebiet (a 100-kilometer-wide restricted area in the southern Namib Desert) has inflicted surface damage in the coastal regions with trenches, mining blocks, and roads that scar the landscape. This could have an discernible impact on tourism land use. On the upside, because the Sperrgebiet was a restricted area, the majority of its 26,000 square kilometers have remained in a near-pristine state. The area contains signifi- cant levels of biodiversity, is considered a national conservation priority, and became a national park in 2004 (Namibia, Ministry of Mines and Energy n.d.). Abandoned and decommissioned mines are another issue. The government estimates that there are more than 240 abandoned mine sites whose rehabilita- tion now rests with the government. Currently, the issuance of mining licenses requires proof of funds for rehabilitation. However, before 1980, rehabilitation was not enforced, and large areas have been left scarred and unrehabilitated. Some of the damage was caused by companies that no longer operate, and the present holders of mining licenses for these areas cannot be held responsible. Limited funding and the inherent problems of rehabilitation in arid areas are the biggest constraints (Namibia, Ministry of Mines and Energy n.d.). Increasingpressureonbiodiversity Despite its very dry climate, Namibia holds a remarkable variety of habitats and ecosystems. The Namib Desert runs along the length of the coast extending into the northwestern corner of South Africa. Because the region is isolated between the ocean and the escarpment, it has remained a relatively stable environment for the evolution of desert species. Another significant biodiversity hotspot is the Sperrgebiet, which is home to the Succulent Karoo Ecosystem in the southern Namib Desert (box 3). It is one of the few arid biodiversity hotspots in the world and constitutes a refuge for an exceptional level of succulent plant diversity (Con- vention on Biological Diversity 2008). 18WorldBankCountryBrief:Namibia Namibia Box 3 A high level of biodiversity within the Succulent Karoo ecosystem StretchingalongtheAtlanticcoastfromSouthAfricaintosouthernNamibia,the SucculentKaroobiodiversityhotspotcovers116,000squarekilometersofdesert.Itis oneofthe25richestandmostthreatenedreservoirsofplantandanimallifeonEarth. Thesebiodiversityhotspotscoveronly1.4percentoftheplanet,yetcontain60 percentofallterrestrialspeciesdiversity. TheSucculentKaroocontainsthehighestlevelofbiodiversityinNamibia,including highconcentrationsofuniqueplantsandlargenumbersofreptiles,amphibians,andwild populationsofgemsbok,springbok,andcarnivoressuchasthebrownhyena.Conversion pressureontheareahasbenefitedfromthesparsepopulation,approximately300,000 people,andthefactthatmorethan90percentoftheareaisusedfornaturalgrazing. Nonetheless,only30,000squarekilometersoftheoriginalvegetationremainsina relativelypristinestate,andspeciesarealreadyexperiencingtheimpactofhuman- inducedclimaticchange.Asaresultofexistingpressures,manyoftheplantspecies shouldbelistedasthreatened(currentlylessthan1percentarelistedasthreatened speciesbytheIUCNRedListofThreatenedSpecies). TheSucculentKarooEcosystemProgrammeisa20-yearstrategythatguides conservationinthisarea.Itsdevelopmentandimplementationissupportedbythe CriticalEcosystemPartnershipFundandmultiplestakeholdersattheinvitationofthe MinistryofEnvironmentandTourismandwiththesupportofConservationInternation- al'sGlobalConservationFund. Sources: http://www.skep.org;CriticalEcosystemPartnershipFund2004. Namibia's biodiversity is under pressure from poaching, expanding agricul- ture, and pollution. In the past, efforts at sustainable natural resource manage- ment have often been thwarted by ineffective and outdated legislation. The National Biodiversity Strategy, together with the Strategic Action Plan (2002­10), set national priorities for sustainable development through conservation and use of biological diversity. Implementation of these strategies, however, has been limited and slow (World Bank 2005). In 1996, Namibia adopted a "conservancy" approach to wildlife management: a system in which communal landowners promote the sustainable management of wildlife while improving their livelihoods. Conservancies also help Namibia to meet its commitments to conserve biodiversity by, for example, protecting threatened species and protecting the land corridors adjacent to protected areas through which wildlife can move. As of 2005, 44 communal area conservancies covered almost 80,000 square kilometers (about 35 percent of all communal land) and were home to about 210,000 people. Approximately another 20 com- munal area conservancies are in various stages of development. Urbanpollutionwillbeafuturechallenge Namibia is a country undergoing rapid urbanization: urban residents increased from 30 percent of the population in 1995 to 36 percent in 2007. Although avail- able statistics indicate that pollution levels for air and water are still relatively WorldBankCountryBrief:Namibia 19 Namibia low, the growing urban population will create more pollution and waste (Tarr 2002). In addition, vehicle density and use in the urban areas are currently not sufficient to lead to major problems. Given the scarcity of potable water, how- ever, water pollution from pesticides and fertilizers (as well as other sources) is an increasing concern. Climatechangeposesathreattothenaturalresources-basedeconomy Climate change is considered one of the most serious threats to Namibia's envi- ronment because of the country's dependence on agriculture and other natural resource sectors. Climate factors such as droughts have already adversely affected agriculture. Marine fisheries are threatened by possible changes to the nutrient- rich Benguela ocean current because any changes could impact marine diversity and influence catch levels of many species. The predicted rise of 0.3 meter or more in sea level would inundate significant parts of Walvis Bay, the main port of Namibia, and possibly the coastal towns of Swakopmund and Henties Bay. A combination of floods caused by heavy rains and devastating cyclones (mostly in the Caprivi region) in 2007, rising freight rates worldwide, and substitution of ethanol production for food production have contributed to rising food prices in Namibia. Along with the problem of rising food prices, the population of Namibia is facing other imminent threats resulting from climate change. The propensity for flooding and poor access to improved sanitation increase the population's suscep- tibility to outbreaks of cholera and other diseases. Projected changes in climate could extend the area at risk of malaria, a significant cause of adult mortality, southward into the center of the country. Finally, while most of Namibia's elec- tricity is imported, the balance is generated locally by a hydroelectric plant on the Kunene River and two thermal power stations at Windhoek and Walvis Bay. During periods of drought and low river flow, electricity production on the Kunene River is severely curtailed. Under climate change scenarios of increased evaporation and reduced rainfall, electricity generation would be adversely affected (World Bank 2008a). ThecostofclimatechangeinNamibiacouldbeverysignificant Research by the International Institute for Environment and Development (IIED)11 suggests that the impact of climate change on natural resources sectors could reduce the country's GDP significantly. Under the best-case scenario, under which agricultural impacts would be partly offset by improved water dis- tribution, there would be no impact on fisheries, and GDP would decline by about 1 percent over 20 years (Reid and others 2007). Under the worst-case scenario, large-scale shifts in climatic zones would reduce agricultural and fishing outputs and GDP would drop by almost 6 percent. The poorest segments of the population would experience the most substantial declines in wages. Namibiaissignatorytomanyinternationalenvironmentalframeworks Namibia actively supports several international environmental treaties and con- ventions that it has used to support national priorities, particularly the United Nations Framework Convention on Climate Change, the Convention on Interna- tional Trade in Endangered Species (CITES), and the Convention on Biological Diversity. With respect to other frameworks, Namibia has not yet been able to 20WorldBankCountryBrief:Namibia Namibia take full advantage of the instruments contained in the conventions, including Table 4: Environmental expenditure in Namibia the Vienna Convention for the Protection of the Ozone Layer, the Ramsar Con- and comparator countries vention on Wetlands, the Basel Convention on the Control of Transboundary % of central Movements of Hazardous Wastes and their Disposal, the United Nations Frame- government % of GDP expenditure work Convention on Climate Change, the Convention on Biological Diversity, Ghana 0.02 0.10 and the United Nations Convention to Combat Desertification. Madagascar 0.47 2.00 Namibia 0.24 0.70 Governmentspendingonenvironmentalprotectionvariesbycountry Argentina 0.10 0.55 Table 4 attempts to provide a comparison of Namibia's expenditures relative to Chile 0.48 2.57 Colombia 0.30 0.96 some comparators. Namibia is spending about 0.24 percent of GDP on environ- Mexico 0.65 4.22 mental protection, higher than low-income Ghana, while Madagascar's high level Source: WorldBank2008a. of spending reflects donor support for biodiversity conservation. Among Latin Note: FiguresforAfricancountriesarefor2005or2006;thoseforLatin American middle-income countries, Colombia is a good comparator because its Americancountriesarefor2003. income per capita and share of government expenditures in GDP are similar. Bilateral funding to the environmental sector is declining, while multilateral funding sources are becoming more common (Reid and others 2007; World Bank 2008a). WorldBankCountryBrief:Namibia 21 Namibia Governance and Business Environment Since independence in 1990, Namibia has enjoyed political and economic stabil- ity. It has worked toward deepening its democratic institutions, adopting a wide array of reforms and policies to transform the social fabric of the country. These include increasing the accessibility of education, health care, housing, water resources, and other social services for the majority of the population that were previously excluded. The business environment has also been strengthened by the development of strong institutions, an independent judiciary, a liberal foreign investment framework, and a generally competitive business environment. Traditional measures of a country's competitiveness, such as the real effective exchange rate (REER), do not suggest that Namibia has a competitiveness prob- lem. Likewise, labor productivity, another measure of competitiveness, appears to have grown more in Namibia than in its neighbors during 2000­05, although absolute productivity levels are still below those of South Africa. Other indica- tors give a mixed view of the country's competitiveness: terms of trade have been volatile, and share of world trade has fallen steadily. RankingsofNamibia'sbusinessandcompetitivenessenvironmentpresent amixedpicture According to the Doing Business 2009 report (World Bank and IFC 2008), Namibia ranks 51st out of 181 countries, a slight drop from 48th out of 178 countries the previous year (table 5). Despite the reduction in the average time to open a business from 99 to 66 days between the two Table 5: Namibia made slight improvements registering property and reports, Namibia's overall rank for starting a business getting credit in 2008, but backtracked or remained the same in other areas dropped due to even more significant improvements in Doing Doing other countries. A similar scenario played out for the cate- Business Business Change gory of protecting investors, which experienced the second- Indicator 2008 rank 2009 rank in rank largest decline in rank. Ease of doing business (overall) 48 51 ­3 For some Doing Business categories, such as starting a Startingabusiness 104 112 ­8 Dealingwithconstructionpermits 38 38 0 business, registering property, and trading across borders, Employingworkers 34 34 0 Namibia performs in the bottom 25 percent of countries Registeringproperty 130 129 +1 ranked. To start a business in Namibia, for instance, it takes Gettingcredit 13 12 +1 Protectinginvestors 66 70 ­4 99 days, almost twice the regional average. In other areas, Payingtaxes 95 96 ­1 such as dealing with licenses, employing workers, getting Tradingacrossborders 148 150 ­2 credit, and enforcing contracts, Namibia performs well. But Enforcingcontracts 32 36 ­4 Closingabusiness 50 52 ­2 in sum, Namibia outperforms Sub-Saharan Africa as a whole in 35 of 41 indicators (table 6). Source: WorldBankandIFC2008. Namibia ranked 88th out of the 128 countries measured Note: MeasurementsofrankreflectTanzania'sperformanceamong181countriesin2009and178countriesin 2008;lowerrankindicatesbetterperformance. in the 2007­08 version of the World Economic Forum's 22 WorldBankCountryBrief:Namibia Namibia Table 6: Namibia outperforms Sub-Saharan Africa on 35 of 41 business environment indicators Indicator Namibia Sub-Saharan African average Starting a business (rank) 112 Procedures(number) 10 10.2 Time(days) 66 47.8 Cost(%ofGNIpercapita) 22.1 111.2 Minimumcapital(%ofGNIpercapita) 0.0 173.4 Dealing with construction permits (rank) 38 Procedures(number) 12 17.2 Duration(days) 139 271.1 Cost(%GNIpercapita) 181.8 2,574.4 Employing workers (rank) 34 Difficultyofhiringindex(0­100) 0 39.0 Rigidityofhoursindex(0­100) 40 43.5 Difficultyoffiringindex(0­100) 20 41.5 Rigidityofemploymentindex(0­100) 20 41.3 Firingcost(weeksofwages) 24 68.3 Registering property (rank) 129 Procedures(number) 9 6.8 Duration(days) 23 95.6 Cost(%ofpropertyvalue) 9.9 10.5 Getting credit (rank) 12 Legalrightsindex(0­10) 8 4.5 Creditinformationindex(0­6) 5 1.4 Publicregistrycoverage(%ofadults) 0.0 2.5 Privatebureaucoverage(%ofadults) 59.6 4.8 Protecting investors (rank) 70 Disclosureindex(0­10) 5 4.6 Directorliabilityindex(0­10) 5 3.2 Shareholdersuitsindex(0­10) 6 5.0 Investorprotectionindex(0­10) 5.3 4.3 Paying taxes (rank) 96 Payments(number) 37 37.8 Time(hours) 375 311.7 Profittax(%) 16.7 21.5 Labortaxandcontributions(%) 1.0 13.2 Othertaxes(%) 7.6 32.0 Totaltaxrate(%ofprofit) 25.3 66.7 Trading across borders (rank) 150 Documentstoexport(number) 11 7.8 Timeforexport(days) 29 34.7 Costtoexport(dollarspercontainer) 1,686 1,878.8 Documentsforimport(number) 9 8.8 Timeforimport(days) 24 41.1 Costforimport(dollarspercontainer) 1,813 2,278.7 Enforcing contracts (rank) 36 Procedures(number) 33 39.4 Duration(days) 270 659.7 Cost(%ofclaim) 29.9 48.9 Closing a business (rank) 52 Time(years) 1.5 3.4 Cost(%ofestate) 15 20.2 Recoveryrate(centsonthedollar) 39.5 16.9 Source: WorldBankandIFC2008. Note: MeasurementsofrankreflectNamibia'sperformanceamong181economies;lowerrankindicatesbetterperformance.Forthe"employing workers"indexes,highervaluesindicatemorerigidregulations.Forthe"gettingcredit"indexes,highervaluesindicatestrongerlegalrightsandgreater availabilityofcreditinformation.Forthe"protectinginvestors"indexes,highervaluesindicategreaterextentofdisclosure,greaterliabilityof directors,greaterpowerofshareholderstochallengeatransaction,andstrongerinvestorprotection.