Document of The World Bank Group FOR OFFICIAL USE ONLY Report No. CPF0000008 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL FINANCE CORPORATION MULTILATERAL INVESTMENT GUARANTEE AGENCY COUNTRY PARTNERSHIP FRAMEWORK FOR THE REPUBLIC OF NAMIBIA FOR THE PERIOD FY25-FY29 December 3, 2024 Southern Africa Country Management Unit Southern and Eastern Africa Region The International Finance Corporation Southern Africa Region The Multilateral Investment Guarantee Agency This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank Group authorization. The date of the last Performance and Learning Review was April 4, 2018 CURRENCY EQUIVALENTS Unit of Currency: Namibian Dollar (N$) N$17.7 = US$1 (as of October 2024) FISCAL YEAR (April 1 – March 30) ABBREVIATIONS AND ACRONYMS ASA Advisory Services and Analytics NAMCOR National Petroleum Corporation of Namibia CCDR Country Climate and Development Report NDC Nationally Determined Contribution CIWA Cooperation in International Waters in Africa NDP National Development Plan CPF Country Partnership Framework NEET Not in Education, Employment, or Training CPS Country Partnership Strategy NHIES Namibia Household Income and Expenditure Survey CPSD Country Private Sector Diagnostic NHP National Housing Policy Namibia Investment Promotion and Development CSA Climate Smart Agriculture NIPDB Board DBN Development Bank of Namibia NPC National Planning Commission DDO Deferred Drawdown Option NREP National Renewable Energy Policy ECDE Early Childhood Development and Education NSA Namibia Statistics Agency EDGE Excellence in Design for Greater Efficiencies PDU Performance Delivery Unit e-GP eGovernment Procurement PFM Public Financial Management ESF Environment and Social Framework PFR Public Finance Review FDI Foreign Direct Investment PIU Project Implementation Unit GBV Gender-Based Violence PLR Performance and Learning Review GCP Global Challenge Program PPP Public-Private Partnership GDP Gross Domestic Product RAS Reimbursable Advisory Services GEF Global Environment Facility RE Renewable Energy GH Green Hydrogen REFIT Renewable Energy Feed-in Tariff GRN Government of the Republic of Namibia SACU Southern Africa Customs Union HCI Human Capital Index SCD Systematic Country Diagnostic HIV Human Immunodeficiency Virus SDG Sustainable Development Goal HLO High-Level Outcome SOE State-Owned Enterprise International Bank for Reconstruction and IBRD SOP Sustainable Oceans Plan Development IFC International Finance Corporation SPI Statistical Performance Indicators ILO International Labor Organization TA Technical Assistance IPF Investment Project Finance TEES Transmission Expansion and Energy Storage M&E Monitoring and Evaluation TVET Technical and Vocational Education and Training MAPS Methodology for Assessing Procurement Systems UMIC Upper Middle-Income Country MDTF Multi-Donor Trust Fund UN United Nations MFPE Ministry of Finance and Public Enterprises WBG World Bank Group MoHSS Ministry of Health and Social Services WDI World Development Indicators MIGA Multilateral Investment Guarantee Agency IBRD IFC MIGA Vice President: Victoria Kwakwa Sérgio Pimenta Ethiopis Tafara Director: Satu Kristiina Kahkonen Cláudia Conceição Șebnem Erol Madan Task Team Leader: Thomas Buckley Mariama Cire Sylla Jessica Charles Wade FY25-29 COUNTRY PARTNERSHIP FRAMEWORK FOR NAMIBIA Contents 1 INTRODUCTION ..................................................................................................................................... 1 2 COUNTRY CONTEXT AND DEVELOPMENT AGENDA ............................................................................. 2 2.1 Social and Political Context ......................................................................................................... 2 2.2 Recent Economic Developments ................................................................................................. 3 2.3 Poverty and Shared Prosperity on a Livable Planet..................................................................... 6 2.4 Main Development Challenges and Growth Opportunities ........................................................ 8 3 WORLD BANK GROUP PARTNERSHIP FRAMEWORK ........................................................................... 11 3.1 Government Program and Medium-term Strategy ................................................................... 11 3.2 Proposed WBG Country Partnership Framework...................................................................... 12 3.3 Objectives supported by the WBG Program ............................................................................. 16 3.4 Implementing the CPF ............................................................................................................... 22 4 MANAGING RISKS TO THE CPF PROGRAM .......................................................................................... 24 Annex 1: CPF Results Matrix ....................................................................................................................... 26 Annex 2: Completion and Learning Review ................................................................................................ 36 Annex 3: Summary of Findings from the FY24 Namibia Country Opinion Survey ...................................... 58 Annex 4 Operations Portfolio (IBRD and Grants)........................................................................................ 59 Annex 5 Statement of IFC’s Held and Disbursed Portfolio ......................................................................... 60 Annex 6 MIGA’s Guarantee Portfolio ......................................................................................................... 61 Table 1: Key Macroeconomic Indicators ....................................................................................................... 5 Table 2: Risks to the CPF Program .............................................................................................................. 25 Figure 2-1 GDP growth has weakened in the last decade, compounded by the COVID-19 shock ............... 3 Figure 2-2 Commodities are an important source of income and growth ................................................... 3 Figure 2-3 The services sector share of jobs has expanded.......................................................................... 4 Figure 2-4 Education attainment levels are low ........................................................................................... 4 Figure 2-5 Investment underpinned GDP growth in 2023 ............................................................................ 4 Figure 2-6 However, Namibia’s investment rate has been below peer averages historically ...................... 4 Figure 2-7: The poverty rate is high for the country’s level of development … ........................................... 7 Figure 2-8: Namibia is the second most unequal country in the world........................................................ 7 Figure 3-1: CPF High Level Outcomes and Objectives ................................................................................ 12 FY25-29 COUNTRY PARTNERSHIP FRAMEWORK FOR NAMIBIA 1 INTRODUCTION 1. Since gaining independence in 1990, Namibia has made substantial economic progress, characterized by structural transformation and strong growth. The country has diversified its economy, decreasing reliance on the mining sector while expanding the services sector, which has been accompanied by significant urbanization and internal migration. Governance improvements and foreign direct investment (FDI), particularly in extractive industries, have bolstered this growth. Investments in infrastructure, education, and public health have led to significant poverty reduction and increased access to essential services, positioning Namibia as an upper-middle-income country. The nation's efforts have also included advancements in combating Human Immunodeficiency Virus (HIV) and enhancing the educational system. 2. However, Namibia still faces deep-seated challenges that hinder further progress. The legacy of colonial rule has resulted in significant inequalities, with land and economic power concentrated among a small segment of the population and persistent disparities in access to services and opportunities. The country remains one of the most unequal in the world, with stark geographical and socio-economic divides. Despite progress in reducing poverty, many Namibians lack basic services, and the country lags in health and education outcomes compared to other upper-middle-income nations. The labor market's duality, with a sophisticated formal sector alongside a large, low-productivity informal sector, exacerbates high unemployment rates, particularly among youth and women. These challenges highlight the complex and multidimensional nature of poverty in Namibia, necessitating continued efforts to address systemic inequalities and promote inclusive development. 3. In this context, the Government aims to accelerate growth and employment through an ambitious strategy of green industrialization. The country’s natural endowments position it well to pursue such a strategy, focusing on leveraging its abundant renewable energy resources, particularly solar and wind power as well as its reserves of copper, lithium, nickel, cobalt, and rare earth elements that are essential for clean energy technologies such as wind turbines, electric vehicles, and renewable energy storage. Namibia is investing in the development of green hydrogen (GH), produced using renewable energy, which can serve as a clean fuel for various industries and transportation sectors. This includes the potential for GH to be used in the production of green shipping fuels, contributing to the decarbonization of maritime transport. The Government’s vision is for GH production to trigger the development of new upstream and downstream economic activities which will allow for higher valued added, export diversification, and job creation. 4. This Country Partnership Framework (CPF) sets forth the World Bank Group (WBG) strategy for supporting Namibia’s goals to reduce poverty and inequality as outlined in its national development plans. Although the WBG has historically had a limited engagement in Namibia, the authorities have signaled interest in an expanded role for the WBG, including International Bank for Reconstruction and Development (IBRD) financing and International Financing Corporation (IFC) investment. In the context of what is hoped will be a growing engagement, the FY25-29 CPF outlines a strategy for supporting the Government’s development aspirations featuring two High-Level Objectives (HLOs): (i) Increased job creation; and (ii) Improved access to quality services. These objectives build on previous WBG engagement under the FY14-20 Country Partnership Strategy (CPS) while emphasizing current government priorities. The strategy anticipates IBRD lending of up to US$400 million over FY25-26 and potential International 1 IFC financing of up to US$200 million over the CPF period, as well as advisory services targeting priority sectors where the WBG has a comparative advantage. Planned IBRD lending would be limited to selected State-Owned Enterprises (SOEs). The CPF builds on recent Advisory Services and Analytics (ASA), including a Systematic Country Diagnostic (SCD) and Country Private Sector Diagnostic (CPSD). The priorities set forth in this CPF have been endorsed by Namibia’s Cabinet and will support the priorities of the government as set forth in its Vision 2030, issued in 2004, the Second Harambee Prosperity Plan, 2020- 2025, and the upcoming National Development Plan 6 to be issued in March 2025. Preparation of this CPF was delayed, first by the COVID-19 pandemic and later while the Government and Bank reached agreement on the priorities and instrument for Bank engagement. 5. The proposed CPF operationalizes key aspects of the WBG Evolution. The CPF aims to deliver solutions and impact at scale, consistent with the WBG’s evolution and updated mission to end extreme poverty and boost shared prosperity on a livable planet by: (a) operationalizing the “One World Bank Group” approach through the Joint Country Representation model with a focus on enabling and mobilizing private capital through the full range of IBRD, IFC, and Multilateral Investment Guarantee Agency (MIGA) instruments; (b) a focus on outcomes using the WBG Corporate Scorecard; (c) aligning country support with global challenges; and, (d) more strongly leveraging partnerships with other development partners. 2 COUNTRY CONTEXT AND DEVELOPMENT AGENDA 2.1 Social and Political Context 6. Namibia is an upper middle-income country located on the west coast of Southern Africa. The country is mostly semi-desert and is covered by savanna and dry woodlands. It has a population of approximately 3 million people and a land area of 825,229 square kilometers. With a countrywide density of 3.6 persons per square kilometer, population density is among the lowest in the world. Namibia’s arid climate, coupled with a high evaporation rate, makes it the driest country in sub-Saharan Africa. Namibia’s economy is primarily based on mining, agriculture, and tourism, with mining being the biggest contributor to the country's income. Namibia is a multi-racial and multi-ethnic country with at least 11 ethnic groups. The long period of colonial rule and racial segregation created stark divides in poverty levels and a lack of access to basic services for most of the population, giving rise to the country’s high levels of unemployment, poverty, and income inequality. 7. Since achieving independence in 1990, Namibia has made significant progress towards long-term development. The country has made strides in overcoming a legacy of exclusion, biases in the development of state capabilities, and access to public goods. Namibia has also established public institutions that increased civic engagement and participation; and achieved significant socio-political stability. Driven by the global commodity super cycle and a rapid expansion in public expenditure, Namibia embarked upon a rapid growth acceleration between 2000 and 2015, outperforming its African peers. During these fifteen years, poverty rates halved, falling from 35.9 percent in 2003 to 15.6 percent in 20151, , while inequality decreased with the Gini coefficient decreasing from 0.64 to 0.59. Nevertheless, the country still faces serious economic, social, and environmental challenges, which include high levels of poverty, income inequality, an unskilled labor force, lack of competitiveness, and vulnerability to climate change. Poverty is projected to have increased to around 17 percent in 2024. 8. Namibia has maintained a strong record of political stability. The country has held regular, peaceful elections, with a consistent adherence to democratic principles and respect for the rule of law. 1 Based on the International Poverty Line (IPL) of US$2.15 per person per day (2017 PPP) 2 The ruling party, SWAPO (South West Africa People's Organization), has remained in power since independence, but the political environment allows for multiparty participation and opposition voices in the National Assembly. Namibia's stable political climate has been supported by a well-defined constitution, a commitment to human rights, and a relatively independent judiciary, contributing to its reputation as one of Africa's most stable democracies. The November 2024 elections saw SWAPO once again achieve victory, securing the Presidency and a majority of seats in Parliament. In this context, the country’s main development goals are expected to remain in place when the new government takes office in March 2025. 2.2 Recent Economic Developments 9. The Namibian economy is rebounding from years of negative growth in 2017-19 and the COVID-19 pandemic. Gross Domestic Product (GDP) growth averaged 4.4 percent between 2001 and 2015, favored by the commodity super cycle, which spurred mining investment and associated services and boosted exports. During this period, growth was primarily driven by investment and a growing labor force, while total factor productivity declined due to persistent structural bottlenecks, including highly segmented input and output markets and severe skills shortages. Resource wealth allowed for an increase in public spending, which enabled expanded household support and the delivery of public services. Growth came to a halt in 2016 as the commodity cycle ended, major investment projects were completed, and a severe drought took its course. At the same time, the government initiated a process of fiscal consolidation to address the rapidly rising debt ratio which more than doubled from 2010 to 2015. Following the sharp COVID-induced economic contraction of -8.1 percent in 2020, the economy rebounded, growing at 3.6 percent and 5.3 percent in 2021 and 2022, respectively, driven by increased global demand for diamonds and uranium. Although the authorities successfully contained spending until the COVID-19 pandemic, reducing public debt proved difficult in a context of low growth. Debt increased markedly during the pandemic as spending increased to support households. As a result, the debt-to-GDP ratio increased rapidly from around 45 percent of GDP in 2016 to 72.8 percent of GDP in 2022. Figure 2-1 GDP growth has weakened in the last Figure 2-2 Commodities are an important source of decade, compounded by the COVID-19 shock income and growth Sources: National Statistics Agency; World Bank. Sources: Bank of Namibia; World Bank. 3 Figure 2-3 The services sector share of jobs has Figure 2-4 Education attainment levels are low expanded Sources: ILO; World Bank. Sources: World Development Indicators (WDI), World Bank. 10. Growth is estimated to have reached 4.2 percent of GDP in 2023 largely underpinned by the continued strong performance of the mining sector. Unlike in 2022, when mining output was supported by a one-off increase in diamond production from 2022Q2, in 2023 sustained strong growth in the sector was driven by an increase in oil and gas exploration activities. In the non-mining sector, performance was mixed – agriculture, manufacturing, construction, and public administration contracted, weighing negatively on GDP growth. From the demand side, economic growth was driven by investment, while household consumption eased amid high inflation, substantial increases in interest rates since the beginning of 2022, and estimated weak employment growth. Namibia’s recovery from the COVID-19 pandemic shock has been uneven, with output in several sectors remaining below pre-pandemic levels even as aggregate real GDP now exceeds pre-pandemic levels. Figure 2-5 Investment underpinned GDP growth in 2023 Figure 2-6 However, Namibia’s investment rate has been below peer averages historically Sources: National Statistics Agency; World Bank. Sources: National Statistics Agency; WDI; World Bank. 11. Absent renewed investment in the mining sector, growth is expected to average around 3.6 percent over the medium term. This projection is subject to high uncertainty as the economy could be 4 impacted by the acceleration of the implementation of several large-scale projects in the energy and mining sectors, specifically on oil and gas and GH (see Box 1). If these projects move into the construction phase during this period, the growth rate of the economy could substantially accelerate through a combination of foreign direct investment inflows and spillovers to the local economy. Growth in the non- mineral economy is expected to gain traction, especially in sectors that were severely affected by the pandemic, including tourism. Household consumption growth is expected to strengthen, benefiting from improved income growth and lower inflation, which is projected to average around 4.5 percent by 2026. Debt will decline over the medium-term, driven by debt repayments and growth. However, it will remain high, in the absence of tax policy reforms to broaden the tax base, and structural difficulties in aligning spending with revenues. Downside risks include climate shocks, reduced demand for diamonds, global geopolitical tensions impacting exports, all entailing fiscal pressures that could hinder debt reduction efforts. Low regional growth, a failure to enact reforms to diversify the economy and global delays in reaching net zero could also curtail Namibia’s growth potential. Table 1: Key Macroeconomic Indicators, 2022-2029 2022 2023e 2024f 2025f 2026f 2027f 2028f 2029f Projections National accounts and prices (annual percentage change) Real GDP, at constant market 5.3 4.2 3.1 3.7 3.9 3.9 3.9 3.9 prices Private consumption 9.5 4.7 5.2 5.5 5.6 5.6 5.6 5.6 Government consumption 0.6 1.0 1.4 0.7 0.5 0.4 0.1 -0.1 Gross fixed capital formation 10.0 69.3 10.3 10.7 11.1 10.6 10.6 10.6 Exports, goods and services 22.9 14.1 1.2 4.6 4.8 4.8 4.8 4.8 Imports, goods and services 23.0 22.7 6.1 7.5 7.5 7.5 7.5 7.5 Real GDP, at constant factor 4.6 4.0 3.1 3.7 3.9 3.9 3.9 3.9 prices Agriculture 1.7 -3.4 -1.9 1.1 2.0 1.5 1.5 1.5 Industry 11.3 9.2 4.7 5.5 6.0 6.0 6.0 6.0 Services 2.2 2.7 3.0 3.1 3.1 3.1 3.1 3.1 Inflation (consumer price index) 6.1 5.9 4.6 4.5 4.5 4.5 4.5 4.5 Fiscal accounts (percent of GDP) Fiscal balance -5.3 -3.6 -4.3 -4.9 -4.6 -4.5 -4.0 -3.7 Primary balance -0.8 1.8 0.9 -0.1 0.1 0.2 0.7 1.0 Revenues and grants 30.3 34.8 34.6 31.6 30.4 30.2 30.2 30.2 Expenditure 35.6 38.4 38.9 36.4 35.0 34.6 34.2 33.9 Total Public debt 70.5 70.1 69.0 68.1 66.8 66.7 66.3 65.5 Balance of payments (percent of GDP) Current Account Balance -12.9 -14.8 -15.1 -15.1 -14.5 -14.4 -14.4 -14.4 Exports (f.o.b.) 42.9 46.1 43.1 42.3 42.6 42.4 42.2 41.9 Imports (f.o.b.) 59.2 67.1 65.4 64.7 64.5 64.6 64.6 64.5 Net Foreign Direct Investment 8.4 21.2 10.5 10.9 11.0 11.0 11.0 11.0 Gross Reserves (US$ million) 2,804 2,868 3,018 3,030 3,030 3,046 3,047 3,047 Other memo items GDP nominal (US$ millions) 12,567 12,351 13,392 14,311 15,398 16,859 18,480 20,271 Source: National authorities and World Bank estimates. 12. Oil exploration, the development of green hydrogen, and renewable energy offer opportunities for growth and job creation. Namibia’s extensive coastline and abundant wind and solar resources are attracting investor interest to develop cost-effective GH production and exports. Lithium and rare earth 5 deposits also offer an opportunity to integrate green value chains, diversify the economy and generate more skill-intensive jobs. Making progress in education and skills and improving the conditions for private sector development could boost good quality job creation and economic diversification, which in turn will strengthen resilience to economic shocks and reduce inequality, which remains amongst the highest in the world. Should oil and gas development, or GH development go ahead, Namibia will need to put in place a set of policies to make the most from increased revenues, while navigating successfully the risks associated with a large inflow of capital. In the short term, pressure for government’s commitments to these large initiatives may create fiscal pressures. Box 1: Uncertainties in Namibia’s Economic Outlook Namibia’s economic outlook is subject to considerable uncertainty in the medium-term. Promising developments in the areas of Green Hydrogen and petroleum could boost economic growth, while creating significant fiscal space for the government through additional revenue. However, at this stage, the timing and magnitude of the expected investments in these two sectors are still largely unknown, making it difficult to incorporate them in the macroeconomic and fiscal framework of this CPF. Moreover, their potential impacts on economic growth will also greatly depend on the use of the revenues collected by the government and other factors such as the governance framework and the development of associated value chains that could generate employment at a significant scale. According to NAMCOR (National Petroleum Corporation of Namibia, a State-Owned Enterprise), Namibia could become one of the top world producers of oil and gas by the 2030s, potentially doubling its GDP per capita. However, the commercial viability of these discoveries remains uncertain, given the unpredictable nature of oil demand. The country's offshore fields are in deep water which adds complexity and cost to extraction. Additionally, Namibia will need to build the necessary infrastructure, including pipelines and export terminals, to transport and sell its oil. If Namibia can successfully manage these factors, final investment decision could be reached in 2025, and oil production could begin by 2029. How Namibia manages its hydrocarbon wealth will be critical, as oil and gas development can bring about both upside and downside risks including revenue volatility, increased exposure to boom-bust cycles, and stranded assets as global energy demand shifts to lower-carbon sources. With respect to Green Hydrogen, while Namibia’s comparative advantage in renewable energy has generated interest from several investors and a pipeline of projects is under active development, the industry is still nascent globally. Its development will depend on policy, technology, donor support, and global market developments. Namibia’s ambitions to leverage green hydrogen is part of its wider green industrialization strategy which could establish a new growth trajectory, creating significant employment. However, achieving this vision will require significant investment in renewable energy and export infrastructure, along with policies to attract and protect investors. Challenges include financing, a limited technical workforce, water scarcity, and the potential environmental impact of large-scale production. 2.3 Poverty and Shared Prosperity on a Livable Planet 13. Strong growth, improvements in labor incomes and educational attainment, and expansion of social protection programs have resulted in significant declines in poverty, which nevertheless remains high. Between 2003/04 and 2015/16 Namibia's national official poverty rate declined by more than half, from 37.5 to 17.4 percent, with larger improvements occurring since 2009/10. Based on the International Poverty Line (IPL) of US$2.15 per person per day (2017 PPP), the international poverty rate similarly fell from 35.9 percent in 2003 to 15.6 percent in 2015, the year of the last available household survey.2 Poverty remains high for the country’s income level: under the Upper Middle-Income Country (UMIC) poverty line of US$6.85 per person per day, the poverty rate was 57.3 percent in 2015 (Figure 2-7). Poverty is projected to have increased since 2015, reaching 20.2 percent (US$2.15 poverty line) in 2020 (or 62.7 percent under the US$6.85 poverty line). Due to stronger-than-expected economic growth in recent years 2 2015/2016 Namibia Household Income and Expenditure Survey (NHIES). A new 2025-26 NHIES is currently under preparation. 6 and lower inflation, poverty is projected to have decreased to around 17 percent in 2024, reaching pre- pandemic levels while remaining high. Figure 2-7: The poverty rate is high for the country’s Figure 2-8: Namibia is the second most unequal level of development … country in the world 0.7 90 0.6 Namibia 80 70 Extreme poverty rate (%) 0.5 60 Gini coefficient 50 0.4 40 0.3 30 Namibia 0.2 20 10 0.1 0 6.5 7.5 8.5 9.5 10.5 0 LN (GDP per capita, PPP, US$)* Ranking of 164 countries Source: World Bank calculations using WDI data, World Bank, Source: World Bank calculations using pip.worldbank.org Washington, DC. Note: Only shows countries with PPP GDP per capita below US$25,000. 14. Namibia is one of the most unequal countries in the world (Figure 2-8) while unemployment is high, and a substantial percentage of the population remains idle. Although inequality fell between 2003 and 2015, the reduction was relatively small, despite several redistributive measures and social protection programs. The Gini index for per capita consumption was 59.1 in 2015, down from 61 in 2009 and 63.3 in 2003. In addition, while urban inequality declined in the period, rural inequality increased, although it remained at lower levels than in urban areas. Overall and youth unemployment remain stubbornly high at 19.9 and 38 percent, respectively. About 35 percent of all youth (around 300,000) are considered not in employment, education, or training (NEET). Namibia's polarized labor market consists of a small, highly sophisticated formal sector and a large, relatively unproductive subsistence agriculture sector, where most of the poor work. Moreover, Namibia has one of the fastest growing young populations in the region. By 2050, the 0-24 population is expected to increase by approx. 22 percent. 15. In terms of gender equality, Namibia performs well on overall global rankings, yet on some areas, notably quality of economic opportunities and women’s exposure to health vulnerabilities, it considerably lags the average for Upper-Middle-Income Countries (UMIC). Namibia is ranked eighth out of 146 in 2022 in the Global Gender Gap Index, making it one of the two countries in Africa that has closed at least 80 percent of its gender gaps. In Namibia, 91.7 percent of legal frameworks that promote, enforce, and monitor gender equality under the Sustainable Development Goals (SDG) indicator are in place. In 2021, 44.2 percent of parliamentary seats were held by women, and 53.9 percent of adult women have reached at least a secondary level of education, compared to 46.1 percent of their male counterparts. Despite these positive outcomes, there is room for more progress on gender equality as the country’s performance on various measures of gender equality and women’s empowerment often lags far behind the UMIC average. While reverse gender gaps exist in education, including at secondary and tertiary level, women have not been able to translate this advantage into employment quality, with higher levels of underemployment than men and being more concentrated in lower-paying, less skilled, and informal 7 work. Factors contributing to women’s overrepresentation in the informal sector include a mismatch between the practical/vocational skills in demand in the formal sector and the subjects that women pursue; unequal gender roles and women’s higher share of unpaid domestic work, with women’s time availability further restricted by poor access to time-saving basic services in rural areas; and limited access to the financial and other resources to start and grow formal businesses. Moreover, while public administration provides a sizeable share of jobs in the formal sector and women are well-represented in these (45 percent of all public administration jobs), they are notably lacking in senior and decision-making positions in the sector. Other gender challenges include high maternal mortality and HIV prevalence, gender-based violence, high poverty among female-headed households in rural areas and dealing with the likely gender differentiated impacts of climate change. 2.4 Main Development Challenges and Growth Opportunities 16. The 2021 Namibia SCD identified four binding constraints for inclusive economic growth3. The first is highly segmented input and output markets, characterized by significant gaps in pay and productivity in labor markets, coupled with high levels of inequality in access to land, finance, and product markets. The second is poor quality of education and health systems reflected in relatively poor education and health outcomes despite high levels of spending. Third, is the highly skewed distribution of productive assets and land with a small segment of the population holding most wealth and land. The legacy of apartheid is reflected in limited or expensive connectivity and underserved historically disadvantaged settlements and northern parts of the country. Finally, Namibia faces extreme vulnerabilities to climate change and vulnerabilities arising from markets and technology. The SCD outlines four pathways for addressing these binding constraints. 17. First is fostering a competitive environment for private sector-led and job-creating activities. The 2022 Country Private Sector Diagnostic (CPSD) for Namibia examined the characteristics of the country’s private sector, economic sectors that could drive an inclusive, transformational and productive private sector, as well as the cross-cutting and sector-specific constraints that needs to be unblocked to create a dynamic private sector. It found that the country has a dualistic private sector, in which an FDI- and commodity-based segment driven by exports is mostly delinked from a small, largely informal domestic segment. This can be seen in the imbalance between sector labor-force shares and contributions to growth. For example, a third of the population is employed in an agriculture sector that accounts for just 10 percent of national output while the mining sector employs less than 2 percent of the population despite accounting for more than 10 percent of output. The domestic private sector struggles with a range of structural challenges, including lack of access to land, skills, markets, and affordable finance, as well as an uncompetitive business environment and low rates of digital technologies adoption. The country’s ranking in overall competitiveness (such as in the World Economic Forum’s Global Competitiveness Index) has dropped in part due to its small market size but also to its lagging performance in business dynamism, macroeconomic stability, health, infrastructure, and information and communication technology adoption. 18. Access to credit and skills are concerns for improving the business environment. Namibia’s banking sector is heavily concentrated and uncompetitive, with four large financial conglomerates (three of which are subsidiaries of South African banks) holding 98 percent of total bank assets. While these major banks are highly liquid, they typically serve large firms and have little incentive to invest in innovation and extend services to entrepreneurs, MSMEs, and excluded populations. As a result, domestic credit to the private sector is very low – 61 percent of GDP in 2022, well below the 140 percent average 3 World Bank. 2021. Namibia - Systematic Country Diagnostic. Washington, D.C.: World Bank Group, Report No. 157730-NA. 8 for UMICs. The availability of skills, especially in digital fields and science, technology, engineering, and mathematics remains a key constraint. This, in part, requires investments in youth employment and improvements in education, from early childhood development through higher education. It also requires strengthening interventions and investments to bolster the quality, relevance, and efficiency of technical and vocational education and training, while making long-term investments to improve the quality of higher education. Additionally, it requires aligning training programs with the needs of the private sector, including leverage the capacity and resources of the private sector in the design and delivery of innovative skills programs leveraging digital platforms. 19. Strengthening fiscal policy to support macroeconomic stability and reducing public sector dominance in the economy is a key condition to strengthen private sector led growth. Namibia remains exposed to commodity cycles and fiscal policy is the main tool for macroeconomic stabilization in the context of common framework for monetary and exchange-rate policies under the Common Monetary Area. Vulnerabilities emerge from a narrow tax base, dependence on Southern Africa Customs Union (SACU) revenues, unpredictable spending and high public debt and debt service. Rebuilding fiscal buffers will be essential to allow a move to countercyclical fiscal policy. The Welwitschia Sovereign Wealth Fund is being capitalized but legislation is still pending. Adopting a medium-term fiscal framework, with more predictable spending patterns more aligned with revenue collection will be essential for macroeconomic stability and will also provide a more encouraging environment for private investment. Broadening the tax base and rebalancing taxation towards indirect taxation and facilitating tax compliance would help reduce SACU dependence and foster private sector investment. High interest payments and the public sector wage bill absorb the bulk of budgetary resources. 20. Namibia also needs to consider the presence of SOEs in the economy. Unpredictable state transfers to SOEs create fiscal pressures and highlight the need for better governance. Additionally, a large public sector that does not operate under competitive neutrality hinders private sector growth. Since many SOEs provide essential inputs and services for economic competitiveness, evaluating their service quality, production costs, and price competitiveness will be essential to drive private sector-led growth and support Namibia’s economic diversification goals. Implementation of Government’s plans to improve SOE governance and efficiency would also strengthen delivery of services while creating opportunities for the private sector. 21. The second pathway is building human capital and increasing the productive potential of the labor force by improving the quality and relevance of the educational system and improving health outcomes. Basic education access and quality remain inequitable with low progression through basic education, a lack of regular learning assessment, low use of technology, insufficient infrastructure, inadequate teacher preparation and support, and low access to early childhood development and education (ECDE). In health, despite improvements universal health coverage remains unequal, short of personnel, and insufficiently planned and coordinated. Under-5 mortality rates have declined (43.99 per 1,000 live births in 2017 to 38.91 per 1,000 live births in 2021); but neonatal mortality remains practically unchanged. The health workforce is inadequate to address the growing concern of noncommunicable diseases. Efforts should focus on improving ECDE and basic education, particularly for disadvantaged groups, through curriculum reforms, better teacher training, and improved resources. In the health sector, the SCD recommends establishing a single-payer reform, enhancing public and private sector performance monitoring, increasing funding, and improving regulatory frameworks and workforce organization. 22. Third is tackling high and persistent inequality through better service delivery to promote sustainable and equitable growth. This challenge encompasses reforms to the machinery of government 9 to improve the quality of services delivery and boost implementation capacity. While good governance represents a fundamental pillar of Namibia’s development progress, enhanced institutional capacity is needed to boost implementation, strengthen monitoring and evaluation (M&E), and improve coordination. Efficient and timely public procurement systems can ensure the availability of key services delivery inputs—for example, medicines, school supplies, water pumps, and electricity meters. In addition, supporting urbanization can increase productivity and contribute to sustainable growth if well- managed. Large-scale development of solar and wind industries can help reduce inequality as poor energy access poses a key constraint on reducing rural poverty, improving economic opportunities, and accessing social services, including health and education. 23. Finally, the country needs to reduce its vulnerabilities to climate change and environmental shocks through investments in adaptation and resilience, and mitigation strategies. As the driest country in Sub-Saharan Africa, Namibia faces significant vulnerabilities to climate change, particularly in the water and agriculture sectors, affecting the poor most severely. Rapid urbanization presents both opportunities and challenges, necessitating efficient and sustainable city development to handle population growth and associated pressures. Investment in climate-smart agriculture (CSA) is crucial for resilience and productivity, while effective water management and innovative solutions like renewable energy-powered desalination are essential for addressing water scarcity. Investments in biodiversity conservation, aquaculture and fisheries, and the blue economy can offer alternative livelihoods and adaptation to climate change. Enhancing smallholder access to markets, supporting tourism, and promoting forest conservation can offset agricultural income losses. Additionally, improved social protection policies and targeted drought-relief assistance are necessary to help households manage risks and adapt to environmental shocks. 24. Climate change also presents opportunities as the country seeks to transition to a low-carbon economy. Namibia’s second Nationally Determined Contribution (NDC) makes an ambitious commitment to avoid 91 percent of Business-as-Usual emissions by 2030 and achieve net zero emissions by 2050. Climate goals are also integrated in national plans as seen in the Harambee Prosperity Plan II (HPP-II) which articulates Namibia’s plans for low carbon growth. Namibia is well positioned to capitalize on the rising global demand for renewable energy and green minerals, and could tap into the development of these value chains. Due its abundant sun and wind, Namibia is a prime location to produce cost-effective GH. The country aims to create an at-scale green fuels industry with the potential to produce 10-15 Mtpa of GH and derivatives by 2050. Development of a GH industry could drive exports of hydrogen derivative products while decarbonizing the economy and energy systems using the surplus renewable energy generated. Excess desalinated water produced through the GH production process could also be used to alleviate water security challenges. With careful planning, investments in greening the energy sector can also bring employment, income generation, and entrepreneurship opportunities across the value chain while fostering inclusion of marginalized groups. 25. In addition to these longstanding challenges, developments since the SCD have highlighted the potentially transformative effects of potential mega investments in offshore petroleum. Recent offshore petroleum discoveries, if proven to be commercially recoverable, could turn Namibia into a significant oil producer, helping to meet global demand even as the world’s economies transition to greener sources of energy. As of August 2023, Shell and TotalEnergies have announced discoveries of at least 11 billion barrels of light oil and 8.7 trillion cubic feet of gas in Namibia's Orange basin. These are promising developments that could drive investment and growth while fundamentally changing the outlook for public finances. However, they also pose challenges for macroeconomic management and 10 possibly risks to the environment including, for example Namibia’s robust fisheries sector, which is dependent on the unique biodiversity of the Benguela Current. 26. Confronting global challenges is an integral element of Namibia’s development agenda. Of the eight global challenges priortized in the World Bank Group’s Evolution4, Energy Access, Climate Change, Water Security, and Protecting Biodiversity are especially relevant for Namibia. The country is extremely vulnerable to climate change and environmental shocks. Namibia accounts for 0.01 percent of global emissions but is ranked 109th out of 185 in terms of its vulnerability and readiness for climate change impact.5 According to Think Hazards, Namibia has a high risk of river, coastal and urban floods, water scarcity, and wildfires, and a mean annual temperature projected to rise by over 2°C by mid-century.6 More frequent and intense droughts are already impacting economic development and threaten growth opportunities in agriculture, livestock, and nature-based tourism. The intersection of multidimensional socio-economic exclusion with climate risks underscores the heightened vulnerability of socially excluded groups. Water insecurity coupled with growing population leaves communities vulnerable to unsustainable agroecological systems, crop failure, and unproductive rangelands. Biodiversity and natural habitats, which are critical to the tourism sector and the rural communities whose livelihoods depend on it, are threatened by poaching and environmental impacts7. 