--=notavailable. WorldBankCountryBrief:Namibia 23 Namibia Global Competitiveness Index (GCI), about the same as the previous year when it was ranked 79th out of 117. Examining the GCI components shows that Namibia has a number of competitive strengths, including quality of its institu- tions, quality of the infrastructure, macroeconomic environment, and soundness of banks. With respect to weaknesses, Namibia ranks near the bottom on indica- tors that include higher education and training, stringent hiring and firing prac- tices, and friction in labor-employer relations. A new report jointly authored by the World Economic Forum, the World Bank, and the African Development Bank (2007) examines the factors necessary to make African businesses more competitive. Its main conclusions are that good policies are critical for a sound business environment and that countries that have implemented sound policies score better on competitiveness rankings. Namibia ranks 10th of all countries in Africa. The report found Namibia's main strengths to be the quality of institutional environment and infrastructure and the sophis- tication of its financial markets, and its chief constraints to be an inflexible labor market; a low-quality educational system; and high prevalence rates of malaria, tuberculosis, and HIV. Namibianfirmsareproductive,andunitlaborcostsarelow The World Bank's Investment Climate Assessments (ICAs), which evaluate the productivity and competitiveness of the private sector in individual countries, indicate that Namibian firms are very productive: of the Sub-Saharan African countries surveyed thus far, both labor and total factor productivity of small, medium, and large enterprises (SMLEs) in the manufacturing sector in Namibia are higher than those of all countries except South Africa (World Bank 2007a).12 Figure 8 shows manufacturing labor productivity in a variety of Sub-Saharan African countries. In terms of productivity, Namibia also compares favorably Figure 8: Labor productivity in manufacturing SMLEs in Namibia is high compared to that in other Sub-Saharan African countries ) 30 ands thous $, 20 (2005 er ork w per 10 alue-addedV 0 a a aloon a a a a a a a ol anda anda sau a,The NamibiSeneg azil CamerBots Les Zambi Sw EritrTanzani e awi Afric wana andVerdeNigeriKenyAng otho BeninMal Guine South MauritiusCape Rw Ug a-Biszambique Guine Mo Gambi Source: WorldBank2007a. Note: Datapresentedareforyearsbetween2002and2005,dependingonsurveyperiodforeachcountry,andareshownforeachcountry inwhich theWorldBankhasconductedanInvestmentClimateSurvey.Datacollectedpriorto2005havebeenconvertedto2005figuresusingGDPdeflators and2005exchangerates. 24WorldBankCountryBrief:Namibia Namibia Figure 9: Productivity growth in Namibia has been higher than that in most neighboring countries in recent years 6 1998­2002 2003­07 5 (%) 4 wtho gr e 3 ag erva 2 1 capita, per 0 GDP ­1 ­2 Botswana Lesotho Namibia SouthAfrica Swaziland Source: WorldBank2008f. with middle-income comparator countries such as Malaysia. In addition, Namibia's overall productivity growth per capita has been higher than that in neighboring countries in recent years (figure 9). Although productivity is a key competitiveness indicator, wage levels are also important because productive firms can become uncompetitive if wages are too high. In Namibia, the median monthly wage for full-time permanent production workers is close to $300, considerably higher than that in most low-income Sub- Saharan African countries and also higher than that in many less productive com- parator countries such as Botswana and Swaziland (World Bank 2007a). Only South Africa and Chile, among comparator countries, have higher average wages. However, unit labor costs (labor costs as a percentage of value added) take differ- ences in productivity into account and are a better measure of the net impact of labor costs on competitiveness. Unit labor costs were found to be relatively low in Namibia and similar to unit labor costs in Botswana, Malaysia, and Swaziland, while considerably lower than those in Lesotho, Mauritius, and South Africa. This suggests that labor costs are probably not a huge drag on competitiveness, although other issues such as abrasive labor relations and an inadequately skilled labor force are known to harm Namibia's competitiveness. Microenterprises,however,areconsiderablylessproductive Although it is not surprising that microenterprises are less productive than their SMLE counterparts, the size of the gap in productivity between the former and the latter in Namibia is unusual. The median SMLE in Namibia produces more than $15,000 of output per worker, while the median manufacturing micro- enterprise produces less than 10 percent of that amount--about $1,400 of out- put per worker (World Bank 2007a). In both Botswana and Swaziland, for example, the median microenterprise produces about 50 percent less than the median SMLE. One possible explanation for the gap in Namibia is the low level of education among microenterpise managers--only 12 percent have completed a university education in Namibia, compared with 32 percent in Botswana. WorldBankCountryBrief:Namibia 25 Namibia Table 7: Namibia is an average performer among Firmsviewtheinvestmentclimateasrelativelyconducivetobusiness comparator countries, according to Transparency According to the World Bank's Investment Climate Assessment, for which firms International's Corruption Perceptions Index in Namibia ranked 17 areas--including competition from the informal sector, Confidence Rank Score range crime, taxation, worker education and skills, corruption, regulation, and infra- structure--the investment climate in Namibia is comparable to that in other Botswana 36 5.8 5.2­6.4 South Africa 54 4.9 4.5­5.1 middle-income countries. While no single area stood out as a serious obstacle to Namibia 61 4.5 3.8­5.1 the investment climate by a majority of firms, crime was identified by 28 percent Lesotho 72 3.6 2.9­4.3 of firms as a constraint, followed by tax rates, worker skills, and corruption (World Swaziland 92 3.2 2.3­3.8 Bank 2007a). Evidence suggests that the direct costs associated with crime are Source: TransparencyInternational2008. high, with the combined costs of crime and security totaling about $132 per Note: "Score"rangesfrom10(highlyclean)to0(highlycorrupt). worker per year, or about 0.5 percent of sales. This is higher than those in any other comparator countries except South Africa and Argentina (World Bank 2007a). Microenterprises, on the other hand, most often cited access to credit as a constraint. Although managers are concerned about corruption, the ICA did not find it to be significantly higher than that in comparator countries. Likewise, Transparency International rates Namibia an average performer among its South- ern African comparator countries. Of the 180 total countries ranked in the orga- nization's 2008 Corruption Perceptions Index, Namibia ranks 61st (table 7). Nearly a third of manufacturing SMLEs in Namibia believe that inadequate worker skills and education are a serious obstacle to business. One-third report that their typical workers have between zero and six years of schooling and that many workers with more years of schooling are also inadequately skilled. The causes of skills deficiency have been identified as poor instruction in schools, a curriculum that is not in line with the required skills in the labor market, or lack of firm-based training. In a 2000 study of 11 countries in southern Africa, Namibia ranked lowest for math scores and third from lowest for reading scores, above only Zambia and Malawi (World Bank 2007a). About 44 percent of manufactur- ing SMLEs provide training, compared with 93 percent in China, 76 percent in Thailand, and 64 percent in South Africa (World Bank 2007a). Namibia is in the bottom third of countries with respect to training provision. Thelegalenvironmentsurroundingprivateinvestmentneedsoverhauling The legal framework for investment in Namibia, comprising the Foreign Invest- ment Act of 1990, the Export Processing Zones Act of 1995, and various other tax and customs laws and administrative practices, is considered weak in terms of establishing an adequate investment environment. The incentive regime has had poor results in terms of attracting new investment: there have been only about 100 firms approved as qualifying manufacturers, and there are only 19 firms in EPZs (FIAS 2006). The government is therefore exploring ways to revamp the investment framework. With respect to tax rates, although the basic corporate income tax rate of 35 percent is higher than that in most comparator countries, there are many invest- ment incentives that can reduce a firm's tax burden, making the effective tax rate relatively low among competitors (figure 10) (World Bank 2007a). However, according to a Foreign Investment Advisory Service (FIAS) report on Namibia, the incentive regime is overly complex and a lower basic rate should be intro- duced. There are effectively seven corporate income tax rates: the general rate of 35 percent; three other bands for manufacturing, depending on the incentives granted; one for diamond mining; one for other mining; and one for EPZ compa- 26 WorldBankCountryBrief:Namibia Namibia Figure 10: Though the basic corporate tax rate in Namibia is high, incentives can reduce the effective rate so that it is lower than in most comparator countries Namibia Swaziland Argentina Thailand China SouthAfrica Thailand Lesotho Swaziland Chile SouthAfrica Malaysia Malaysia China Chile Namibia Mauritius Mauritius Lesotho Botswana Botswana Argentina 0 10 20 30 40 0 10 20 30 40 Top corporate tax rate Average effective tax rate, (manufacturing), % of profits % of profits Source: WorldBank2007a. nies. The marginal effective tax rate (METR) on capital investments in Namibia, even without any targeted incentives, is quite low by international and regional standards, ranging from 0 percent to 16 percent (FIAS 2006). Infrastructureisnotamajorconstrainttobusiness Compared with many other Sub-Saharan African countries, Namibia has fairly developed infrastructure that does not present a major constraint to business. Fewer than 10 percent of firms with five or more employees rate any aspect of infrastructure as a major concern (World Bank 2007e). In terms of electricity consumption, at 1,149 kilowatt hours per capita, Namibia is approximately on par with lower-middle-income countries, where consumption is 1,502 kilowatt hours per capita. Electric power transmission and distribution losses, however, are significantly higher in Namibia (18 percent of power output) than those in lower-middle-income countries (12 percent). As of 2005, 97 percent of electricity in Namibia was generated from hydroelectric sources, less than 3 percent from oil sources, and less than 1 percent from coal sources. Electricity coverage, however, is far from universal. For poor house- holds, wood is by far the most common source of energy for cooking and heating activities, and candles are the most common source of lighting. (Electricity from mains is the primary source of energy for lighting in only 8 percent of poor house- holds [World Bank 2007e].) Despite campaigns to promote solar energy as an alternative source of electricity, only 0.5 percent of nonpoor and 0.1 percent of poor households use solar energy for any part of their energy needs. Regional highways such as the Trans-Kalahari and the Trans-Caprivi Highways make the busy Walvis Bay port easily accessible to SADC and Central African countries. As of 2002, however, only 13 percent of Namibia's 42,000-kilometer WorldBankCountryBrief:Namibia 27 Namibia road system was paved, a metric that compares poorly with middle-income countries as a whole, where 44 percent of roads were paved. Four international airlines--Air Namibia, South African Airways, LTU, and BA/Comair--serve Namibia. In general, information and communication technology access and usage in Namibia compares well to those in lower-middle-income countries. Approxi- mately 95 percent of the population is covered by mobile phone telephony, and 39 of every 100 people are mobile phone subscribers (as of 2007), well above the 23 of 100 people in Sub-Saharan Africa and just above the 37 of 100 in lower- middle-income countries as a group. Presence of personal computers, at 24 per 100 people in Namibia in 2007 is more than five times that of lower-middle- income countries in 2006, although usage of the Internet, at 5 per 100 people, is less than one-third of the rate observed in lower-middle-income countries. The price basket for Internet service--$56 per month--remains higher than the $44 observed in Sub-Saharan Africa as a whole and very high compared with $17 in lower-middle-income countries. Tradepolicyisbiasedagainstexports While the Namibian economy is very open and dependent on international trade--exports of goods and services averaged 50 percent of GDP over 2003­07, and imports averaged 54 percent--Namibia lacks the kind of diversified trade structure that is critical for a small, open economy. Its key traditional exports are diamonds, other minerals, fish products, and beef (World Bank 2007e). Com- pared with those of other middle-income comparator countries, Namibian firms are modest exporters, with only about one-third of firms exporting anything-- lower than in any of the comparator countries except for Botswana (figure 11). In comparison, close to two-thirds of firms in Malaysia, Mauritius, and South Africa export some of their output. For Figure 11: Compared with manufacturing firms in other middle-income countries, relatively few firms Namibia firms that do export, only 14 in Namibia export percent of their output is exported, and almost half goes to other SACU Mauritius Mauritius countries. The share of exporting firms Malaysia Malaysia is similar to South Africa (14 percent) and Argentina (13 percent), but far Argentina Chile lower than in countries such as Leso- Chile Argentina tho (44 percent) and Mauritius (39 percent) (World Bank 2007e). According to the World Bank, SouthAfrica Lesotho export diversification in Namibia is Lesotho Swaziland constrained by a trade policy structure that discriminates against exports and Swaziland SouthAfrica favors capital-intensive sectors over Botswana Botswana labor-intensive ones and large over small firms. As a member of SACU, Namibia's trade policy is determined Namibia Namibia at the regional level, and SACU's com- 0 20 40 60 80 0 10 20 30 40 50 mon external tariff (CET) is heavily % of firms exporting Exports, % of sales influenced by South Africa. The CET Source: WorldBank2007a. reflects South Africa's industrial pat- 28 WorldBankCountryBrief:Namibia Namibia terns, and the protectionist tariff regime is geared toward import-substitution industries in South Africa. The common ad valorem rates (with 39 bands) range from zero to 55 percent. The simple average common most favored nation (MFN) tariff rate is 11.4 percent, although the tariff system remains complex (World Bank 2007e).13 The high levels of the SACU common external tariff make imports of products from non-SACU countries uncompetitive. Thefinancialsectorisstrongandincreasinglywellregulated Namibia has a