3 WORLD BANK GROUP PARTNERSHIP FRAMEWORK 3.1 Government Program and Medium-term Strategy 27. The Government of Namibia’s longer-term vision and development strategy are set forth in Vision 2030, successive National Development Plans (NDPs), and the Harambee Prosperity Plan II. Vision 2030, launched in 2004 is a strategic framework aimed at transforming the country into an industrialized, knowledge-based society with a high quality of life for all its citizens by 2030. The Harambee Prosperity Plan II (HPP II), launched in 2021, aims at building a resilient and inclusive economy while addressing the impacts of the COVID-19 pandemic. HPP II is complementary to the country's broader NDPs; while the NDPs provide a long-term strategic framework for Namibia's socio-economic development, HPP II is designed to address specific, immediate challenges and accelerate progress in key areas. HPP II focuses on five main pillars: effective governance, economic advancement, social progression, infrastructure development, and international relations and cooperation. The plan places a strong emphasis on digital transformation, sustainable development, and enhancing public service delivery. 28. The CPF is also well aligned with Namibia's National Development Plan 5 and the emerging priorities of National Development Plan 6. Namibia's Fifth NDP (NDP 5), covering the period from 2017 to 2022, is guided by the overarching goal of achieving sustainable and inclusive economic growth. NDP 6, preparation of which is well advanced, will focus on three overarching developmental objectives: creation of employment, reducing poverty, and reducing inequality. NDP 6 will be organized around the following four pillars: Economic Recovery, Transformation, and Resilience, focusing on revitalizing the economy, enhancing its structure, and building resilience against shocks; Social Transformation aiming to improve social services and enhance human capital development; Environmental Sustainability emphasizing the need for sustainable management of natural resources and addressing environmental 4 See World Bank (2023). Ending Poverty on a Livable Planet: Report to Governors on World Bank Evolution. Report for the Development Committee, Annual Meetings 2023. Marrakech, World Bank: 5 Notre Dame Global Adaptation Initiative Country Index summarizes a country's vulnerability to climate change in combination with its readiness to improve resilience. Available at: https://gain.nd.edu/our-work/country-index/rankings/ 6 World Bank, 2024, “Climate Change Knowledge Portal”, 2024 7 A Country Climate and Development Report (CCDR) is being prepared. 11 challenges; and Good Governance and Institutional Excellence ensuring effective governance structures, transparency, and accountability in public institutions. Following extensive public consultations, NDP 6 is expected to be formally launched in March of 2025. 3.2 Proposed WBG Country Partnership Framework 29. The overarching goal of this CPF is to help Namibia promote economic growth and reduce inequality in a sustainable manner. The CPF introduces two High-Level Outcomes (HLOs) and 5 objectives (Figure 3-1). These objectives build upon achievements in the previous periods, drawing from the lessons learned from earlier engagements while emphasizing current government priorities. The cross-cutting theme under this CPF is leveraging the transformative potential of digital technology in driving economic growth, improving service delivery, and enhancing overall development outcomes, and the CPF includes specific indicators under each HLO to measure progress in this area. Figure 3-1: CPF High Level Outcomes and Objectives High Level Outcomes Increased Job Creation Improved Access to Quality Services Increased Access to Renewable and Green Energy Improved Efficiency in Education and Health Services CPF Objectives Improved Enabling Environment for Private Sector-Development Improved Housing and Urban Services Strengthened Macro-fiscal Management Cross-Cutting Theme Digital Transformation 30. This CPF represents a significant shift in the World Bank Group’s engagement in Namibia. From 1990 to 2024 Namibia borrowed from IBRD just twice, in 2007 and 2008 and the Bank maintained a limited presence in the country for only a short period, between 2011-2014. While the Bank’s technical assistance and policy advice were appreciated, the Bank was not seen as a financier of choice. While preparing this new strategy the authorities signaled interest in IBRD financing. A first lending operation was approved in May of 2024. Thus, in contrast to the previous CPS covering FY14-20 which featured a limited engagement centered on knowledge and technical cooperation, this CPF features IBRD lending as well as IFC investments and guarantees provided by the WBG Guarantee Platform, housed in MIGA. The Government intends to take a measured approach to IBRD borrowing, with planned lending under the CPF limited to selected SOEs rather than direct sovereign lending. Nevertheless, this development increases the Bank Group’s capacity to generate development outcomes and marks an important and positive development in the Bank’s relationship with Namibia. 31. The CPF will contribute to accelerating growth and poverty reduction through two HLOs, one related to increased employment and one related to improved access to quality public services. HLO1 addresses constraints to job creation that has not been rapid enough to absorb Namibians who have lost agricultural jobs. Proposed CPF objectives under this HLO aim to foster private sector development by ensuring availability of reliable energy, a conducive business environment, and a stable and predictable macro-fiscal environment, while supporting sector specific reforms and investments in highly productive, developmentally impactful and sustainable sectors (such as housing, renewable energy, and GH). The CPF 12 would also aim to improve the effectiveness of macro-fiscal management including management of financial flows from extractive industries and GH projects as well as helping the government adopt a risk- layered approach to disaster risk financing. HLO2 would address the challenges of improving access to quality public service delivery. One CPF objective under this HLO would address the relatively poor performance of public services in education and health despite significant investment. Another would seek to improve outcomes in housing and urban services. A cross-cutting theme under this CPF is leveraging the transformative potential of digital technology in driving economic growth, boosting resource mobilization via improved tax administration, strengthening service delivery, and enhancing overall development outcomes. 32. The CPF’s two HLOs and objectives are interlinked and mutually reinforcing. For example, objectives aimed at improving public services under HLO 2 are those most critical for addressing the job creation challenge addressed under HLO 1. In particular, the CPF will focus on education and skills to address human capital challenges that could otherwise compromise Government’s goals for expanded job creation, especially in the energy sector. Likewise, the focus under HLO 2 on improved performance in education and health are aimed at improving the efficiency of large segments of public expenditures and will help to improve fiscal performance and advance progress on macro-fiscal management under HLO1. The focus on housing responds to an important Government priority linked to improved welfare which also has the potential for considerable job creation. 33. Selectivity will be critical to ensure that the current opening in the Bank’s relationship with Namibia demonstrates value and sets the stage for an enduring partnership. The CPF applies the following three selectivity filters: grounding in Government’s national development priorities, alignment with SCD priorities, and leveraging the WBG’s comparative advantage with close coordination and partnership with other cooperating partners as described below. 34. Selectivity Filter 1: Client Demand and Development Priorities. The CPF reflects the government’s priorities for WBG engagement as determined through engagement with multiple ministries under the guidance of the Ministry of Finance and Public Enterprises. Specifically, based on consultations from late 2021 until 2023, the Cabinet endorsed a set of seven priority areas for World Bank engagement. The priority areas are Education, Energy, Climate Smart Agriculture, Digital Development, Social Protection, SOE Reform, and Urbanization and Housing. This explicit articulation of demand provides a clear set of priorities to guide the WBG engagement. With respect to instruments, moving beyond the strictly knowledge-based engagement since 2008, the authorities have indicated that they welcome IBRD financing as well as technical cooperation although for the time being financing would be limited to state-owned enterprises and financial intermediaries rather than sovereign lending. 35. Selectivity Filter 2: SCD and Core ASA Findings. While the 2021 SCD did not explicitly identify High Level Objectives, together with the 2022 CPSD, it did identify development pathways and reform priorities for tackling Namibia’s growth, inclusiveness, and sustainability challenges which informed the formulation of this CPF. The CPF aims to help address the priority challenges identified in the SCD, including: 1) fostering a competitive environment for private sector-led, job-creating activities: 2) building human capital and increasing the productive potential of the labor force by improving the quality and relevance of the educational system, generating needed skills, and improving health outcomes; and 3) addressing inequality service delivery in remote areas. The CPF programs also aims help stimulate reforms and investment in sectors with strong potential for growth and job creation prioritized by the Government, namely energy and housing. These priorities are reinforced by the ongoing Country Climate and Development Report (CCDR) dialogue that has made clear that to harness the development potential of 13 hydrogen via green value chains, and private sector growth and job creation more broadly, Namibia needs to improve its business environment. This involves comprehensive reforms in the regulatory environment, trade and tax policies, improving access to credit, and the ability of domestic firms to participate in global value chains. 36. Selectivity Filter 3: World Bank Comparative Advantage. The proposed CPF program leverages the Bank’s comparative advantage based on recent and ongoing activities. The CPF program under HLO 1 draws on significant experience during the previous strategy period in the areas of economic management and private sector development. Likewise, the planned engagements in energy build on significant Bank Group experience including Bank TA and MIGA guarantees in renewable energy. The Bank’s comparative advantage is also based on its global reach and experience as with the planned engagement in GH which benefits from lessons learned in other countries, such as Chile, as well as strong client demand. The proposed engagement with the Development Bank of Namibia (DBN) builds on Bank Group experience in supporting national development finance institutions, including in Nigeria, Ghana, Rwanda, and South Africa. While investment in water management and improved sanitation is a priority reform in the SCD, the CPF program does not support this priority as other partners have sizable existing portfolios in the sector. 37. The Government’s restrained approach to IBRD lending defines a key element of the Bank’s comparative advantage. As Government prefers not to engage in sovereign borrowing at present, key sectors are effectively out of reach for IBRD financing. Hence although sectors such as health and digital development are critical to advancing Government’s development objectives and World Bank Group corporate priorities, the engagement in these sectors will be limited to technical assistance. Achieving targeted results in these areas will be contingent on achieving increased scale of WBG advisory support through reimbursable advisory Services (RAS) engagements. Similarly, improving targeting of social protection is a Tier 1 priority in the SCD, the CPF will not focus on this. As the Bank gains experience and demonstrates its value as a development partner, it is hoped that this limitation can be removed opening the door to a more robust engagement. 38. The proposed CPF reflects lessons learned during implementation of the previous CPS as detailed in the Completion and Learning Review (see Annex 2). 39. Lesson 1: Grant and concessional resources can play a catalytic role in MIC countries. Grant and concessional resources play a key role both upstream and downstream. Upstream, supplemental financing for an expanded ASA engagement establishes the analytical underpinnings while building client relations. More important, in a context where IBRD is one of multiple potential financiers, the ability to work with partners to mobilize grant and concessional resources that can be blended with IBRD loans enables the Bank to present a competitive financing package. In a country with high levels of inequality and poverty despite its UMIC status, access to concessional finance recognizes Namibia’s unique development challenges. Building on the recently approved Transmission Expansion and Energy Storage (TEES) project (P177328), the WBG will seek to maximize mobilization of grant and concessional resources, including global climate finance and IBRD financial incentives for projects that address global challenges with cross-border externalities. 40. Lesson 2: A knowledge-oriented CPS requires special attention to developing and updating a realistic results framework. Where a country engagement relies primarily on knowledge products (ASA), especially in a UMIC country the WBG needs to be judicious in selecting outcomes that can realistically be achieved over the period of the program. Since IBRD engagement under the CPF will continue to be limited 14 to knowledge products in several key sectors, the results framework is designed to be realistic, recognizing the limits of what can be achieved through advisory activities. 41. Lesson 3: Upstream policy advice and capacity building by the Bank are important for enhancing the effectiveness of investments and guarantees by IFC and MIGA. Technical assistance can play an important role in addressing policy and regulatory frameworks to enhance the bankability of private sector investment. This was found to be the case in the renewable energy sector where the design of Government’s REFIT program created challenges for investors. For the coming CPF period, the Bank Group will adopt a collaborative approach, supported by the joint WBG country representation, working with Government and partners to address power sector challenges and thereby help de-risk renewable energy projects and attract a broader range of investors. This will help to create additional opportunities for IFC and the World Bank Guarantee Platform, housed in MIGA. 42. Lesson 4: Country presence is crucial for effective client engagement. As seen in the CLR, experience during the CPS period demonstrated that lack of a country presence was an obstacle to growing the Bank Group’s engagement in Namibia. Implementation of the CPF will benefit from the establishment of a joint IBRD-IFC office which will help to increase the responsiveness of the Bank and strengthen the relationship. Since the Bank has a limited presence in Namibia, many public and private entities are unfamiliar with the Bank. As the Bank establishes a reputation as a development partner, and establishes a physical presence in the country, additional demand for Bank services is expected to emerge and the CPF program will adapt accordingly. 43. Guided by corporate priorities and the WBG Evolution process, the CPF will support the government’s efforts to address global challenges. Ongoing and proposed new interventions would position Namibia to participate in Global Challenge Programs (GCPs), notably: Energy Access and Transition; Accelerating Digitalization; and Forests for Development, Climate and Biodiversity. Specifically, planned lending in energy will facilitate Namibia’s transition to renewable energy sources and increase energy access with the GCP approach helping to mobilize coordinated IBRD/IFC/MIGA solutions. In the digital space, a cross-cutting engagement will support improved access and affordability of broadband internet while supporting expanded digital public services that contribute to improved service delivery. Given the global potential of GH to contribute to decarbonizing hard-to-abate industries like steel and cement production, or maritime shipping, Namibia is expected to be able to benefit from the Framework for Financial Incentives to mobilize additional concessional resources. The WBG will also contribute to other corporate priorities, such as promoting women and youth inclusion, and creating more and better jobs. Enhancing collaboration with development partners will be a key element of the CPF, facilitated by the opening of a country office under the pilot One World Bank country representation model as well as by the Global Collaborative Co-Financing Platform. 44. The CPF also reflects consultations with key stakeholders, including the Government, private sector, and development partners. Extensive dialogues were held with government counterparts at various levels leading to Cabinet endorsement of the CPF’s focus areas. Engagement with the private sector during high-level visits over the course of CPF preparation revealed demand for IFC investments as well as WBG financing to reduce risks surrounding the Government’s GH strategy. Collaboration with development partners helped identify complementary areas for coordination and avoid duplication of efforts. The consultative process was supplemented by a client opinion survey carried out in early 2024 (see Annex 3). 15 3.3 Objectives supported by the WBG Program HLO 1: INCREASED JOB CREATION 45. Creating more and better jobs is fundamental to tackling Namibia’s challenges of poverty and inequality. HLO1 focuses on enhancing the enabling conditions for the private and public sectors to boost resilient and equitable growth by creating more and better-quality jobs. The government’s ambitious green industrialization plans could unlock an economic boom and structural transformation, but attracting the required investment will require tackling economy-wide constraints posed by underperforming and monopolizing SOEs, improving access to finance, and strengthening macro-fiscal management. The program under HLO will also support investments in the energy sector to support development of the GH value chain while increasing energy access along with investment support to increase financial access and inclusion. Objective 1: Increased Renewable and Green Energy 46. Namibia’s green industrialization strategy rests on its ability to take advantage of its considerable energy potential. A key challenge is to expand the country’s limited generation capacity while expanding access to unserved populations. In 2023 the country imported on average 58 percent of its energy requirements, mainly from Zambia and South Africa. The GRN and NamPower have committed to reduce the current dependence on electricity imports by building more domestic generation capacity. The National Renewable Energy Policy (NREP) adopted in 2017 aims to: (i) make renewable energy a vehicle for expanded access to affordable electricity in Namibia; (ii) create an enabling environment for renewable energy development; and (iii) enhance value chains to enable greater participation of Namibians in the sector. Similarly, HPP-II for 2021-2025 identifies energy supply security through renewable energy (RE) resources as a key priority to achieve the intertwined economic and energy goals of the country.8 The electricity access rate is 55 percent, 9 mostly grid-connected, leaving roughly 200,000 rural households, and 50,000 urban households without access to electricity. Beyond these existing needs, the Governments goal of establishing a GH economy will require massive investment in renewable energy to power the electrolysis process for hydrogen production. 47. The CPF is adopting a phased approach to address the challenges posed by these ambitious objectives. The ongoing Transmission Expansion and Energy Storage project aims to strengthen the transmission grid and add battery storage capacity to address limitations of existing infrastructure that would otherwise limit the expansion of renewable energy generation. Technical assistance, provided in collaboration with IFC and MIGA, will facilitate the development, procurement, and implementation of bankable RE projects, complementing these public investments. Such projects could also benefit from MIGA guarantees, building on existing MIGA guarantees provided to solar plants established under the REFIT program, and could include new guarantee products under the World Bank Guarantees Platform. IFC will explore opportunities to involve the private sector in the energy industry. For instance, ongoing discussions may lead to upstream engagements in battery storage projects, potentially followed by investments in battery storage financing. Additionally, IFC is exploring ways to support regional energy trade through Independent Power Producers, with the possibility of mobilizing up to US$50 million, including IFC's own investment. On access, the World Bank is supporting the Government of Namibia (GRN) to develop a sustainable electrification business model. This is expected to lead to an energy access operation under the next phase of the Accelerating Sustainable and Clean Energy Access Transformation 8 Government of Namibia. 2021. "Harambee Prosperity Plan II." Windhoek: Government of Namibia. 9 Namibia Electricity Board. 2023. "Annual Report 2023." Windhoek: Namibia Electricity Board. 16 in Eastern and Southern Africa Multi-Phase Programmatic Approach Phase (ASCENT MPA) as part of the WBG-African Development Bank Mission 300 Initiative. 