sophisticated and highly developed financial system compared to most countries in Africa, with four commercial banks, about 30 insurance com- panies, 500 pension funds, a stock exchange, a number of asset management and unit trust management companies, and a large number of microlending institu- tions. Total financial system assets were about 170 percent of GDP. Commercial banking represented 38 percent of total financial sector assets in Namibia as of 2007, while pension funds accounted for 34 percent and life insurance compa- nies for 22 percent (source for all data in this paragraph is IMF 2007a). Regulations governing financial sector competition and capital markets are closely tied to those in South Africa. South African firms dominate banking, although Namibian ownership has increased in recent years. The commercial banking sector is mature and well established, as measured by private sector credit to GDP, which is relatively high by international standards at 56 percent in 2006. Individual mortgages are the most important component of banks' loan portfolio (about 40 percent), with finance, real estate, and business services also important borrowers. Namibia's banks are well capitalized and very profitable compared with other banks in Sub-Saharan Africa. In general, the financial sector is deeper in Namibia than in comparator countries, though banking and capital markets indicators are not as strong (table 8). Pensionfundsarewelldeveloped Pension funds in Namibia are well developed, as measured by total asset size and maturity. By law, they are required to invest at least 35 percent of their assets domestically, though flexible implementation of this regulation allows foreign companies dual-listed on the Namibian Stock Exchange to be included Table 8: Financial sector depth in Namibia is better than that in comparator countries Namibia Botswana Kenya Lesotho Mozambique South Africa Swaziland Tanzania Financial sector depth Moneyandquasi-money(M2)(%ofGDP) 44.8 31.7 36.3 30.1 28.5 60.0 21.8 26.8 Domesticcredittoprivatesector(%ofGDP) 61.7 19.6 25.8 8.9 13.8 160.8 23.7 12.2 Banking industry Banknonperformingloanstototalgrossloans(%) 2.9 2.8a 5.2b 1.0 3.7 1.2 2.0 -- Bankcapital-to-assetsratio(%) 8.3 9.7a -- -- 6.4 7.8 -- -- Capital markets Numberoflisteddomesticcompanies 9 18 51 -- -- 401 6 6 Marketcapitalizationoflistedcompanies(%ofGDP) 8.3 37.2 49.9 -- -- 280.2 7.5 4.2 Stockstraded,turnoverratio(%) 3.8 2.3 14.6 -- -- 48.8 0.0 2.1 Source: WorldBank2008f. Note: Dataarefor2006,exceptwherenoted.--=notavailable. a. Datafor2004. b. Datafor2005. WorldBankCountryBrief:Namibia 29 Namibia in meeting this target (IMF 2007a). (Tighter regulation of pension and insur- ance fund domestic investment is being considered, however.) The industry typically invests much of the remainder of its assets abroad, citing a lack of domestic investment opportunities. Pension savings are one factor behind Namibia's capital outflows, whereas most middle-income countries have capi- tal inflows. Accesstofinanceremainslimited,however While access to finance in Namibia is better than that in many other Sub-Saharan African countries, it is still limited for several reasons. First, there is pervasive rural poverty and a growing urban population suffering widespread unemploy- ment. Second, the distance between rural villages and urban centers, where most commercial banks are located, limits credit access for small and medium-size firms and for private rural borrowers. Third, basic banking services fees appear high to most of the population. Available estimates indicate that less than 15 percent of the population use transaction, credit, or insurance services (IMF 2007a). The use of savings products is higher, at 45 percent of the population, but this is low by international standards (IMF 2007a). Banks are now extending their outreach through a range of innovative savings and credit products and expanding the supply of microcredit in both urban and rural areas. 30WorldBankCountryBrief:Namibia Namibia Global Links StrongeconomiclinkswithinAfricaandbeyond Namibia has actively pursued international trade and monetary memberships and agreements since independence. It is a member of the Southern African Develop- ment Community (SADC), the Southern African Customs Union (SACU), the Common Monetary Area (CMA), and the Cross-Border Initiative and has been a member of the World Trade Organization since 1995. Namibia's exports qualify for duty-free access to the United States under the African Growth and Opportu- nity Act and to several developed countries via the General- ized System of Preferences. In the beginning of 2008, SADC Figure 12: Namibia's exports go mostly to the EU and South Africa, negotiated an economic partnership agreement with the EU while imports come overwhelmingly from South Africa that replaces the trade portion of the Cotonou Agreement, which expired at the end of 2007. 30 $) SACU, comprising Botswana, Lesotho, Namibia, South in ed 25 Africa, and Swaziland, is the oldest customs union in the world. There are no tariffs on goods produced in and traded asur 20 within member states, and all customs duties in the area (me ts 15 are paid into a fund that is distributed among member states according to a revenue-sharing formula. The IMF expor 10 estimates that receipts to Namibia from SACU totaled otalt 5 approximately $1 billion in 2007, up from $894 million in of % 2006, and that the increase was the key reason for Namib- 0 a y ola da tes an of ia's jump in current account surplus to an estimated $1.4 dom Ital Afric Spain Ang Sta Taiw Rep. King Cana billion in 2007. SACU has negotiated a number of prefer- Germanyed ed South Unit Korea, ential and free trade agreements, including the SACU/ Unit Mercosur agreement concluded in 2004. 90 $) In October 2008, representatives of SADC, the Common in 80 Market for Eastern and Southern Africa (COMESA), and ed 10 the East African Community (EAC) laid the groundwork asur for an umbrella trade area comprising the 26 member coun- 8 (me tries of the three existing blocs. Increased bargaining power ts 6 in global trade deals was an impetus for the agreement. impor 4 SouthAfricaandtheEUareNamibia'slargesttrade otalt 2 of partners % 0 ) Because of historical connections and geographical proxim- a tes a n and we Afric China Sta dom Indi Spai ity, Namibia does most of its international trade with South bab (China Germanyed King Zim ed Switzerl Africa. Taken together, however, EU countries--namely South Unit Kong Unit the United Kingdom, Italy, and Spain--are a bigger export Hong market than South Africa (figure 12). After the extraction Source: WorldIntegratedTradeSolution(WITS)database(WorldBank2008g). WorldBankCountryBrief:Namibia 31 Namibia and tourism industries, the agricultural sector has contributed most significantly to the growth of Namibia's exports in recent years. Goods and services exports amounted to 50 percent of Namibia's GDP in 2007, well above the Sub-Saharan African average of 33 percent. This percent- age is nearly equivalent to that of another diamond exporter, Botswana, which had exports equivalent to 49 percent of GDP. Namibia also shows a high depen- dence on foreign goods, with imports of 54 percent of GDP in 2007, a rate much higher than that of Botswana, Nigeria, or South Africa. Merchandise represents the majority of imports to Namibia; manufactured products represent 78 percent of merchandise imports, food products (mainly cereal) 16 percent, and fuel 3 percent. Tourism represented 15 percent of total exports in 2006, down from 23 percent in 2003 partly because of environmental degradation threatening