48. With respect to GH, Namibia’s GH strategy has already attracted significant investor and partner interest, including from the European Union and Germany. However, much more will be needed. The WBG is providing technical assistance to support operationalizing the strategy, covering, inter alia, support to maximize the socio-economic benefits, bankable contractual arrangements, and monetization of green attributes of GH. Leveraging the Bank’s experience in supporting GH initiatives in other countries, the CPF program will seek to accelerate hydrogen financing by mobilizing and lowering the cost of financing for GH projects while de-risking investments by supporting Government participation in GH projects and ensuring adherence to applicable ESG standards. Planned support will feature an IPF operation to finance SDG Namibia One, a US$1 billion dedicated blended financing vehicle for GH investment in Namibia. In tandem, IFC will support private investors through an advisory engagement acting as strategic adviser on biodiversity management. 49. A key element of World Bank support will concentrate initially on the skills needed to develop the GH economy. Government estimates that its GH and Green Industrialization strategy could generate up to 250,000 jobs by 204010. In the shorter term, the next couple of years will see an increase in labor demand in the construction sector, as the building phase of the first large-scale projects commences. To ensure that sufficient workers with the appropriate skills are available, substantial and well-targeted investments are needed in TVET, higher education, and adult training, and the mechanism for attracting foreign labor to fill remaining skill gaps should be improved. The World Bank is providing technical assistance to the GH Program to identify key skill gaps; develop a Skills Development Strategy and Implementation Plan for GH and its key derivates; and identify and implement key ‘quick actions’. Objective 2: Improved Enabling Environment for Private Sector Development 50. Enhancing the business enabling environment is key for generating the increased employment and productivity needed to reduce poverty and inequality in Namibia. While the CPF will focus targeted support aimed at attracting private sector investment in Government’s priority sectors such as renewable energy and housing, maximizing the development impact of these strategic value chains also requires addressing cross-cutting constraints in the business environment. Despite some success in economic diversification, notably via the development of services linked to mining activities, Namibia’s export base remains dominated by commodities, with little transformation. The CPSD and ongoing CCDR dialogue have made clear that to harness the development potential of hydrogen via green value chains, and private sector and job creation more broadly, Namibia needs to tackle a range of structural challenges, including a business environment that increases the cost of doing business, especially for small businesses, as well as lagging levels of financial inclusion despite a well-developed financial sector. In addition, given the country’s heavy exposure to climate shocks, and its impacts on private sector’s prospects, the country needs sizeable adaptation investments in water systems, agriculture, and housing to reduce the negative impact of climate shock on the economy and its people. 51. Leveraging an expanded country presence, the WBG will support business environment reforms and build the capacity of the private sector with a view to increasing investment and employment in productive sectors with strong potential for employment creation. In the financial sector, advisory activities will focus on priority reforms to ensure financial system stability and integrity and advance financial sector deepening and inclusion. Responding to Government’s request for IBRD financing support 10 Government of Namibia, A Blueprint for Namibia’s Green Industrialization , (2024). 17 for the Development Bank of Namibia (DBN), planned ASA is expected to lead to an investment operation aimed at strengthening DBN’s capacity to play a catalytic role in the financial sector and expand access to finance by Micro, Small, and Medium Enterprises (MSMEs). IFC will pursue investment opportunities in agribusiness and microfinance. In collaboration with the IBRD, IFC will also explore opportunities to support the Investment Promotion Agency in enhancing the competitiveness of the country. This support will primarily focus on SOE reforms, competition policy, and business regulation. To improve the entrepreneurship ecosystem, advisory work will focus on reforms to strengthen the entrepreneurship ecosystem by addressing barriers to entrepreneurship, trade, and investment that inhibit business entry and expansion in Namibia. The World Bank will continue policy dialogue with the Namibia Investment Promotion and Development Board (NIPDB) on strengthening support for MSMEs and entrepreneurs, investment promotion and facilitation capacity, and tapping the economic growth and job creation potential of selected value chains as well as other reform areas. 52. Support under this Objective will also be anchored in the findings of the CCDR and the interest of the Government on how to prioritize climate resilient investments and integrate climate change adaptation in its National Development Plan and its vision of developing green value chains . Building on the CCDR’s preliminary findings on the impact of climate change on growth and natural capital, and on Government’s diversification objective, planned works include support to the development of Namibia’s Sustainable Ocean Plan (SOP) to design climate-resilient fisheries’ policy, understand the potential for blue carbon, and determine pathways to decarbonization and pollution-reduction in the country’s ports. Support in the housing sector will focus on the need for addressing climate risks in spatial planning while in the financial sector the aim will be to build capacity in climate finance (disaster risk finance, agriculture insurance, and green finance). One area of concern in Namibia’s potential investments in mega projects, such as in GH and petroleum industry, is to ensure the environmental, social and governance (ESG) risks are managed adequately. This requires strengthening the government’s capacity to plan, monitor and enforce appropriate regulations. Objective 3: Strengthened Macro-fiscal Management 53. Namibia is on the brink of an economic boom and structural transformation brought about by the discovery of oil and gas, and the potential to develop a GH value chain. These investments, which could surpass the country’s GDP, will substantially increase economic output and exports but will require sound macroeconomic and fiscal policies to prevent the emergence of imbalances and Dutch disease type effects, which could dent competitiveness and impede government’s diversification and job creation objectives. At the same time, additional fiscal revenues could help address key constraints to growth and shared prosperity by closing infrastructure, health, and educational gaps. These investments will be key to attain the government’s desired objectives of developing the private sector, boosting job creation and output, and export diversification. Attaining these objectives will also require improvements in the efficiency and effectiveness of public expenditures by, inter alia, strengthening public procurement, modernizing tax administration, reforming public enterprises, and leveraging digital technologies. Improving fiscal policy design and macro-fiscal management is pivotal to increase fiscal space to confront future shocks, expand the social safety net, finance needed infrastructure investment to improve external competitiveness, and strengthen climate resilience. 54. The CPF will support Namibia’s ongoing efforts to strengthen economic management through policy advice and technical assistance. Namibia is committed to fiscal consolidation to reduce its high debt level and interest payments. A planned Public Finance Review (PFR) will help to address these challenges by providing a tax policy review with a view to identifying possibilities for increasing revenue while supporting growth. Preliminary findings of the CCDR indicate that private sector activity is hampered 18 by tax uncertainty and cumbersome tax legislation and practices. An ongoing project to support the newly created Namibia Revenue Agency, NamRA, will aid ongoing efforts to maximize revenue collection, lower taxpayer’s effort, and improve the agency’s efficiency. On the spending side, the PRF will provide analysis and options to improve public procurement, explore options for public sector reform to improve the delivery of key services, re-orient activities according to the objectives in the NDP, and reducing costs. The CPF program will build on recent work in public procurement with the aim of supporting the roll-out of a government e-procurement system. Depending on whether oil exploration leads to commercial development, activities under this Objective could also include an analysis of revenue management to avoid Dutch disease effects and promote growth. Activities under this objective will also comprise an analysis of the drivers of growth and the bottlenecks hindering private sector development, productivity growth and external competitiveness. 55. Potential IFC advisory and financing can support the Government’s objectives for public enterprise reforms and increased use of public–private partnerships (PPPs). The Cabinet is close to approving a public enterprises ownership policy, which would provide clarity regarding the future status and resolution of the various SOEs. The Bank Group can support implementation of the holding company model, set to be implemented in 2024, through support for restructuring of individual SOEs. This will allow for more bankable PPPs and opportunities for IFC’s involvement. IFC advisory services can support the restructuring of selected SOEs as well as individual PPP transactions. HLO 2: IMPROVED ACCESS TO QUALITY SERVICES 56. Namibia’s ability to increase employment and productivity will depend on increasing human capital. This HLO focuses on enhancing access to quality public services and addresses two of the development pathways outlined in the SCD, namely 1) Building human capital and increasing the productive potential of the labor force by improving the quality and relevance of the educational system, generating needed skills, and improving health outcomes; and 2) Reducing inequalities through better services delivery especially for marginalized communities and remote areas where population density is low and the cost of delivering services is high. Based on the findings of the CPSD, the CPF will focus on supporting improved access to affordable housing and associated municipal services as a key policy priority of the Government as well as a significant opportunity for growth and job creation. Objective 4: Improved Efficiency in Education and Health Services 57. Despite the large share of government spending devoted to social programs, Namibia performs poorly in the provision of social services, including education and health care. The country’s 2020 Human Capital Index (HCI) of 45 is well below the average for upper middle-income countries. Basic education access and quality remains inequitable with low progression through basic education (low internal efficiency), no regular learning assessment, low use of technology, insufficient infrastructure, inadequate teacher preparation and support, and low access to ECD. Boys lag girls on participation and achievement. Despite improvements, universal health coverage remains unequal, short of personnel, and insufficiently planned and coordinated. The health workforce is inadequate to address the growing concern of noncommunicable diseases. 58. Consistent with Government’s decision to forgo for the time being sovereign IBRD borrowing, World Bank support under this objective will be limited to advisory activities . In education, the focus is to develop a package of teacher reforms and pedagogic practices, including teacher management and professional development to improve the cost-effectiveness of the teacher workforce. Technical support will include capacity development to implement national learning assessments, and strategy development 19 for cost-effective and sustainable school construction as well as digital platforms. In health, building on the public expenditure review (PER) and Ministry of Health and Social Services (MHSS) priorities, the focus is to support key investments that will enhance equity, efficiency, and quality of health services. These include strengthening capacity of primary health care to deliver quality health services, strengthening supply chain management systems, and improving availability of strategic information for decision making. The activities will contribute to enhance equity and quality of health services by enhancing the capacity of PHC level services while strengthening capacity for information use and management. Objective 5: Improved Housing and Urban Services 59. Namibia is urbanizing rapidly with nearly 50 percent of the population living in urban areas, a share that is expected to rise to 75 percent by 2050. Formal housing delivery with basic services has not kept pace with the demand, resulting in a proliferation of informal settlements and unplanned city sprawl with adverse effects on inequality, inclusion, and the carbon footprint. Key constraints like lack of access to serviced land, inconsistent institutional coordination, and insufficient investments in the housing sector have created an estimated backlog of 300,000 units. While large by African standards, Namibia’s mortgage finance market mainly serves upper-income households, thereby missing the priority target groups (ultra- low and low-income groups) outlined in the National Housing Policy (NHP). 60. Accelerating the delivery of housing is a priority for the GRN and World Bank Group support will include IFC investment as well as Bank ASA on urbanization and housing issues. Since the GRN has already developed a comprehensive NHP, support will focus on identifying opportunities to accelerate its implementation while bringing in elements that better align supply with the growing demand (e.g. shifts in urbanization patters due to GRN’s green industrialization plans) and mainstreaming climate and disaster resilience. The core of the strategy is to streamline the acquisition and servicing of land, and to create opportunities for PPPs and other private sector investors. IFC already has an investment of US$45m with Letshego Bank Namibia and is looking to expand its footprint to support the development of the affordable housing market, including supporting microlending institutions in the sector. TA can be explored to strengthen the institutional and financial capacity of the different Government actors active in this space, for example: (1) SOEs like the National Housing Enterprise, (2) other state-owned institutions like the Development Bank of Namibia; and (3) local governments like the City of Windhoek. Depending on client demand, support can target availability of serviced land for housing, land development process management, sites and services, informal settlement upgrading, and increasing private sector participation in the housing value chain. Moreover, building on the PER in the water and agriculture sectors, more TA could be explored in strengthening/ expanding sustainable urban services in existing or new urban developments, including water supply and sanitation, and solid waste management. Cross-cutting theme: Digital Transformation 61. While digitalization has continued to improve in recent years, particularly in the area of digital connectivity, Namibia lags behind regional peers in key areas that support the digital economy. Digital transformation provides the potential to support the two HLO areas of the CPF, supporting economic growth of the private sector while also providing a platform for the improvement of public services in the country. 62. Namibia has greatly improved access to the internet in the last decade, with an almost total coverage of the population by digital networks. However, affordability remains an issue and Namibia’s telecommunications market continues to be restrained by dominance of single operators in both the fixed and mobile network market segments. Further steps to improve market competition and innovation will 20 help to improve affordability and access by underserved communities and businesses. World Bank support to this agenda will include advisory activities to help improve policy and regulation. IFC has been discussing with the Government of Namibia on options to increase private sector participation in the telecoms and digital sector. This engagement could potentially mobilize more than US$50 million to enhance telecom investments and technology, improving service quality, access, and affordability in the country. 63. Namibia has also highlighted the digitalization of government and public services as a priority for the country in the 2021 Harambee Prosperity Plan under Pillar 1 ‘Effective Governance’. This includes a specific objective for improving e-government services, particularly in areas such as procurement, education, health, and support for digitalization of businesses. The Government is also developing a new National Digital Strategy and has signaled that digital government will be a core pillar of the strategy. However, Namibia has struggled to make progress in this area and is ranked 121 under the UN E-Government Index, well below regional peers and despite the development of a previous four-year E-Government Strategy in 2014. Increasing the digitalization of government services is critical to supporting the development of outcomes under both HLOs in the CPF, and to improving service delivery to citizens and businesses across the country. 64. Under this CPF, the World Bank will provide advisory support to Namibia as needed to advance the objectives of the Harambee Prosperity Plan and to support the two CPF HLOs. The following are a few examples of how the World Bank will help accelerate digitalization across the CPF: (i) improve the digital business ecosystem and strengthen market competition, in collaboration with IFC (HLO1), (ii) support the regulator in advancing the universal broadband access agenda, (iii) improve e-procurement within Government through support to implement the recommendations of the World Bank e-Procurement Readiness Assessment (HLO2), (iv) support NamRA in the development of a digital tax ecosystem, including the advancement of a cross-government digital identity platform (HLO1 and HLO2), and (iv) support the development of a digital health blueprint as part of the broader engagement of health outcomes in the country (HLO2). 65. The WBG will aim to focus on projects with the potential to leverage private financing or enable private investment. Lending for energy transmission is designed to enable private investment in renewable energy generation. Similarly, planned support for the Government’s GH program will help to mobilize significant private investment using strategic concessional funding to de-risk investments. Various IBRD products can be deployed to support such projects to mobilize private capital, including contingent financing (IPF DDO), guarantees, and other forms of credit enhancement. The potential engagement with DBN, with financing and technical assistance, can help support DBN’s transformation to play a more catalytic role in financing priority sectors by crowding in private bank and non-bank financing using wholesale financing, blended financing, and guarantee instruments. An engagement with DBN also presents an opportunity to strengthen the implementation of PPP projects through closer cooperation between the DBN’s Project Preparation Facility and the PPP unit under the Ministry of Finance and Public Enterprise (MFPE) (DBN is also under the MFPE). The CPF will target potential activities in the housing and agriculture sectors which were assessed in the CPSD as promising for stimulating private investment. The planned CPF will also enhance complementarities across IBRD, IFC, and the MIGA Guarantee Platform, to address the government’s objective of mobilizing private capital, including through carefully structured PPPs. 66. Regional Integration. Where feasible, the Bank engagement will prioritize activities that have the potential to increase regional integration, for example by supporting power transmission interconnections 21 that promote regional energy trade through the Southern Africa Power Pool, or by opening trading opportunities within the framework of the African Continental Free Trade Area (AfCFTA). Planned support for GH production and green industrialization are an example. Similarly, support for strengthening livestock value chains and commodity-based trade would promote regional beef exports. 67. Gender. The planned composition of the modest World Bank Group operational portfolio in Namibia lends itself best to addressing gender through an emphasis on gender inequalities in education (where boys are at a disadvantage), and in employment (where women are at a disadvantage) through technical assistance and advisory services. The CPF program will seek to promote employment and economic opportunities for women by reducing constraints to increasing women’s participation in the labor market and supporting financial inclusion of women. This work will lay the foundations for policy dialogue and future work addressing gender gaps in other sectors. Activities across the portfolio include targeted capacity building, promoting women's employment and leadership and ensuring gender- inclusive work environments. In the energy sector ongoing and planned lending will include targeted capacity building promoting women's employment and leadership and ensuring gender-inclusive work environments. In the financial sector, diagnostics and planned lending to the Development Bank of Namibia will include a focus on increasing financial access for women and women-owned businesses. Additionally, overall improved access to electricity will be especially beneficial to women, given its potential to alleviate the domestic work burden and boost women’s economic opportunities at the extensive and intensive margins. A planned Gender Assessment, to be prepared in collaboration with UN Women, will review laws and policies related to Gender Based Violence (GBV) to identify gaps and make recommendations to address Namibia’s relatively high rates of GBV. This approach aligns with both national policies and the World Bank’s Gender Strategy (2024-2030) and AFE Regional Gender Action Plan. 68. Partnerships. The WBG will deepen its collaboration with other development partners to ensure complementarity. Leveraging the establishment of a local office under the joint WBG representation model, the Bank Group will step up coordination across partners with a view to improving knowledge sharing and identifying opportunities for collaboration and joint approaches where feasible. As the Bank’s role as a financier is at an early stage, an early priority will be ensuring that Bank Group activities are harmonized with those of other partners. As opportunities emerge, the WBG will seek opportunities for expanded collaboration, including co-financing through the Bank Group’s recently launched Global Collaborative Co-Financing Platform. An early priority will be to step up collaboration with the African Development Bank to advance energy access under the Mission 300 Initiative. The Bank will proceed carefully in sectors where other partners have sizable existing portfolios such as in the water and transport sectors where KfW and AfDB have sizeable ongoing programs. 