wildlife and ecosystems. Of merchandise exports, ores and metals (including diamonds and uranium) and food each represent 26 percent, a remarkable shift from 2003, when ores and metals represented a post-2000 low of 7 percent of exports and food reached a post-2000 high of 48 percent of exports. Termsoftradehaveimprovedconsiderablyinrecentyears Namibia's terms of trade have risen sharply, by an estimated one-third, between 2005 and 2007 (IMF 2007b), boosting mineral exports and contributing to a merchandise trade surplus. Namibia's major exports, however, differ significantly from those of its CMA partners. The two major exports are diamonds and fish, which together account for almost 60 percent. By contrast, Lesotho's exports are mostly clothing, while Swaziland's are predominantly edible concentrates, cot- tonseed, and lint. While South Africa's major exports, like Namibia's, are con- centrated in minerals, the composition is quite different. South Africa is a major exporter of gold, iron and steel, and platinum. In addition, South Africa's trade is more diversified than Namibia's, with no individual category of exports exceed- ing 12 percent (IMF 2006). Namibia's average most-favored-nation simple tariff, at 7.8 percent in 2007, is lower than that of both Sub-Saharan Africa and middle-income countries. Almost 51 percent of exports leave the country duty-free, and 82.7 percent of exports involve free trade agreements (World Bank 2008h). Anetoutflowofworkerssince2000,butstillamuchlargerstock ofimmigrantsthanofemigrants Table 9: Immigration numbers were many times higher than emigration Historically, cross-border movement of labor among CMA numbers as of 2005 countries--Lesotho, Namibia, South Africa, and Swazi- Immigration land--has been extensive. In the years following Namibia's Stockofimmigrants 143,275 independence, however, a significant number of Namibian Immigrantsas%ofpopulation 7.1 migrant workers repatriated, leading to a large net inflow of Femalesas%ofimmigrants 47.1 Refugeesas%ofimmigrants 8.9 people across the border. But since 2000, UN population Topsourcecountries(indescendingorder) Angola,SouthAfrica,Zambia,Botswana data show a small net outflow. Though the issue of "brain Emigration drain" of a country's highly educated workforce is problem- Stockofemigrants 15,101 atic for many developing countries, this is not an issue of Emigrantsas%ofpopulation 0.7 concern for Namibia. The emigration rate of the tertiary- Topdestinationcountries(indescending Mozambique,Tanzania,UnitedKingdom, order) UnitedStates,Germany,Australia,Canada, educated workforce is around 3.4 percent, compared with Zambia,NewZealand,Netherlands rates of more than 50 percent for many countries in Africa Source: WorldBank2008d. (World Bank 2008d). 32 WorldBankCountryBrief:Namibia Namibia As of 2005, 0.7 percent of the total population of 2.1 million lived outside the country (table 9). This rate is lower than that of South Africa, where 1.5 percent of the population were emigrants. On the other side of the migration coin, there were 143,275 immigrants, or 7.1 percent of the total population, living in Namibia in 2005, the majority of whom--nearly 70,000--were from Angola. Foreigndirectinvestmentjumpedin2005beforefallingbackslightly in2006 Foreign direct investment (FDI) to Namibia is heavily biased toward the mining sector, which attracted two-thirds of investment during 2003­06. Net FDI inflows were about $342.4 million in 2006 (World Bank 2008f), or 5.2 percent of GDP (by comparison, Sub-Saharan African received inflows of 2.1 percent of GDP in 2006). FDI flows to Namibia have been erratic in recent years, falling from a high of $382 million in 2001 to $158 million in 2003 before beginning to rise again. In the manufacturing sector, most FDI from East Asia has been directed toward taking advantage of spare quota under the textile and apparel trade regime. Gross fixed capital formation was about 30 percent of GDP in 2007. Although Namibia's FDI figures are relatively competitive by regional standards, the country aspires to compete with the most dynamic emerging markets, which usually perform much better. Arisingbutstillverylowlevelofremittances Remittances, a main source of foreign exchange in the developing world, have been on a mostly upward path in Namibia since 2002. Inflows of approximately $16.9 million in 2007 represent a mere 0.25 percent of GDP, compared with the 2.1 percent of GDP in remittances received by Sub-Saharan Africa as a whole in 2007. In general, remittance flows remain tiny compared with inflows of FDI and official development assistance (ODA) (figure 13). TheUnitedStatesandGermanyarethelargestsourcesofofficial developmentassistance In 2006, Namibia received $145.3 Figure 13: FDI to Namibia outpaces official development assistance and workers' remittances by a million of ODA (2.2 percent of GNI). wide margin The United States recently became 400 Namibia's largest donor, followed by Workers'remittancesandcompensationofemployees,received Germany. Namibia was selected as a Foreigndirectinvestment,netinflows 350 Officialdevelopmentassistance focus country for the U.S. President's Emergency Plan for AIDS Relief 300 (PEPFAR) in 2003. Since then, more 250 than $125 million has been provided through this channel alone. Namibia 200 millions received an additional $128 million $ 150 through the Global Fund to Fight AIDS, Tuberculosis and Malaria, of 200 which $105 million were earmarked 50 for HIV/AIDS. In addition, Namibia recently became eligible for the U.S. 0 Millennium Challenge Account 2002 2003 2004 2005 2006 (MCA), which announced in mid- Source: WorldBank2008f. WorldBankCountryBrief:Namibia 33 Namibia 2008 that it will disburse slightly more than $300 million to the country over the next five years. There are, however, concerns in the donor community on the efficacy of the MCA money because of insufficient absorptive capacity in Namibia. Though there are not regular donor roundtables, the United Nations Development Programme has led the coordination process for ODA. Higherforeignexchangeearningsandgrowingforeignreserves Namibia achieved a very large balance of payments surplus in 2006, while foreign exchange reserves rose to the highest level since independence. The latter nearly doubled, to around $850 million in 2007 from $450 million in 2006, following on the increases in SACU revenues and mineral export receipts (IMF 2008a). Expected further increases in diamond production and mineral exports in 2007 will add to already increasing foreign exchange earnings, and hence reserves, despite the volatility of SACU revenues. The25percentdebtceilingwasundershotin2007/08 After reaching almost 35 percent of GDP in fiscal year 2005/06, Namibia's pub- lic debt has dropped steadily in the years since, and in fact undershot the 25 percent debt ceiling by 2 percentage points in 2007/08 (IMF 2008b). Despite forecasted declines in medium-term SACU and mining revenue receipts, public debt is not expected to breach the debt ceiling. For 2002, public and publicly- guaranteed external debt, most of which was on concessional terms, accounted for only about 12 percent of GDP. Given its lower-middle-income status and its relatively low level of indebtedness, Namibia is not a member of the heavily indebted poor countries (HIPC), nor is it eligible for debt relief. As of October 2008, Fitch gave Namibia a credit rating of BBB­ (just below investment grade) for long-term foreign currency issuer default risk, F314 for short-term sovereign foreign currency issuer default risk, and BBB for long-term local currency default risk. The figures have shown impressive