3.4 Implementing the CPF 69. The IBRD lending program for FY25 and FY26 is expected to total US$400 million. Actual IBRD lending volumes will depend on country demand, overall performance, demand by other Bank borrowers, as well as other factors, including global economic/financial developments, which could affect IBRD’s financial capacity. All IBRD financing is expected to take the form of investment lending to state-owned enterprises supported by a sovereign counter-guarantee. No sovereign lending is envisioned at present, but IBRD will be ready to respond should the authorities seek such lending. The Bank will also leverage a newly established office to provide implementation support on a sustained basis, recognizing the lack of familiarity with Bank processes in Namibia. 22 70. The WBG will seek to mobilize financing sources that can help to increase the financing available to Namibia while reducing borrowing costs. Where possible, the Bank will aim to mobilize grant and concessional financing sources such as the Green Climate Fund to supplement IBRD financing. Planned activities such as support for regional energy transmission could also benefit from up-front grants from the Livable Planet Umbrella Trust Fund under the recently approved Framework for Financial Incentives (FFI)11. As part of the WBG engagement in support of Namibia’s GH program the Bank is also supporting Namibia to generate and monetize Emission Reduction Credits which can help reduce overall financing costs. Global Challenge Programs will be leveraged to facilitate a One WBG approach and achieve scale in selected areas. For example, the Global Challenge Program for Energy Access and Transition (GCP-E) will use a joint approach to increase private investment in support of expanded renewable energy generation and expanded energy access. 71. Analytical services will play a critical role in the World Bank program. In line with the Knowledge Compact, a scaled-up engagement will be supported through delivery of core analytical products. Some progress has been made in building the analytical foundation for Bank engagement with completion of the SCD and CPSD. A CCDR, Country Economic Memorandum (CEM), and PER of the Agriculture and Water sectors are underway, and further core diagnostics, such as a Public Finance Review and Poverty and Equity Assessment, are planned along with ASA in sectors targeted for World Bank engagement. Planned technical assistance to develop a Sustainable Oceans Plan, part of Namibia’s commitment as a member to the High-Level Panel on Sustainable Oceans, will also help consider how Namibia can assess various options for coastal and offshore developments. As lending is expected to increase gradually, advisory services will provide the main avenue for supporting government reforms. This will be the case in areas where sovereign lending would be the only financing option. In these sectors (e.g., health, education, and social protection), we will aim to scale up our advisory work through RAS arrangements. The emphasis will be on just-in-time “how to” advisory work needed to support implementation of priority reforms. 72. Over the course of this CPF, the Bank will explore opportunities to employ innovative modes of IBRD financial support to Namibia. This could include advisory support to facilitate green, sustainable, or sustainability-linked bonds and loans to tap new funding sources. These can be supported through guidance on the relevant frameworks and regulations, design of concepts, structuring of credit enhancement mechanisms (potentially utilizing IBRD financing), review of transaction documents, and outreach out to potential investors. Also, during this CPF cycle, the Government and sub-sovereign entities can access new tools to bolster financial resilience to climate shocks including contingent financing, which can be used to backstop the budget, a national emergency fund, the sovereign wealth fund (or stabilization fund elements of it), or sub-national entities and projects in case of an unforeseen climate shock. IBRD can also finance disaster risk insurance premium as part of loans, and IBRD can intermediate catastrophe risk insurance and bonds for Namibia if those become suitable instruments for the country. Finally, Namibia may consider other forms of World Bank advisory support on risk management, including interest rates, currency, and commodity risks, and in some cases, IBRD can intermediate those risks in international markets. One example of such risk mitigation is for NamPower, where a non-IBRD hedge will be executed to enable the full financing package of loans from IBRD and the Global Climate Fund (concessional loan) to be converted to local currency (South African Rand). This will ensure that the debt and revenues of NamPower will be aligned. 11 “IBRD Framework for Financial Incentives for Projects that address Global Challenges with Cross Border Externalities” (R2024-0066/1). 23 73. IFC expects to grow its engagements during the CPF period. To date, IFC’s Long-Term Finance (LTF) Engagements in Namibia have been limited, with only US$114.2 million committed since FY13, all in the financial sector. As reforms are enacted, IFC expects to invest in agriculture, renewable energy, affordable housing, and the digital infrastructure space. In the context of significant reforms, IFC investment could reach up to US$200 million over the CPF period. Advisory services will play a catalytic role to unlock private sector participation in key sectors and could prove critical in supporting the reform of key SOEs. 74. During the CPF period MIGA expects to increase its portfolio. MIGA’s outstanding exposure in Namibia totals US$30 million covering projects in energy (solar power generation) and hospitality. Going forward, MIGA will continue to coordinate closely with IBRD and IFC to explore new opportunities, in addition to exploring opportunities for collaboration and innovation under the World Bank Guarantees Platform, housed in MIGA. MIGA is exploring further prospects in renewable energy, including wind, and, working closely with the IFC and the World Bank, MIGA is exploring cross-border investment opportunities to scale up its support in strategic sectors of the country including in the GH space. 75. Namibia has a comprehensive public procurement legal and regulatory framework. This consists of the Procurement Act of 2015 and is supplemented by Public Procurement Regulations, 2017. Whilst it covers most aspects of a well-functioning public procurement system, the Act has no provisions addressing its application to the procurement contracts arising from international agreements, international treaty or financed by multilateral financing institutions. Entities implementing donor funded projects and wishing to follow the procurement procedures of the donors must seek exemption from the Act. Namibia has a partially decentralized public procurement system for bidding and contract implementation process with the Central Procurement Board of Namibia conducting the bidding process on behalf of public entities for procurement or disposal of assets that exceed certain thresholds while public entities conduct their own bidding processes for the award of contracts that are within the threshold. While procurement under the World Bank projects is new, to date no efficiency challenges or inappropriate practices have been encountered. Government is committed to improving the operational effectiveness and efficiency of procurement system guided the recommendations of the recently completed MAPS assessment, including moving towards development of an e-GP system which will help simplify processes and procedures and generate cost and time savings, improve contract management, and better monitoring performance and citizen engagement. During the CPF period, the World Bank will support these efforts through continued capacity building and technical assistance. 4 MANAGING RISKS TO THE CPF PROGRAM 76. The overall risk to the CPF program is assessed as moderate. Two of the eight categories in the WBG’s Systematic Operations Risk-Rating Tool warrant a substantial risk rating (Table 2). All risks will be monitored throughout the CPF period, and mitigation measures will be applied as needed. 77. Risks related to institutional capacity are rated substantial . There is likely to be substantial risk in the management of WBG-financed programs and projects due to capacity constraints in borrowing entities. For example, while NamPower and the Development Bank of Namibia have extensive experience implementing donor financed infrastructure projects, they have little experience with the requirement of IBRD operations. To mitigate these risks, the WBG will provide implementation support at the project level including additional training for PIU staff on technical, procurement, financial management and environment and social aspects as required by project implementation units. 24 78. Environmental and social Table 2: Risks to the CPF Program risks are rated substantial. The Government of Namibia has only Risk Category Rating (L, M, S, H) recently re-engaged in World Bank 1. Political and Governance M investment project lending applying 2. Macroeconomic M the Environmental and Social 3. Sector Strategies and Policies M Framework (ESF). As a result, there is 4. Technical Design of Project or Program M limited experience with the 5. Institutional Capacity for Implementation and S institutional capacity of the national Sustainability system for environmental and social 6. Fiduciary M assessment and management. 7. Environmental and Social S Expected projects under the CPF 8. Stakeholders M could impact critically endangered OVERALL M species and unique desert ecosystems, which require special considerations under the Environmental and Social Standard 6 – Biodiversity Conservation and Sustainable Management of Living Natural Resources. Planned lending also carries the risk of impacts on Indigenous Peoples who reside in various regions throughout the country. Areas which require strengthening in the existing environmental framework include mainstreaming of aspects such as climate change risk and adaptation, biodiversity conservation considerations and occupational health and safety, which currently do not require any specific assessment in the existing environmental assessment processes. This risk will be mitigated by strengthening the government’s E&S risk management capacity through providing assistance to prepare guidelines for mainstreaming climate change adaptation and biodiversity consideration in the environmental assessment processes and supporting the enhancement of government capacity through training and close project supervision. 25 Annex 1: CPF Results Matrix (C) Corporate Scorecard Indicator (D) Indicator Related to Digitalization (G) Gender-Related Indicator High Level Outcome 1 (HLO 1) –Increased Job Creation The Namibia Systematic Country Diagnostic Update (P168320) did not include HLOs (July 2021). However, HLO 1 is aligned with Pilar 2 (Increase the Private Sector’s Ability to Generate Jobs and Incomes) of the FY14 -FY17 CPS. Higher Level Outcome Indicators Data source Current value12 1. Wage and Salaried workers (percent of International Labor Organization 61% (2022) employment) (C) 2. Gross Fixed Capital Formation, Private sector (as a World Development Indicators 24.6% (2023) share of GDP) (C) 3. Gender Gap in the share of wage and salaried 9.9% (2022) workers (percent of employment) (modeled ILO estimate) (G) High Level Outcome description Rationale: Namibia’s high levels of poverty and inequality are, among other factors, the result of a persistent lack of private sector employment opportunities. Unemployment remains high at 20.3 percent, while youth unemployment is double at 39.5 percent . Women face difficulties in accessing and maintaining employment and are more likely to be self-employed. Namibia’s employment and production is dominated by the informal sector. Formal employment constitutes only 29 percent of the total employment which is below average of South Africa 62 percent and global average 41 percent. Public investment has been a historical driver of growth while limited private sector growth has created a situation in which only a small segment of poor Namibians benefits from employment income, while the majority depend on social grants or subsistence farming. The domestic private sector struggles with a range of structural challenges, including lack of access to land, skills, markets, and affordable finance affecting both foreign and domestic investment in the country. An uncompetitive business environment and lack of level playing field increases the cost of doing business, especially for small businesses and discourages entrepreneurship. the dominance of state-owned enterprises, which effectively crowds out private participation and contributes to inefficiencies in key sectors of the economy. As outlined in the 2021 SCD and 2022 CPSD, addressing this challenge will require a strong growth strategy supported by a business-friendly environment to promote productive job creation. Boosting labor demand through investment in labor-intensive activities would create jobs, deliver needed productivity gains, and reduce inequality. Both the agriculture and service sectors are among those with the highest GDP multipliers, driven by large direct effects despite weak backward linkages with other sectors. Encouraging private investment and targeting labor-intensive sectors represent a double win. 12 CPFs track the trajectories of HLO indicators but do not formulate target values. 26 WBG Support: The CPF will contribute to HLO1 by addressing barriers in enabling conditions for the private and public sectors to boost resilient and equitable growth and shortcomings in labor market for better-quality jobs. Based on the findings of the SCD and CPSD, the CPF focuses on tackling economy-wide constraints posed by underperforming and monopolizing SOEs through reforming the role of SOEs, lifting regulatory barriers to firm creation and growth, and improving access to finance. In addition, the strategy aims to help address constraints in promising sector, namely renewable energy. Recognizing the critical importance of building human capital for investment and job creation, activities under this HLO will also target improvements in skills development, complementing support for education and health under HLO2. This HLO also recognizes that effective macro-fiscal management is a critical enabler of improved services and therefore focuses on ASA and technical assistance in public expenditure management. Finally, this HLO encompasses improvement in digital public service to improve public service delivery as well as climate and landscape management as essential for building increased resilience in the face of growing climate impacts. Sustainable Development Goals (SDGs) associated: SDG1 – No poverty; SDG2 – Zero Hunger; SDG8 – Decent Work and Economic Growth; SDG9 – Industry, Innovation, and Infrastructure; SDG10- Reduced Inequalities; SDG12 – Responsible Consumption and Production. CPF Objective 1: Increased Access to Renewable and Green Energy Link to previous CPF: This is a new objective reflecting client demand and the increased salience of supporting Namibia’s transition from imported coal-based power to domestically generated renewable energy while increasing access to energy. In addition, activities under this objective aim to support Namibia’s ambitious goals to become a leading producer of GH. Intervention Logic Rationale: In the context of Namibia’s goals for industrial development and greater climate resilience, increasing domestically produced renewable energy is a critical priority. Existing generation remains constrained with installed capacity of 654 MW against peak demand of 616 MW in 2021 which is expected to increase to 1,243 MW by 2040. As a result, NamPower, the national utility, imports on average between 60 and 70 percent of its energy requirements, rising as high as 90 percent during peak hours and low hydropower availability. This creates import dependence and impacts Namibia’s fiscal and external positions. The GRN and NamPower have committed to reduce the current dependence on electricity imports by building more domestic generation capacity. The country has excellent but largely untapped renewable energy resources, including one of the highest solar irradiation levels in the world, as well as excellent wind resources which would allow for zero-carbon energy self-sufficiency and enable the country to realize its ambition to become a major global GH13 (GH) producer and exporter. Finally, the electricity access rate is 55.3 percent, mostly grid-connected, leaving roughly 200,000 rural households, and 50,000 urban households without access to electricity. WBG engagement. The CPF under this objective will support Namibia’s transition from imported coal -based power to domestically generated renewable energy while increasing access to energy. Building on an existing TA a combination of financing and analytics will provide support to: 1) create an enabling environment for RE development; 2) develop a business model for electricity access expansion; 3) integrate increased RE into the energy system; and, 4) facilitate energy trade through the Southern Africa Power Pool. The Transmission Expansion and Energy Storage (TEES) will finance transmission and battery storage infrastructure to enable increased RE deployment. Subject to demand the CPF envisions further lending and IFC investment in the sector to: 1) expand RE generation; 2) support the GH development strategy; 3) increase electricity access; and 4) invest in transmission needed to enable increased energy exports. The Government aims to achieve universal access by 2040 and the WBG engagements in the energy sector is aligned with the World Bank 13 Green hydrogen is hydrogen gas produced through the process of electrolysis, utilizing renewable energy sources like wind or solar power to split water molecules into hydrogen and oxygen, without generating carbon emissions. 27 Africa Region’s ambitious initiative of “Mission 30014” of increasing access to renewable energy in Namibia. CPF Objective Indicators Supplementary Progress Indicators WBG Program Indicator 1.1: Renewable energy capacity enabled SPI 1.1: Transmission Line Financing Ongoing: (GWh/year) (C) constructed (kilometers) • Namibia Renewable Energy Scale Up Support Baseline (2023): 0 Baseline (2023): 0 Project (P179377): Target (2029): 1000 Target (2026): 461 • Transmission Expansion and Energy Storage Project Source: Transmission Expansion and Energy Storage Source: Transmission Expansion and (P177328 (IBRD/GCF US$138 million)) Project (P177328) Energy Storage Project (P177328) Financing Pipeline: • Namibia Green Hydrogen Support (FY25 US$150 Indicator 1.2: Percent of population with access to SPI 1.2: Share of women with million) electricity (percent) (C) permanent positions in NamPower • Namibia Energy Access Expansion (FY26, US$100 Baseline (2022): 56.2 %15 (Percentage) (G) million) Target (2029): TBD Baseline: (2023) :24 • IFC- Regional Energy Trade (IPPs) (US$50 million). Source: Energy Access Operation Target (2026): 30 • IFC- Battery Storage Financing Source: Transmission Expansion and ASA Ongoing: Indicator 1.3: Private Investment in Green Hydrogen Energy Storage Project (P177328) • Assessment of enabling environment for private mobilized (C) deployment of GH (BETF TA) Baseline (2023): 0 • Market sounding of GH value chain (BETF TA) Target (2029): US$600 million • Maximizing the socio-economic benefits of GH Source: Green Hydrogen Support Facility Project (TA)- • Carbon Market TA • Energy Sector Programmatic Advisory Services and Analytics (PASA) ASA Pipeline: • CCDR • Sustainable electrification business model. • IFC Advisory - Battery Storage Upstream CPF Objective 2: Improved enabling environment for private sector development Link to the previous CPF: This objective builds on the Institutional Environment for a Competitive Private Sector objective in the FY14-20 CPS. Rationale: The domestic private sector is characterized by poor productivity and competitiveness. Significant gaps exist between those in high-productivity, high-paying jobs, and those in low-productivity, low-paying jobs. Similarly, high levels of inequality in access to land, finance, and product markets significantly hamper average productivity. Critical to overcoming this constraint is establishing an environment for private sector-led, job-creating growth by creating an environment conducive to long-term growth through enhanced competition, improved access to finance, and development of a better entrepreneurship 14 Mission 300 is a joint effort between the WBG Africa region and African Development Bank an ambitious agenda to provide access to electricity of 300 million African by 2030. 15 56.2% population has access to electricity in 2022. Source World Development Indicator. 