improvements and are better than those of Nigeria and Ghana, which received ratings of BB­ and B+, respectively, for long-term sovereign default risk in 2008. Namibia's rela- tively better ratings are partly the result of its external debt being far below the median for countries rated BBB. 34WorldBankCountryBrief:Namibia Namibia Namibia and the World Bank Group Namibia, one of the more recent countries to join the Bank Group, became a member of the International Bank for Reconstruction and Development (IBRD), International Finance Corporation (IFC), and the Multilateral Investment Guar- antee Agency (MIGA) in 1990. In the initial years of membership, a number of analytical and advisory activities were undertaken, some jointly with the Namib- ian government. WorldBankportfolio The World Bank has provided limited assistance on HIV through an Institutional Development Fund (IDF) grant. Namibia also benefits from technical assistance from the Global AIDS Monitoring and Evaluation Team and from capacity build- ing initiatives provided to middle-income countries in Southern Africa. In May 2007, the first-ever Interim Strategy Note (ISN) for the period 2007­09 was presented to the World Bank's Board of Executive Directors. The first and only IBRD lending operation for Namibia--a Development Policy Loan ($7.5 million)--was approved in the same month. In July 2008, the loan was disbursed as 58.2 million South African rand, the first time the IBRD has ever disbursed a loan in an African currency (the South African and Namibian currencies are equivalent in value). And in November 2008, a second Development Policy Loan Table 10: Projects in Namibia supported by IBRD was approved (table 10). and the GEF, fiscal 2008­mid-09 Namibia has benefited from two Global Environmental Facility (GEF) grants Date of $ Project name and description approval millions since 2004--the Namibian Coast Conservation and Management Project and the Integrated Community-Based Ecosystem Management Project--and a third is Thesecondloaninthe 11/18/2008 7.5 Education and Training under preparation. Sector Improvement Program (ETSIP) serieswill InternationalFinanceCorporationportfolio supporteducationand trainingsector. The International Finance Corporation (IFC) has been involved in several invest- Note: Fiscalyears2008and2009representtheperiodfromJuly1,2007 ments in Namibia: a fisheries project (Pescanova) and an equity investment in the toJune30,2009. country's first local life insurance company (Namibia Life). An IFC loan also sup- ported the construction of a 110-room Best Western hotel in Northern Namibia. In terms of technical assistance, IFC has worked with the Namibian Agronomic Table 11: Projects in Namibia supported by the Board to raise funds for a feasibility study of a cotton ginning industry. In August IFC, fiscal 2008­mid-09 2008, the IFC approved a $10 million loan for the construction of a 124-room Date of $ hotel in Windhoek, the only project that has been undertaken in Namibia within Project name and description approval millions the past two fiscal years. United Africa Group willuse 08/28/2008 10 anIFCloantobuilda five-star,124-roomhotelin MultilateralInvestmentGuaranteeAgencyportfolio Windhoek Currently, the Multilateral Investment Guarantee Agency (MIGA) does not have Note: Fiscalyears2008and2009representtheperiodfromJuly1,2007 exposure in Namibia. toJune30,2009. WorldBankCountryBrief:Namibia 35 Namibia Notes 1. Households are classified as poor if food consumption makes up 60 percent or more of total household consumption, and extremely poor in cases where food consumption is 80 percent or more, according to NHIES. 2. The HDI is a composite measure assessing three dimensions of human development: life expectancy, education, and income. 3. The Gini index measures income inequality on a scale of 0­100, with 0 representing perfect equality and 100 representing perfect inequality. 4. Gini data from World Bank (2007b) and analysis in World Bank (2007e) indicates that the magnitude of the drop could be explained by a number of factors, including greater participa- tion in economic activities by the previously disadvantaged; expansion of safety net coverage in public schemes such as old age pensions and grants for orphans and vulnerable children; an increase in the production and consumption of mahangu (pearl millet), a main food item in Namibia, compared with that in the 1993/94 survey year, which was characterized by a drought; and an increase in the internal transfer of money from the urban to the rural sectors (World Bank 2007e). 5. The Ministry of Health and Social Services conducts HIV sentinel surveys every two years, using pregnant women visiting antenatal clinics (Namibia, Ministry of Health and Social Services 2007). 6. Using hotel and restaurant data from balance of accounts alone to evaluate sector contribution grossly underestimates the tourism sector's size (see World Bank 2008a for more background on this topic). 7. The VCF, commonly known as the "red-line," was erected in the early 1960s to separate the disease-free areas of the South from predominantly communal farms of the North. The diseases in question are foot-and-mouth disease and contagious bovine pleuropneumonia. Many areas in the North have been disease-free for years. 8. Under the CMA, Namibia, Lesotho, and Swaziland peg their currencies to the South African rand, which is also legal tender in their territories. The CMA also provides for free capital mobility. 9. Namibia's stated fiscal target is for the deficit to not exceed 3 percent of GDP. 10. Toward this end, a land-use planning and environmental sustainability study is under way (World Bank 2006). 11. IIED used Namibia's Natural Resources Accounting (NRA) to determine how two sectors of the economy--agriculture and fishing--would respond to climatic changes. These projections underestimate the impact because they ignore the effect on sectors such as health, infrastruc- ture, and energy. It also examined Namibia's Social Accounting Matrix (SAM) to analyze which groups in Namibia would be most affected. 12. Conducted in June 2006, the survey covered 329 SMLEs and 100 microenterprises in Windhoek and Walvis Bay and included sectors such as retail trade and manufacturing. Microenterprises included some in the informal sector. 13. Higher tariffs (above 40 percent) apply to tobacco (35­45 percent), clothing (up to 40 percent), pineapples (55 percent), tires (43 percent), beef (specific tariff equivalent to more than 40 percent ad valorem), and sheep and goat meat (specific tariff equivalent to more than 40 percent ad valorem). 14. Fair credit quality: the capacity for timely payment of financial commitments is adequate; however, near-term adverse changes could result in a reduction to noninvestment grade. 36WorldBankCountryBrief:Namibia Namibia References Bertelsmann Stiftung. 2007. "Namibia Country Report." In Bertelsmann Transformation Index (BTI) 2008. Gütersloh: Bertelsmann Stiftung. http://bti2006.bertelsmann-transformation-index.de/ 66.0.html?L=1. Convention on Biological Diversity. 2008. "Namibia Country Profile." Montreal. http://www.cbd. int/countries/ Critical Ecosystem Partnership Fund. 2004. "Namibia Declares Sperrgebiet as National Park." http://www.cepf.net/xp/cepf/news/newsletter/2004/june_topstory.xml. Clark, B. M., W. F. Meyer, C. Ewart-Smith, A. Pulfrich, and J. Hughes. 1999. "Integrated Overview of Diamond Mining in the Benguela Current Region." AEC Report 1016/1, Anchor Environ- mental Consultants, University of Cape Town, South Africa. http://www.bclme.org/factfig/ diamond_mining.asp. 