28 ecosystem. MSMEs provide employment and income to around 160,000 Namibians, accounting for approximately one-third of the country’s workforce and contributing 12 percent of GDP. Namibia’s nascent entrepreneurship ecosystem shows strong growth potential. The country r anks 61st of 137 countries in the 2018 Global Entrepreneurship Index (latest available data) and is among the highest-ranking countries in Africa. Initiatives such as Startup Namibia are providing entrepreneurs with both financial and nonfinancial support to address the current gaps in start-up skills, human capital, technology and innovation, and risk capital. The 2022 Country Private Sector Diagnostic (CPSD) identified several priority reform areas: (i) enhancing the role and performance of the SOE sector through a more effective competition policy environment; (ii) strengthening implementation of the public-private partnership (PPP) framework to expand private investments, especially in infrastructure; (iii) leveraging the potential for digital transformation of the economy; (iv) addressing inefficiencies in logistics and trade facilitation; and (v) tapping opportunities in the water sector for green and resilient growth. The Government has also expressed interest in World Bank engagement in strengthening their investment policy and promotion capabilities as well as the ecosystem for MSMEs and entrepreneurship. Namibia has a large but concentrated financial system and Credit-to-GDP ratio stands at 60 percent of GDP, relatively high for the CMA region. However, over 50 percent of banking sector loans go to mortgages and access to M SMEs and infrastructure projects remain constrained. The Namibia FSAP Update identified several needed reforms to strengthen the financial system. Some reforms have been implemented while others are underway; the modernized BoN Act 2020 gives it the macroprudential oversight function to safeguard financial stability in Namibia. Other areas for priority engagement include strengthening of State-Owned Financial Institutions (SOFIs) and climate finance (disaster risk finance, agriculture insurance, green finance). A secured transactions framework for movable assets, a modernized insolvency regime, and enhanced catalytic role played by the Development Bank of Namibia can facilitate increased access to finance for MSMEs. WBG Ongoing and Planned Support: The CPF through a combination of ongoing ASA and planned investment will support establishing an environment for private sector-led, job-creating growth by creating an environment conducive to long-term growth through enhanced competition, improved access to finance, and development of a better entrepreneurship ecosystem. Following activities are being proposed: ▪ To improve access to finance for MSMEs the World Bank will build on ongoing ASA (Southern Africa Jobs Platform and the Southern Africa Financial Sector Development program) to provide technical assistance and financing to support Government’s strategy to improve the per formance of its SOE sector and strengthen the capacity of Development Bank of Namibia (DBN). A planned FSAP (FY26) will review progress made on financial sector reforms and will identify priority reforms that may be needed to ensure financial system stability and integrity and advance financial sector deepening and inclusion. In addition, a State-Owned Financial Institution (SOFI) Assessment (FY25) of DBN is expected to inform the preparation of a potential investment policy operation. A planned operation is expected to support DBN to strengthen its capacity to play a catalytic role in modernization of the financial sectors laws, regulations and strengthening SOFIs in financing its economic sectors with the highest growth and job potential. ▪ To improve entrepreneurship ecosystem, the World Bank will continue policy dialogue with Namibia Investment Promotion and Development Board (NIPDB) on strengthening support for MSMEs and entrepreneurs, investment promotion and facilitation capacity and tapping the economic growth and job creation potential of selected value chains as well as other reform areas. ▪ IFC will pursue investment opportunities in agribusiness and microfinance. In collaboration with the IBRD, IFC will also explore opportunities to support the Investment Promotion Agency in enhancing the competitiveness of the country . 29 ▪ To increase digital infrastructure, the WBG engagement will build on recent diagnostics with further advisory support for: i) restructuring of Namibia Telecom to improve access and affordability of broadband internet; and ii) development of a strategy and implementation support for expanding digital public services. CPF Objective Indicators Supplementary Progress Indicators WBG Program Indicator 2.1: B-READY Pillar 1 (Regulatory Framework) SPI 1: Enactment of Consumer Credit Financing Pipeline: Score16. Act • Namibia Finance for Infrastructure and Jobs (FY26, Baseline (2025): TBD Baseline (2023): No US$150 million) Target (2029): TBD Target (2026): Yes • IFC- Microfinance Lending Facility Source: B-READY Survey Source: Namibia Finance for • IFC- Telecom Private Sector Participation [US$55 Infrastructure and Jobs million] Indicator 2.2: Number of registered new SMEs • IFC- Sustainable Agribusiness Project Baseline (2022): 29,850 ASA Ongoing: Target (2029): 5% increase from the baseline SPI 2: DBN is brought under the • Namibia: Entrepreneurship Ecosystem Diagnostic Source: Namibia Entrepreneurship Ecosystem supervision/oversight of the Bank of • Agriculture and Water Sectors Public Expenditure Diagnostic (P500612) ; Enterprise Survey 2025 Namibia Review Baseline (2023): No • Southern Africa Digital Engagement Indicator 2.3: Percentage of small firms that have a Target (2026): Yes • Improving Transport Connectivity, Logistics and bank loan and line of credit (G) Source: Namibia Finance for Resilience of Supply Chains in Southern Africa Baseline (2014): 19% (o/w women firms) Infrastructure and Jobs • Southern Africa Financial Sector Development Target (2029): TBD (o/w women firms) ASA Pipeline: Source: Enterprise Survey 2025 • CEM/Drivers of growth m(FY25) • State-Owned Financial Institution Assessment (FY25) • Financial Sector Assessment (FY26) • IFC -Business Environment Advisory Project • IFC- Digital Connectivity Upstream and Upstream CPF Objective 3: Strengthened macro fiscal management Link to Previous CPF: This objective relates to the previous CPS objective 1 “To build public sector capacity to enable better management of the economy”. This CPF objective will focus on the assessment of Namibia’s development strategy, public finances, and fiscal framework in view of the expected structural transformation brought by the exploration of oil and the development of GH value chains. It also aims at responding to the country’s request on improving tax administration to mobilize revenues and digital government services. Rationale: Namibia’s economic prospects may be fundamentally altered by the impact of the discovery of oil and gas and the potential to develop a GH value chain. Attaining these objectives will require improvements in the efficiency and effectiveness of public expenditures. From a growth perspective, there are 16 B-READY assesses the economy’s business environment by focusing on three pillars—the Regulatory Framework, Public Services, and Operational Efficiency. The Regulatory Framework comprises the rules and regulations that firms must follow as they open, operate, and close a business. The 10 topics in BREADY are being measured for scoring - Business Entry, Business Location, Utility Services, Labor, Financial Services, International Trade, Taxation, Dispute Resolution, Market Competition, and Business Insolvency. 30 two challenges: i) an oil and gas development strategy that also serves the domestic market may be incompatible with the green industrialization strategy the government wishes to pursue; second, climate change will impact the country’s diversification stra tegy beyond green industrialization, by affecting the performance and potential to develop other sectors identified as “strategic”, such as agriculture and tourism. Climate change is also expected to have a sizable impact on labor productivity. As one of the countries that will be most impacted by climate change, Namibia also faces large adaptation investments needs to secure current development gains. WBG Ongoing and Planned Support: The WBG will support government’s growth and development strategy (National Development Plan) and address structural measures to manage country’s fiscal resources given the large potential to inflow of revenues from oil and gas exp loration. The WBG will be engaged in analytical, high level policy dialogue and technical assistance to identify and analyze solutions to support macro-fiscal management with effective advocacy and outreach to relevant stakeholders . Following ongoing and planned activities are being proposed: ▪ On the revenue side, technical assistance will be provided to the Namibian Revenue Authority (NamRA) and the Namibia Finance Ministry in building a sound tax policy and strengthened tax administration to raise better and sufficient tax revenues. This will be achieved through: (a) Implementing strategies aimed at Improving compliance and revenue collection; (b) implementing targeted tax policy reforms to enhance tax revenue collection and improve equity; and (c) Strengthen systems through “compliance-by-design” to minimize compliance costs and ease the pressures on enforcement. While revenues stemming from oil exploration may be realized in the medium term, fiscal consolidation is needed in the short term to reinforce fiscal buffers and address future shocks, including climate shocks, expand the social programs, and finance infrastructure to boost growth and external competitiveness. ▪ To improve expenditure efficiency the World Bank will support, reforms to strengthen public procurement systems and investments in digital public services. On the spending side, the analysis will benchmark Namibia’s quality of public several service deliver y, with a focus on the health and education sectors, as well as on upstream sectors dominated by SOEs which are key for private sector competitiveness downstream. ▪ The impact of climate change on growth, output diversification and natural capital are also part of ongoing analytical work and would include support for the development of Disaster Risk Financing mechanisms as well as support for development of Namibia’s Sustainable Ocean Plan (SOP) supporting climate-resilient fisheries, understanding the potential for blue carbon, and pathways to decarbonization and pollution-reduction in the country’s two ports. ▪ Additional analytical work include: i) the identification of complementarities and/or trade-offs brought the development of oil & gas, on one hand, and GH on the other; ii) analysis of the linkages between these two strategies and the government’s objective of scaling -up other sectors considered strategic, such as tourism and fisheries; and, iii) the potential contribution of GH to the provision of global public goods, regional decarbonization and Namibia’s economic growth and diversification objectives, in cluding more and better-quality formal jobs. CPF Objective Indicators Supplementary Progress Indicators WBG Program Indicator 3.1: Percentage of public contracts that are SPI 1: Revised Public Procurement Act Financing: Pipeline procured through e-procurement (D) or Public Procurement Regulations • IFC- Strengthening Namibia Mining Value Chain Baseline (2024): 0%; Target (2029): 100% that include provisions that facilitate • IFC- Digital Connectivity Projects Source: Namibia: Assessment of Public Procurement use of e-GP tools and standards ASA Ongoing: System (P181292) Baseline (2023): No Revision • Agriculture and Water Sectors Public Expenditure Source: Development of 5-Year National Public Target (2026): Revised Review Procurement Strategy Source: Development of 5-Year • Country Climate and Development Report National Public Procurement Strategy 31 Indicator 3.2: Tax/GDP ratio • Support for a Sustainable Ocean Plan Baseline (2021): 28% SPI 2: Data matching of civil servants • Southern Africa Programmatic Poverty TA (TA on Target (2027): 33% payroll, procurement transactions 2025/26 Income and Expenditure Survey) Source: Namibia Digital Tax Transformation for and streamlining payment procedure ASA Pipeline: Improved Revenue Collection and Equity ASA and launched. • Digital Public Infrastructure RAS Regional Tax Policy ASA Baseline (2023): No • Poverty and Equity Assessment (FY26) Target (2026): Yes • Namibia Digital Tax Transformation for Improved Indicator 3.3: People using digitally enabled public Source: Namibia Digital Tax Revenue Collection and Equity (FY25) services (C) (D) Transformation for Improved • Support for IFMIS modernization. Baseline (2022): 5.9% Revenue Collection and Equity ASA • Disaster Risk Finance Policy and Strategy Target (2029): TBD and Regional Tax Policy ASA • Development of 5-Year National Public Procurement Source: Digital Public Infrastructure RAS Strategy • Regional Tax Policy SPI 3: Domestic Tax Risk Unit capacitated and begun data matching and other risk analysis (2025) Baseline (2023): No Target (2026): Yes Source: Namibia Digital Tax Transformation for Improved Revenue Collection and Equity ASA High Level Outcome 2 (HLO 2) – Improved Access to Quality Services New HLO. The Namibia Systematic Country Diagnostic Update (P168320) did not include HLOs (July 2021) High-level Outcome Indicators Data source Current value17 1. Human Capital Index Human Capital Index Brief 2020 44.6 or 0.45 (2020) 2. Universal Health Coverage Index (UHC) Human Capital Index Brief 2020 6218 (2017) High Level Outcome description Rationale. Namibia remains one of the most unequal countries in the world, with a Gini coefficient of 0.59 in 2015, reflecting its history of systemic exclusion under apartheid. Vision 2030 set an ambitious goal of reducing this to 0.30 by 2030. Despite significant investment and success in expanding access to public services, outcomes remain disappointing, particularly in rural areas and access to basic public services remains low among the poorest segments of the population. The country is characterized by an extremely high level of stunting, with 23.1 percent of the children under 5 years old considered stunted. The comparable figure in upper middle-income countries is 6.4 percent. More than 40 percent of the Namibian population and around 66 percent of its urban 17 CPFs track the trajectories of HLO indicators but do not formulate target values. 18 Index ranging from 0-100 measures coverage of essential health services based on tracer interventions. 32 population live in informal settlements or backyard shacks. WBG Support: This HLO reflects the government’s commitment to reducing poverty and inequality by focusing on enhancing access to quality p ublic services. This HLO addresses two of the development pathways outlined in the SCD, namely a) Building human capital and increasing the productive potential of the labor force by improving quality and efficiency of health; and b) Reducing inequalities through better service delivery by improving governance and the quality of services, especially for marginalized communities and remote areas where population density is low and the cost of delivering services is high. Based on the findings of the CPSD, the CPF will focus on supporting improved access to affordable housing as a key policy priority of the Government as well as a significant opportunity for growth and job creation. Sustainable Development Goals (SDGs) associated. SDG1 – No Poverty; SDG2 – Zero Hunger; SDG3 – Good Health and Well-being; SDG4 – Quality Education; SDG5 – Gender Equality; SDG6 – Clean Water and Sanitation; SDG10 – Reduced Inequality and SDG11 – Sustainable Cities and Communities. CPF Objective 4: Improved efficiency in education and health services The activities under this objective build on the Economic Management Program of the 2014-2020 CPS. Rationale: Despite a large share of government spending devoted to social programs, Namibia performs poorly in the provision of social services, including education and health care. In Basic education access and quality remains inequitable with low progression through basic education (low internal efficiency), no regular learning assessment, low use of technology, insufficient infrastructure, inadequate teacher preparation and support, and low access to ECD. Boys lag girls on participation and achievement. Despite improvements universal health coverage remains unequal, short of personnel, and insufficiently planned and coordinated. Under-5 mortality rates have declined (43.99 per 1,000 live births in 2017 to 38.91 per 1,000 live births in 2021); but neonatal mortality rate remains practically unchanged. The health workforce is inadequate to address the growing concern of noncommunicable diseases. WBG Ongoing and Planned Support: The Government currently does not foresee sovereign lending in the near term. World Bank support under this objective will be limited to advisory and analytic activities. The proposed analytics and advisory services are expected to inform government policies and programs to improve quality of education and health services which is a foundation for improved human capital outcomes. The following activities are being proposed and outcomes of the activities are subject to the materialization of the Reimbursement Advisory Services in Education and Health: ▪ In education, the focus is to develop a package of transformative reforms and systems to improve teacher effectiveness and student learning. This would entail teacher reforms and pedagogic practices, including teacher management and professional development to improve the cost- effectiveness of the teacher workforce. Technical support will include capacity development to implement national learning assessments, and strategy development for cost-effective and sustainable school construction as well as digital platforms. An objective of these technical and advisory support activities is to generate capacity and readiness for potential World Bank financed operation(s) in education sector that can support Namibia implement at-scale interventions to make educations sector more productive, efficient, and equitable. ▪ In health, the World Bank will explore opportunities through technical assistance building on the public expenditure review and MoHSS priorities, the focus is to support key investments in strengthening capacity of primary health care to deliver quality health services. In this regard, the World Bank will conduct a public financial management (PFM) in health assessment to identify bottlenecks to service delivery at the primary health care level; (ii) technical assistance for the development of a digital blueprint for the health sector; and (iii) an assessment of the supply chain system for essential medicines and supplies. ▪ In addition, a plan Country Gender Assessment is expected to review existing GBV laws and policies to identify gaps and areas of improvements to strengthen national institutional framework for GBV prevention and response services. 33 CPF Objective Indicators Supplementary Progress Indicators WBG Program SPI 1: School Infrastructure Expansion ASA: Ongoing Indicator 4.1: Adoption of package of reforms of Plan Developed • Gender Equality and Citizen Engagement PASA Teacher professional development and workforce Baseline (2024): No plan ASA Pipeline: management Target (2026): Plan developed • Education RAS Baseline (2024): No report Target (2029): Reforms adopted Source: Education RAS • Health RAS Source: Education RAS • PFM in Health; • Digital Health Blueprint; SPI 2: Adoption of recommendations • Essential Medicines and Medical Supplies Supply Indicator 4.2: National Learning Assessment (NLA) to strengthen supply chain Chain Assessment framework for foundational grades 1-3 developed management for essential medicine • Southern Africa Regional Health Preparedness Baseline (2024): No assessment and supplies. Target (2029): Framework developed Baseline (2024): No adoption Source: Education RAS Target (2029): Recommendations adopted for supply chain Indicator 4.3: Adoption of digital health blueprint (D) management Baseline: No digital blueprint (2024) Source: Health RAS Target: A digital blueprint adopted in health (2029) Source: Digital Health Blueprint ASA CPF Objective 5: Improved Housing and Urban Services Link to the new CPF: This is a new CPF Objective. Its inclusion reflects: (i) Government’s request for WB G support in the sector; (ii) IFC’s ongoing investment in the sector; and (iii) economic opportunity associated with housing . Rationale: Rapid urbanization coupled with an unmet demand for formal housing has led to proliferation of informal settlements in urban areas. Namibia is urbanizing rapidly with nearly 50 percent of the population living in urban areas, a share that is expected to rise to 75 percent by 2050. Formal housing delivery with basic services is not keeping pace with demand, resulting in a rapid growth of informal settlements and unplanned city growth at the periphery. The City of Windhoek estimates that the number of people living in informal settlements doubled from 80,000 in 2011 to 160,000 in 2022. There is an estimated housing backlog of around 300,000 units (with an estimated backlog of 84,000 units just in Windhoek). Approximately 15,000 new households require accommodation each year in urban areas, and if the backlog is to be eradicated within a decade, an additional 30,000 housing units will be required annually, creating demand for about 45,000 new housing units per year. Key housing supply side constraints include lack of serviced land for housing construction, rigid regulatory processes and planning standards, insufficient financial, technical, and coordination capacity at different levels of Government. While large by African standards, Namibia’s mortgage finance market mainly serves upper -income households, thereby missing the priority target groups (ultra-low and low-income groups) outlined in the National Housing Policy (NHP). Combining the delivery of affordable housing with basic services (water, sanitation, electricity etc.) and urban mobility will be key to ensuring the spatial, economic, and social inclusion of Namibia’s urban population. More needs to be done to leverage p rivate sector funds from commercial banks, capital markets, and investors to venture into the different segments of the housing market. There is also a need to bring in climate- and disaster-risk sensitive planning and building regulations for resilient ho using to limit the exposure and vulnerability of Namibia’s housing stock to floods, which is a high risk for 34 coastal towns like Walvis Bay and Swakopmund. Accelerated delivery of housing is a key priority of the Namibian government in the NDP Plan and Harambee Prosperity Plan. Namibia’s mortgage finance market is relatively large by African housing market standards, but mainly serves upper-income households. WBG Ongoing and Planned Support: WBG through a combination of IFC investment and Bank ASA will support GoN urbanization and housing issues. The WBG engagement under this objective is at an early stage. IFC’s ongoing investment aims to increase access to affordable housing finance targeting upper low- and middle-income households. IFC will also explore advisory services in supporting the development of mortgage market for affordable housing. At this stage the World Bank will provide analytical and advisory services to in housing and urban services. A planned World Bank ASA on Urbanization and Housing will explore: 1) regulatory reforms to support: a) digitization of land titles as well as enforcement of laws; b) the provision of basic infrastructure to buy down the cost of affordable housing; c) development of effective housing PPPs delivery structures; d) securitization and covered bond laws to support the sector to tap the capital market; 2) reform of the state-owned National Housing Enterprise (NHE) under the Ministry of Urban and Rural Development to increase its access to land, low-cost finance, and technical capacity; 3) Technical assistance to municipalities/local authorities in governance, servicing of land banks, and enhancing collections to increase their receivables, to unlock funding from local commercial banks; 4) Advisory support to Banks/NBFIs on affordable housing solutions, alternative products such rent and rent-to-own models; supporting Banks to scale up their developer financing portfolios mainstreaming the use of greening techniques and leveraging IFC’s Excellence in Design for Greater Efficiencies (EDGE) tools. In addition, the Bank’s ASA will focus on : 1) a demographic trends driving housing demand, including possible shifts due to the new green industrialization plan; 2) study the urban expansion patterns of Windhoek and 1-2 secondary cities as well as assess the exposure and vulnerability of existing informal settlements and land ; 3) develop a land and housing market assessment to understand key constraints to housing supply; 4) analyze institutional roles and responsibilities and identify ways to strengthen the technical and financial capacity of municipal governments; 5) identify opportunities for informal settlement upgrading, risk-sensitive greenfield and brownfield development, and urban intensification; and 6) develop recommendations to support the implementation of the NHP and create pathways towards green, resilient, and inclusive urbanization in Namibia. The ASA could also help identify potential investments that the Bank or other development partners could finance to help accelerate the implementation of the NHP. In addition to the ASA, technical assistance could be considered to strengthen the technical and financial capacity of key actors in the housing space. CPF Objective Indicators Supplementary Progress Indicators WBG Program 5.1: Increase volume of mortgage loans (US$ million) SPI 1: Recommendations Note on Financing Ongoing Baseline (2023): US$ 0.7 million improving housing and urban service • IFC- Letshego Namibia Housing, US$50 million (IFC Target (2029): US$ 87.5 million delivery #44605) Source: Letshego Namibia Housing Baseline (2024): 0 Financing Pipeline: Target (2026): 1 • IFC -Housing Developers Support (US$37 million) 5.2: National Housing Policy Implementation Plan Source: Urbanization and Housing ASA Ongoing: Adopted ASA • Urbanization and Housing Review (FY25) Baseline (2024): Implementation plan approved ASA Pipeline: Target (2029): Implementation plan advanced. SPI 2: Stakeholder workshop on • IFC- Development of Mortgage Market – FIG Source: Urbanization and Housing Review accelerating the implementation of • IFC- EDGE Advisory Project [TBC] the National Housing Policy Baseline (2024): No workshop Target (2026): Workshop Held 35 Annex 2: Completion and Learning Review Date of Country Partnership Strategy: June 26, 2013 (Report No.: 77748-NA) Date of Performance and Learning Review: March 8, 2018 (Report No.: 122699-NA) Period Covered by the Completion and Learning Review: FY14-20 Introduction 1. This Completion and Learning Review (CLR) assesses the development outcomes and performance of the World Bank Group’s (WBG) Country Partnership Strategy (CPS) for Namibia. It covers the period of the CPS FY14-17, and the extension under the Performance and Learning Review (PLR) through FY20. The CLR is the first ever for Namibia as a Country Assistance Strategy (CAS) completion report was not required for the 2007 Interim Strategy Note (ISN, Report 39195-NA, April 25, 2007) which was the first engagement document for Namibia since it joined the World Bank in 1990. For completeness and learning purposes, the CLR also discusses activities that were implemented or completed after FY20. 2. This CLR was prepared in accordance with the special procedure applicable to country strategies developed under the pre-2014 Country Engagement Model19. As the design of the CPS pre-dates the current CLR methodology, it does not lend itself to evaluation using that methodology. Moreover, the absence of IBRD lending or Reimbursable Advisory Services (RAS) during the CPS period, together with the modest overall Advisory Services and Analytics (ASA) engagement, makes it difficult to rate development outcomes and limits the availability of data for evaluation. In such cases, working arrangements with IEG allow for preparation of a special CLR that evaluates the country strategy outside of the normal CLR methodology. Accordingly, this CLR does not rate the CPS’s overall development outcome or the WBG’s performance. While the CLR uses a modified results matrix to facilitate the assessment and to align the results framework more closely with the current guidelines, the focus is on learning rather than ratings, while making every effort to provide an accurate accounting of progress. Furthermore, this review necessarily relies, in part, on qualitative evidence to assess progress and does not rigorously distinguish among outcomes that were achieved prior to the end of the CAS period or afterwards given the time that has elapsed since the CPS period. Proposed outcome ratings should be considered in light of these limitations. 3. A combination of factors led to a significant delay in preparation of the CLR and new CPF. Near the end of the CPS period, the WBG decided to delay preparation of a new CPF to align the strategy cycle with upcoming presidential and general elections in 2019 and to allow time for the preparation of a first Systematic Country Diagnostic (SCD). Hence the PLR of 2018 extended the CPF through FY20. The SCD was launched in FY19, but due to the COVID-19 pandemic the document could not be finalized until mid-2021. Subsequent discussions on the timing and content of a new CPF were protracted as Government considered and came to a decision on an expanded role for the WBG. Dialogue with the authorities on the preparation of a new CPF commenced in late 2021 but an agreement on the scope of the new CPF was not reached until 2023. 4. This first CPS was aligned with the Government of the Republic of Namibia’s (GRN) National Development Plan 4 (NDP4) and extended through the PLR in line with NDP5 (2017/18-2021/22). It aimed at deepening the WBG relationship and cooperation to enable Namibia to find solutions for its 19 IBRD/IDA/IFC/MIGA “Working arrangements between Independent Evaluation Group and WBG” EXC6.02 - PROC.105. Country Engagement Guidance (OPS5.01-GUID.110) 36 challenges. The overarching objective of the CPS was to advance the WBG-Namibia partnership by providing a flexible but limited package of Technical Assistance (TA) and knowledge services which could serve to build a solid foundation for possible future expansion of the Bank Group’s engagement. The CPS concentrated on two main objectives, or Pillars, namely, to help: (i) build state capacity for better economic management; and (ii) stimulate private sector development by improving the regulatory framework and assist with investment transactions. The International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA) aimed to seek opportunities to invest in priority industries and encourage public-private partnerships. No lending operations were envisaged reflecting GRN preferences. Preparation of the CPS was aided by the placement in 2011 of the country senior economist in Windhoek to act as country representative. However, the position was thereafter relocated to headquarters in 2014. 5. The 2018 Performance and Learning Review (PLR) assessed the progress made under the CPS as largely satisfactory and made recommendations for extending the strategy in view of new requests from the GRN for assistance in areas such as transport. In response to requests from Government, the PLR added seven new outcomes and nine outputs. The WBG continued to solidify its partnership with the Government after the end of the CPS, laying the foundation for a scaled-up engagement. Preparation of country diagnostics and other technical assistance was used to support policy dialogue and develop options and demand for new WBG activities. Preparation of the first SCD was launched in FY19 and completed (after delays due to COVID) in 2021. This was complemented by a Country Private Sector Diagnostic, completed in 2022. Ongoing ASA and technical assistance on renewable energy and energy access was instrumental in catalyzing a request for IBRD financing to support expansion of renewable energy in Namibia. TA under the Energy Sector Management Assistance Program (ESMAP) GH support program also led to a request for IBRD financing in support of Namibia’s ambitious GH plans. Technical assistance for e-Government procurement (FY22) was instrumental in leading to a request for a wider assessment of public procurement which was launched in 2023. A growth diagnostic and a Country Climate and Development Report (CCDR) were launched in FY24. Progress toward CPS Development Outcomes Pillar 1. Improve the state’s capacity to design, implement, and monitor policies on strategic issues. 6. At the start of the CPS period, Namibia was grappling with the twin challenges of lagging growth and the need to improve policy implementation and public service delivery. Challenges increased during the CPS with the economy falling into recession in 2016 following the end of the commodity cycle and severe drought in 2018-2019. As a result, per capita GDP stagnated, and debt increased rapidly. The COVID pandemic which struck during the final months of the CPS period was a further blow. The CPS sought to support the GRN in its effort to strengthen institutions to better design, execute, and monitor public policies in implementing NDP4, and later, NDP5. This was seen as particularly important as policy outcomes and impact had not matched the level of government spending, and the initial rapid decline in poverty achieved after independence had stagnated. These objectives remained relevant as the country faced economic headwinds. Four program objectives were articulated under Pillar 1: economic management; environmental management; statistical capacity building; and health and nutrition program.20 One of the four objectives was achieved while two were mostly achieved and one was partially achieved. 20 For the purpose of CLR evaluation and in order to align the results framework more closely with the current guidelines, the results matrix was modified using the Desired Outcomes from the CPS to serve as CPF objectives, see page 22-27 of CPS. 37 Objective 1: Economic Management: To build public sector capacity to enable better management of the economy – mostly achieved 7. The economic management program objective was developed in response to GRN requests for support and activities focused on building debt management capacity and ability to manage Public Private Partnerships (PPP), as well as assisting on issues of insolvency, mainstreaming electronic government, improving the financial management of the city of Windhoek; and increasing efficiency in the social protection system which consumes an average of 44 percent of the annual national budget. 8. With respect to debt management, a multi-year TA (Technical Assistance to Ministry of Finance on Economic Management) aimed to improve the Ministry of Finance's capacity for debt management and analysis. The TA built on 2012 Debt Management Performance Assessment (DEMPA) assessment and a 2013 debt management ASA (Analysis and Options for Namibia’s Medium-term Debt Strategy. Indicators for increased debt management capacity included adoption of a debt strategy and the use of Debt Sustainability Analysis in the MoF fiscal framework and BoN economic outlook. Improved debt management was demonstrated by Cabinet approval of the Sovereign Debt Management Strategy (SDMS) 2018-2025 which incorporated benchmarking of borrowing activities against various risk criteria. Subsequent MTEF and Borrowing Plan Documents issued by the Ministry of Finance and Bank of Namibia have included explicit benchmarks based on debt sustainability criteria.21 Notwithstanding this enhanced capacity for debt management, due to economic shocks, public debt rose rapidly reaching 67 percent of GDP in 2020, subsequently peaking at 73 percent in 2022. 9. The CPS identified support for developing the legal framework for public-private partnerships as a key avenue of support for mobilizing investment in infrastructure with IFC and MIGA available to facilitate individual transactions. The WBG program aimed to build capacity to manage PPPs with progress measured by the delivery of specific World Bank technical assistance outputs. Planned support related to the Procurement Law and PPP policy were provided under the Economic Management TA. The engagement was successful in supporting the issuance of a PPP policy in 2015 and enactment of the Public Private Partnership (PPP) Act 2017, which came into operation in early 2018. Partners, including the ADB, provided related support though there was little coordination of these complementary engagements, in large part because neither institution had an office in Namibia. The PPP screening framework and appraisal guidelines were approved in 2021, but PPP uptake remains low due limited PPP project preparation funding and staff capacity constraints. Hence while World Bank TA contributed to the creation of basic enabling legislation, capacity to engage in transactions remains limited and no PPP transaction reached financial close during the CPS period. Nevertheless, the PPP Unit has identified ten PPP pipeline projects, five of which the Namibian government has formally announced, including the concession of the Walvis Bay container terminal which was negotiated in 2022 and commenced operations under a private operator in October 2024.22 10. A specific task (Assistance on Financial Reporting for the City of Windhoek) assisted the City of Windhoek in building its capacity to produce acceptable financial reports. The aim was to help the City of Windhoek to access loans from the market by improving financial reporting. This could generate the momentum for longer term legislative reform to improve municipal financial management and governance. Though the task was phased over two periods, financing for the first part was provided but 21 For example: Republic of Namibia Funding Strategy 2016 - 2019 and Ministry of Finance, Briefing on Public Debt Management and Public Procurement. 22 World Bank Group. (2022). Creating Markets in Namibia: Country Private Sector Diagnostic. Washington, D.C.: World Bank Group. Page 18 38 not confirmed for the second part, which limited the sustainability of the project. Nevertheless, the city did adopt a new accounting framework as required to issue bonds, switching to International Public Sector Accounting Standards that are based on accrual accounting principles. 11. The CPS aimed to support fiscal consolidation through rationalization of social protection (SP) programs. A Diagnostic Report on the Social Protection System (2018) and several workshops helped advance the dialogue on social registries among the institutions involved in the social sector with a view to eliminating duplicative programs and maximizing efficiency. In addition, TA on Improving SP Information Systems (2019) provided guidance for building an integrated social registry to harmonize the steps in the delivery process, such as intake and registration, which can generate efficiencies and cost savings when multiple programs are using the registry. However, the studies did not lead to elimination of a duplicative program as envisioned in the CPS and instead focused on improving program coordination through creation of a social registry. Objective 2: Environmental and Natural Resources Management: Foster implementation of coastal management and other environmental policies, expand adoption of environmentally sensitive tourism practices, and increase jobs and incomes from sustainable use of Namibia’s environment. –achieved. 12. The environmental management program objective benefited from the well-established relationship between the GRN and the World Bank through Global Environment Facility (GEF) grant support for coastal zone management. During the period under review the second Namibian Coast and Conservation Management project (P070885) was completed and provided good results in increasing the area of marine systems under effective management, while more than doubling the number of people engaged in sustainable use activities.23 Furthermore, two very important studies were conducted. The Climate Smart Agriculture Diagnostics was dropped, but work was carried out under the Integrated Land and Water Management activity (2021) which produced three reports: one on opportunities for sustainable use of forest resources for communities in the Zambezi River region. A second report focused on climate-smart agriculture, critical for the driest country in Africa, at the time of climate changes and severe droughts; and the third was a hydrometeorological assessment. To support climate smart development, including sustainable tourism, a multi sector investment opportunity analysis for the Okavango region (2017) and a case study of nature conservancy joint ventures (2015) were conducted. These came with specific scenarios and recommendations for Namibia and the neighboring countries (Angola and Botswana) for transboundary cooperation and nature protection while also addressing some critical issues of job creation. Unfortunately, the envisaged GEF–funded project for climate change mitigation did not materialize; nor did the feasibility study for a desalination plant fueled by renewable energy. Another important TA (Namibia Climate Risks Policy Dialogue) on flood risk mapping aimed at improving flood forecasting for Namibia’s northern region was dropped. Objective 3: Statistical Capacity: To increase the frequency, quality and dissemination of statistics and policy analysis, and expand use of data and statistics to monitor and evaluate public policies – partially achieved 13. Statistical capacity building was high on the government agenda to supervise and evaluate programs whose effectiveness can be improved with proper statistics and scientific assessments and their timely dissemination. The CPS program aimed to help government overcome inadequacies in data, statistics, modeling, and monitoring systems. TA supported implementation of the 2017 Namibia Financial 23 ICR, Report No: ICR00003819, page iii, June 26, 2016. 39 Inclusion Survey (NFIS), evaluation of the 2015/16 Namibia Household Income and Expenditure Survey (NHIES), and preparation of Namibia’s Quality Assurance Framework for Statistics (NQAFS). Namibia’s score on the World Bank Statistical Performance Indicator rose from 49.5 in 2016 to 53.6 in 202024. The proposed Natural Capital accounting under the Wealth Accounting and Valuation Environmental Services (WAVES) global initiative and the Road Traffic Safety Surveillance activities were not completed. 14. The program also aimed to support the National Planning Commission (NPC) to develop capacity to monitor National Development Plan Implementation. An IDF grant, (Namibia: Performance Management and Monitoring & Evaluation project (2015)) helped NPC to improve its capacity to design and implement an effective system for monitoring and evaluation of national development plans. Although implementation of the grant was delayed by a reorganization of the NPC, a diagnostic review of M&E systems was completed, and a new M&E framework was introduced. Use of the new framework was reflected in the FY2015/16 and subsequent budget and MTEF which included monitoring indicators that were informed by the draft M&E framework. NPC continues to play a critical role in monitoring implementation of National Development Plans.25 Objective 4: Health and Nutrition: Implementation of reforms that enable GRN to deliver health, education or social protection services more effectively. – partially achieved. 15. The CPS focused on the challenge of addressing the increasing burden of non-communicable disease and targeted increased integration of the systems for communicable and non-communicable disease. This was to be achieved by the launch of a national nutrition plan; adoption of policies to better control tobacco use; and measures to prevent and control cervical cancer within HIV/AIDS programs. The 2018 PLR reported this outcome as having been achieved based on the completion of these steps. Specifically, the following achievements were recorded: 1) Cabinet approved the Namibia Zero Hunger Strategy and Roadmap in 2015; 2) The Tobacco Products Control Act came into operation in 2014 and excise taxes on tobacco were increased in 2019; and 3) The Namibian Ministry of Health and Social Services (MoHSS) adopted cervical cancer prevention guidelines in March 2018.26 The latter guideline have been assessed to be effective while the rate of smoking in Namibia declined between 2015 and 2020, however there are no data on nutritional outcomes during the CPS period. 