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WorldBankCountryBrief:Namibia 39 Namibia Data Appendix Lower- Sub- middle- Saharan income Africa Namibia group region 1990 2000 2007 2007 2007 People and poverty Populationstructure Population(millions) 1.4 1.9 2.1 3,437 800 Populationgrowth(%) 4 2 1 1 2 Populationdensity(peoplepersquarekilometer) 2 2 3 100 34 Urbanpopulation(%oftotal) 28 32 36 42 36 Populationages0­14(%oftotal) 45 42 37 27 43 Populationages15­64(%oftotal) 52 54 59 67 54 Populationages65andabove(%oftotal) 3 3 4 6 3 Incomeandpoverty Grossnationalincomepercapita,Atlasmethod($) 1,710 1,880 3,360 1,887 952 Grossnationalincomepercapita,PPP($) 2,530 3,510 5,120 4,543 1,870 Populationbelownationalpovertyline(%) -- -- -- -- -- Urbanpopulationbelownationalpovertyline(%) -- -- -- -- -- Ruralpopulationbelownationalpovertyline(%) -- -- -- -- -- Incomeshareheldbylowest20percentofearners(%) -- -- -- -- -- Fertilityandmortality Lifeexpectancyatbirth(years) 62 54 52 69 51 Totalfertilityrate(birthsperwoman) 5.7 3.9 3.3 2.3 5.2 Adolescentfertilityrate(birthsper1,000womenages 15­19) -- 79 61 39 121 Birthsattendedbyskilledhealthstaff(%oftotal) 68 76 -- 69 45 Maternalmortalityrate(modeledestimate,per100,000 livebirths) -- -- 210 300 900 Infantmortalityrate(per1,000) 60 50 45 41 94 Under-fivemortalityrate(per1,000) 86 69 61 54 157 Health Malnutritonprevalence,weightforage(%ofunderage5) -- 20 -- 25 27 Malnutritionprevalence,heightforage(%ofunderage5) -- 30 -- 35 44 Childimmunization,measles(%ofages12­23months) 57 69 63 77 72 HIVprevalencerate(%populationofages15­49) -- -- 15.3 0.3 5.2 Contraceptiveprevalencerate(%ofmarriedwomenages 15­49) 29 44 -- 69 22 Incidenceoftuberculosis(per100,000people) 306 664 767 135 368 Educationandliteracy Primaryschoolenrollment(%net) 86 75 76 90 70 Primarycompletionrate,total(%ofrelevantagegroup) -- 82 76 92 60 Secondaryschoolenrollment(%gross) 45 57 57 66 32 Ratioofgirlstoboysinprimaryandsecondaryschool(%) 106 103 104 96 87 Tertiaryschoolenrollment(%gross) 3 7 6 19 5 Literacyrate,youth(%ofpopulationages15­24) 88 92 -- 96 70 Literacyrate,adult(%ofpopulationages15andabove) 76 85 -- 89 59 Economy Sizeandstructureofeconomy GDP($billions) 2.4 3.4 6.7 6,888 843 GDPpercapita($) 1,658 1,816 3,251 2,004 1,054 40WorldBankCountryBrief:Namibia Namibia Lower- Sub- middle- Saharan income Africa Namibia group region 1990 2000 2007 2007 2007 GDPgrowth(annual%) 2.5 3.5 5.9 9.7 6.2 Householdfinalconsumptionexpenditure(%ofGDP) 51 57 50 49 67 Governmentfinalconsumptionexpenditure(%ofGDP) 31 29 25 13 16 Crosscapitalformation(%ofGDP) 34 20 30 36 22 Exportsofgoodsandservices(%ofGDP) 52 46 50 37 33 Importsofgoodsandservices(%ofGDP) 67 51 55 34 36 SourceofGDP Valueaddedinagriculture(%ofGDP) 12 11 11 13 15 Valueaddedinindustry(%ofGDP) 38 28 30 41 32 Valueaddedinmanufacturing(%ofGDP) 14 11 11 25 15 Valueaddedinservices(%ofGDP) 50 61 59 46 54 Centralgovernmentbudget Centralgovernmentrevenue(%ofGDP) 31.3 32.8 -- 15.2 -- Centralgovernmentexpenditure(%ofGDP) 36.2 31.6 -- 15.6 -- Centralgovernmentcashsurplus/deficit(%ofGDP) ­2.6 ­3.0 -- ­1.4 -- Inflation Inflation(annual%changeinconsumerpriceindex) -- -- 6.7 -- -- Laborforce Laborforce(millions) 0.4 0.6 0.7 1647 323 Unemploymentrate(%oflaborforce) 19.1 20.3 -- 5.8 -- Environment Agriculture Agriculturalland(%landarea) 47 47 47 47 44 Irrigatedland(%ofcropland) 1 1 -- -- -- Fertilizerconsumption(100grams/hectareofarableland) -- 4 19 1,729 -- Forests Forests(thousandsofsquarekilometers) 88 80 77 8,609 6,247 Deforestation(averageannual%,1990­2005) -- -- 0.9 0.1 0.7 Nationallyprotectedarea(%oflandarea) -- -- 5.6 11.8 11.3 Waterandsanitation Freshwaterwithdrawal(%ofinternalresources) -- 4.8 -- -- -- Internalfreshwaterresourcespercapita(cubicmeters) -- -- 3,070 4,200 5,062 Freshwaterwithdrawalusedforagriculture(%) -- 71 -- 75 87 Energy GDPperunitofenergyuse(2005PPP$/kilogramoil equivalent) 8.1 7.1 6.7 3.8 2.9 Energyusepercapita(kilogramsoilequivalent) -- 549 683 968 681 Energyfrombiomassproductsandwaste(%oftotal) 16.0 16.8 13.5 16.0 56.3 Electricitygeneratedusingfossilfuel(%oftotal) 4.8 2.4 3.0 82.5 79.3 Electricitygeneratedbyhydropower(%oftotal) 95.2 97.6 97.0 16.6 20.1 Emissionsandpollution CO2emissionsperunitofGDP(kilograms/2005PPP$) 0.0 0.2 0.3 0.8 0.5 CO2emissionspercapita(metrictons) 0.0 0.9 1.2 2.6 0.9 CO2emissionsgrowth(%,1990­2004) -- -- -- 71.1 46.3 Particulatematter(urban-population-weightedaverage, micrograms/cubicmeter) 74 45 42 71 60 Passengercars(per1,000people) 39 36 -- -- -- Unemploymentrate(%oflaborforce) 19.1 20.3 -- 5.8 -- Business environment Generalenvironment Timetostartabusiness(days) -- -- 99 41 55 Procedurestostartabusiness(number) -- -- 10 10 11 Firingcost(weeksofwages) -- -- 24.0 51.9 66.8 Closingabusiness(yearstoresolveinsolvency) -- -- 1.5 3.5 3.4 Totaltaxrate(%ofprofit) -- -- 26.5 44.1 68.2 Highestmarginaltaxrate,corporate(%) -- 35 35 -- -- Businessentryrate(newregistrationsas%oftotal) -- -- -- 7.5 6.6 continued WorldBankCountryBrief:Namibia 41 Namibia Lower- Sub- middle- Saharan income Africa Namibia group region 1990 2000 2007 2007 2007 Infrastructure Pavedroads(%oftotalroads) 10.8 13.6 -- -- -- Electricpowerconsumption(kilowatthourspercapita) 1,047 1,270 1,428 1,148 542 Poweroutagesinatypicalmonth(number) -- -- 1.7 -- -- Accesstoimprovedwatersource(%totalpopulation) 57 81 93 88 58 Rural(%ruralpopulation) 42 72 90 82 46 Urban(%urbanpopulation) 98 99 99 96 81 Accesstoimprovedsanitation(%totalpopulation) 26 32 35 54 31 Rural(%ruralpopulation) 8 15 18 42 24 Urban(%urbanpopulation) 73 68 66 71 42 Informationandcommunicationtechnology Fixedlineandmobilesubscribers(per100people) 4 10 45 53 25 Mobilephonesubscribers(per100people) 0 4 39 37 23 Populationcoveredbymobiletelephony(%) -- 85 95 80 54 Internetusers(per100people) 0.0 1.6 4.9 15.8 4.4 Broadbandsubscribers(per100people) -- 0.0 0.0 2.4 0.0 Financeandbanking Depositmoneybanks'assets(%ofGDP) -- 46.5 56.3 -- -- Totalfinancialsystemdeposits(%ofGDP) -- 35.2 38.8 -- -- Bankcapitaltoassetratio(%) -- 8.7 8.3 9.6 -- Banknonperformingloanstototalgrossloans(%) -- 3.4 2.9 4.2 -- Domesticcredittotheprivatesector(%ofGDP) 22.6 45.6 65.3 78.6 47.1 Marketcapitalizationoflistedcompanies(%ofGDP) 0.7 9.1 10.4 144.5 149.8 Realinterestrate(%) 17.9 4.2 12.0 -- -- Interestratespread(lendingminusdepositrate, percentagepoints) 10.6 7.9 4.9 7.3 9.2 Global links Externaltrade Tradebalance($millions) ­364.1 ­188.5 ­302.0 ­12,540 -- Currentaccountbalance($millions) 27.6 227.1 1,064.4 15,671 ­22,374 Currentaccountbalance(%ofGDP) 1.2 6.7 16.2 -- -- Exchangerate(localcurrencyunitsper$) 2.6 6.9 7.0 -- -- Capitalflow Foreigndirectinvestment,netinflows($millions) -- -- -- 162,047 15,408 Foreigndirectinvestment,netinflows(%ofGDP) -- -- -- 2.9 2.1 Workers'remittancesreceived($millions) 13.0 9.0 16.9 140,091 16,166 Workers'remittancesreceived(%ofGDP) 0.6 0.3 0.3 2.1 2.1 Officialdevelopmentassistance($millions) 119.6 152.3 145.3 31,185 40,490 Officialdevelopmentassistance(%ofGDP) 5.1 4.5 2.2 0.6 5.5 Portfolioinvestment,equity(netflows,$millions) -- -- -- 62,728 10,200 Portfolioinvestment,bonds,publicandpublicly guaranteed+privatenonguaranteed(netflows, $millions) -- -- -- 16,811 5,802 Externaldebtanddebtservice Totalexternaldebt($millions) -- -- -- 1,170,117 193,480 Short-termdebt($millions) -- -- -- 347,063 44,399 Externaldebt(%ofGNI) -- -- -- 19.6 26.4 Externaldebt(%ofexportsofgoodsandservices) -- -- -- 44.4 59.8 Totaldebtservice(%ofGNI) -- -- -- 2.9 3.1 Foreignreserves Totalreservesminusgold($millions) 49.7 259.8 896.0 2,291,928 136,696 Totalreservesinmonthsofimports 0.3 1.7 1.6 12.1 7.0 Source:WorldBank2008f. Note:--=notavailable. 42WorldBankCountryBrief:Namibia ISBN 978-0-8213-7870-0 SKU 17870