16. A Health Sector Public Expenditure Review (PER), completed in 2019, is the first for Namibia’s health sector with extended health financing assessment. The PER assessed Government health spending and system performance. The report found that private sector employers contribute almost a quarter of total health spending to pay for insurance coverage managed by medical aid funds; however, the insured still report very high out-of-pocket payments. The World Bank also supported developing a universal Health care (UHC) policy framework. NDP 5 stated Government’s commitment to achieve UHC but financing options remain to be developed. Pillar 2. Increase the private sector’s ability to generate jobs and incomes. 17. NPD4 and NDP5 acknowledged that without increased investments in the country’s infrastructure and the private sector’s productive capacity, Namibia would remain locked in the situation of growth without job creation. The CPS proposed two programs to meet these objectives: one was designed to help strengthen the regulatory framework to spur investments, and the other would aid with specific 24 See note on indicator in Annex 1. 25 Namibia Planning Commission. (2020). Annual Report 2019-2020. Namibia Planning Commission. 26 Ministry of Health and Social Services Namibia (2018). National Cervical Cancer Prevention Guidelines. Windhoek (Namibia): Ministry of Health and Social Services (Namibia). 40 investment transactions, including investments from IFC and guarantees from MIGA. The CPS recognized the fact that, in addition, there was a need to improve skills, and foster entrepreneurship and innovation. Objective 5: Regulatory Framework for a Competitive and Resilient Private Sector. Government introduces reforms that reduce transaction costs and increase the resilience of markets, especially financial services and capital markets, and that reduce the costs that firms face in complying with business regulations. – partially achieved 18. This objective encompassed advisory and IFC investment support aimed at improving the business environment and increasing Namibia’s competitiveness. It reflected a recognition that Namibia’s competitiveness (as measured by the World Economic Forum (WEF) Global Competitiveness Index) was falling behind other countries, highlighting the need for reforms to reduce regulatory barriers, increase access to finance, and stimulate competition. In the PLR, the results framework was revised so that sole performance indicator for this objective related to “a resilient and supportive financial sector” as evidenced by IFC investments in financial sector actors. In addition, significant TA was delivered, including, inter alia, 1) a FIRST grant for Namibia’s Financial Institutions Supervisory Authority (NAMFISA) to develop a Namibia Crisis Management Plan (2015); 2) a Strengthening Namibia Competition Policy Report (2015); and 3) an analysis of obstacles to SME Finance (Namibia Supply Side SME Financing, 2017). The WBG also helped in developing central securities depository and enhancing payments oversight (Developing Central Securities Depository and Enhancing Payment Systems Oversight, 2016). However, an anticipated RAS for improving the business environment did not materialize and a TA for strengthening capacity of the Competition Commission was dropped prior to completion. Nevertheless, during the CPS and after, the country enacted significant amendments to financial oversight legislation.27 Namibia’s score in the 2019 WEF Global Competitiveness Report showed significant improvement, placing the country as the third most competitive in sub-Saharan Africa, with the Financial System score increasing during the CPS, above the upper-middle-income group average.28 Objective 6: Support for Investments in Production and Infrastructure. Increase the number of investments made by the IFC or with Bank Group support -- partially achieved 19. The program in support of private investments in infrastructure and production aimed to provide direct support for investments through IFC debt and equity investments, MIGA credit enhancement and risk insurance, PPP transaction support, and technical advice on structuring investments. An increase in investments supported by IFC and MIGA was therefore seen as an important measure of success of this objective. Specific indicators were related to increased capacity to undertake projects in energy as evidenced by an IFC advisory on the Kudu Gas Project and MIGA guarantees in energy. Other indicators related to MIGA’s guarantees in agribusiness and the GRN’s adoption of a PPP approach for the new container terminal. With respect to the latter, the WBG provided an analysis of PPP options at the Port of Walvis Bay and the International airport in Windhoek with two activities: 1) Transport Sector PPP Support PPP (2018); and 2) Transport Sector PPP SOE reform (2019). The studies proved useful in supporting the government’s decision to move ahead with the concession of the Walvis Bay container terminal which was successfully negotiated in 2022. 20. IFC’s engagement remained modest during the CPS with new financing of US$103 million during FY14-20. In 2016 IFC launched the first bond by a non-resident issuer in the Namibian capital market, raising 180 million Namibian dollars (US$12 million) for private sector development. This was done 27 Amendments to the following acts were adopted: Bank of Namibia Act (2020), Namibia Financial Institutions Supervisory Authority Act (2021) Banking Institutions Act (2023), Financial Institutions and Markets Act (2021). 28 World Economic Forum. (2019). The Global Competitiveness Report 2019. World Economic Forum. page 410 41 under the IFC’s Pan-African Domestic Medium Term Note Program which was launched in 2012 to support capital market development in the region. Other IFC investments were in Bank of Windhoek (US$68.9 million, 2015) to support SME lending and Purros Investments (US$14 million, 2016). In 2021, IFC partnered with the pan-African finance organization, Letshego’s subsidiary in Namibia with a US$50 million financing facility to subsidize affordable housing finance. 21. MIGA was active throughout the CPS period and provided multiple guarantees, primarily in support of solar power, supporting investments totaling 25 megawatts in new solar generation under the GRN’s Renewable Energy Feed-In Tariff (REFIT) program. The Ejuva One and Two projects (Project #13755) support the operation and maintenance of two 5-megawatt solar power plants in the Omaheke region. In addition, MIGA provided guarantees covering Investec’s non-shareholder loans and Mettle Solar Investments Pty Ltd.’s equity investments into the project enterprise (Metdecci Energy Investments Pty Ltd.), which owns and operates the Karibib photovoltaic (PV) solar plant (Project #14317) outside of Karibib town in the Erongo region. Another two solar projects were guaranteed by MIGA in 2019: NCF & Tandii Solar Projects (Project #14321), in the Oshikoto region. However, the REFIT program had key weaknesses including a low limit on project capacity (5MW) and a lack of clarity on some contract terms which limited uptake and led to disputes with investors. Closer coordination between the World Bank and MIGA on RE sector policy might have addressed these gaps in the program at an early stage. MIGA also supported investment in agribusiness through Silverlands Vineyards (Pty) (Project #13105) to develop and manage 198 hectares of existing table grape vineyards designated for the export market. The project led to the creation of 144 full time jobs. 22. A sustained technical assistance engagement in the energy sector during the CPS helped to develop a policy and regulatory environment conducive to private investment in renewable energy and laid the foundation for renewed IBRD lending in Namibia. A series of technical assistance engagements including: 1) Development of the Integrated Resource Plan for Namibia (2014); 2) Namibia National Electrification Program TA (FY20-23), and the Solar Risk Mitigation Initiative (SRMI) (FY18-20) provided significant TA – largely trust funded – to support Namibia’s overall energy development and specifically to develop sustainable and bankable renewable energy projects. Importantly, much of this technical assistance was grant financed and was aimed at crowding in concessional climate finance. The result was Namibia’s successful application to the GCF and the IBRD Fund for Innovative Global Public Goods (GPG) Solutions financing to support investments in transmission and battery storage infrastructure needed to attract private investment in RE generation. The resulting package of financing reduces the development risk of the RE projects while reducing the cost of the grid investments needed by blending IBRD financing with concessional funding. The latter proved critical in a context where Namibia is planning a pipeline of private sector investments in RE and requires targeted grid investments to support this effort at the lowest cost possible in order to ensure access and affordability. World Bank Group Performance 23. World Bank Group Performance over the CPS period was generally good. The WBG had had a relatively limited engagement in Namibia prior to this first full CPS. One of the most important lessons learned from the prior period was that the client had to be in the lead and show ownership of the interventions. The ISN also argued that a program of analytical work did not always lead to tangible outcomes (i.e., policy reforms) in part because there was insufficient follow-up by the WBG and/or the agenda was not driven by the Government. In the absence of lending, the WBG team sought to provide in-time analytical advice and technical assistance. Many of the interventions were well received and were timed to align with government’s own efforts. The decision to place a World Bank representative in Windhoek was a move toward intensifying the dialogue and providing more opportunities for Bank Group 42 involvement in new initiatives, while at the same time answering queries and offering advice and information in a speedy manner. This enabled the Bank to gauge Government interest in new analytical activities more effectively and increased the relevance of advisory activities. Building a closer relationship with the Government and partners was instrumental in strengthening the collaboration. In terms of the CPS’ overall objective of building greater trust between the WBG and Namibia, the CPS did indeed serv e as a transition toward a more ambitious program as evidenced by Government’s requests for IBRD financing in 2022 and the scaled-up engagement outlined in the FY25-29 CPF. Design and Relevance 24. CPS Focus areas and objectives reflected key development challenges and were well aligned with Government priorities. The CPS and the PLR were fully aligned with the government’s own agenda as formulated in the NDP4 and NDP5, and the long-term objectives of Vision 2030. Specifically, to address the critical challenges of lagging growth, persistently high unemployment, and extreme inequality, NDP4 emphasized faster growth, increased employment, and reduced income inequality. NDP4 also aimed to improve execution of development plans through strengthened national statistic, closer linkages between budgets and NDPs, and improved systems for reporting, monitoring, and evaluation. Hence the WBG program which focused on building state capacity and facilitating private sector development with the goal of generating jobs was well aligned with Government’s own priorities and consistent with the findings of business environment surveys and stakeholder feedback during CPS consultations. The program was constrained by the lack of demand for IBRD financing and hence the program was entirely knowledge- based, in line with Government preferences. WBG analytical work was expected to feed into the Government’s planning and implementation process by providing global knowledge. Given the Government’s reluctance to borrow, the CPS strategy’s emphasis on enabling IFC and MIGA activities was therefore appropriate although this limited the scope of the World Bank’s engagement and made it difficult to intervene effectively to help address challenges related to human capital. 25. The CPS reflected the experience and lessons learned from the ISN regarding the need to ensure ownership, bring greater focus to the program, and build synergies with IFC and MIGA. The program was meant to be flexible and recalibrated based on the demand and circumstances While such an approach gives ample opportunities for adjustment, response to requests, and involvement in new areas, concrete targets and results are difficult to set. Some demand-driven activities were not well linked to the program’s overall strategic objectives. Moreover, the lack of sustained presence in the country after 2014 made such an approach difficult to implement due to the lack of regular contact with the authorities. The CPS appropriately identified key risks, including country risks, financing risks, and coordination risks. Given the CPS assumption that planned work would in some cases be financed via trust funds or RAS arrangements, the CPF appropriately identified as a risk that these might not materialize, as indeed they did not in several instances. The program was adjusted accordingly by reducing the scope of planned activities. The CPS also highlighted the risk of a lack of coordination and weakened program coherence due to low capacity and weak government oversight. The CPS proposed to ensure selectivity via a mechanism of regular program reviews with the Government to address this, but the reviews did not take place on a regular basis. Finally, the CPS highlighted the need to exploit synergies across the WBG and the program successfully targeted sectors where these synergies were most apparent including infrastructure, investment climate, and the financial sector where World Bank advisory work complemented IFC investment and MIGA guarantees. The approach of combining World Bank support for policy reforms (e.g., in PPPs) with IFC and MIGA support for transactions was appropriate even though specific transactions were slow to materialize. In some cases, stronger upstream policy engagement by the World Bank could have helped to address constraints faced by private investors as was the case in the renewable energy sector. 43 26. The results framework had significant shortcomings. The CPS results framework was organized around programs of advisory activities that corresponded to CPS objectives. The objectives were generally broad and not always well aligned with the indicators selected. In several cases, objectives were framed as increasing Bank Group engagement and therefore only distantly related to impacts. Delivery of Bank outputs was used as an objective indicator rather than a supplementary progress indicator. Indicators that demonstrate increased capacity or implementation of reforms embedded in WBG knowledge products would have been more relevant for assessing the engagement. Overall, the results framework was not aligned with the Shared WBG and IEG Approach to Assessing Country Partnership Frameworks, which states that completion of WBG activities or outputs are not sufficient to assess Development Outcomes. The CPS would have benefited from a more systematic output-outcome results framework consistent with the analytical character of the engagement seeking clearer measures that would link the interventions to impact on the higher-level goals of reducing poverty even if indirectly. The PLR added seven new outcomes and nine outputs. Some of them were in direct response to Government requests. The PLR dropped several targets that might have remained and contributed to the assessment. Program Implementation 27. The program was largely successful in delivering targeted knowledge products . Many critical analytical pieces were completed, and capacity building activities were conducted although the CPS did not specify desired impacts. Nevertheless, impacts are in some cases apparent as outlined above and in the results matrix. CPS design was adjusted to changing circumstances as shown by program adjustments made in the PLR to align the program with NDP5. The presence of a liaison officer based in Windhoek between 2011 and 2014 helped to develop the relationship but the subsequent decision not to appoint a replacement made communication with Government less regular and hampered implementation. The division of responsibility between the World Bank, IFC, and MIGA was appropriate with, for example, the World Bank providing TA on overall policies and capacity related to PPPs while IFC supported specific transactions. MIGA scaled up its activities significantly during the CPS, especially in renewable energy, which helped to pave the way for greater Bank Group engagement in the sector. The World Bank worked closely with the UN agencies and USAID in helping the government formulate a universal health care plan. Other major partners include the World Wildlife Fund, OECD, and GTZ. Alignment with Corporate Goals 28. The main thrust of the CPS was well aligned with the twin goals articulated in 2013. As indicated in both the original CPS and the PLR, high poverty and extreme inequality were a main focus of the strategy. The SCD completed in 2021 stresses the duality of the labor market, slow job creation, low productivity, and the large informal sector which employs about 41 percent of the population making vulnerability and uncertainty extremely high. Hence the focus on private sector job creation was appropriate along with the goal of improving the effectiveness of social safety nets. The focus on improving the institutional capacity to design, implement and monitor policies represents a key enabler for addressing these challenges. As outlined in the PLR, the program increasingly sought in incorporate climate change concerns through launching of ASA in support for Namibia’s NDC Partnership Plan (FY21) and a Climate Risk Country Profile (FY21). Lessons Learned 29. Lesson 1: Grant and concessional resources can play a catalytic role in Middle Income Countries (MIC). The World Bank’s ability to mobilize grant technical assistance resources enabled a more in-depth engagement in the energy sector than would otherwise have been possible. This support was essential for developing an understanding of the sector context, building trust with counterparts, and for assisting 44 the authorities to prioritize reforms and investments needed to facilitate private investment in RE. Even more important, in a context where IBRD is one of multiple potential market rate financiers, the ability to blend grant and concessional resources with an IBRD loan enabled the Bank to present a very competitive financing package. Finally, for a utility like NamPower that operates with fully cost-reflective tariffs, minimizing the cost of grid investments can reduce pressures to increase consumer tariffs which is important for expanding access. Unfortunately, grant and concessional resources are often unavailable for Upper MICs, even those like Namibia that, despite having relatively high per capita incomes exhibit high levels of poverty and face unique development challenges. The WBG should advocate for greater availability of trust funds and concessional resources in MICs. 30. A knowledge-oriented CPS requires special attention to developing and updating an appropriate results framework. Where a country engagement relies primarily on knowledge products (ASA), especially in a UMIC the WBG needs to be judicious in selecting outcomes that can realistically be achieved over the period of the program. While the results matrix successfully linked the WBG program to national goals, the matrix lacked linkage to concrete results to assess program effectiveness. Indicators should track improved public sector performance (i.e., capacity) or implementation of reforms. Moreover, in a highly demand driven country program that is subject to significant revision based on emerging or changing Government priorities, adjustment of the results framework in the PLR is doubly important for ensuring its relevance. 31. Upstream policy advice and capacity building by the Bank are important for enhancing the effectiveness of investments and guarantees by IFC and MIGA. WBG impact could have been stronger with more coordination across the WBG. For example, MIGA was active in guaranteeing solar energy investments, but more coordinated upstream engagement could have perhaps prevented some of the issues that investors in the sector faced. The World Bank’s engagement in the power sector could have focused more on private sector bankability and helped to highlight issues in the Government’s Renewable Energy Feed-In Tariff (REFIT) program that limited investor interest and the program’s impact. For the coming CPF period, the various WBG institutions should closely coordinate both upstream and downstream to better support the government in enabling private sector investment. 32. Country presence is crucial for effective client engagement. Preparation of the 2014 CPS was aided by the presence of a country representative based in Windhoek between 2010 and 2014. This was helpful for improving communications with counterparts, building trust, facilitating the work of WBG teams, and developing relationships with other partners. The latter is particularly important as the WBG is a relatively small player compared to other partners in Namibia. However, the representative was not replaced after the assignment was over. Regular program discussions with Government became less frequent and implementation slowed. The decision to create a joint IBRD-IFC Resident Representative under the Evolution initiative for One World Bank Group country representation should help to increase the responsiveness of the Bank and strengthen the relationship. 45 CLR Annex 1: Namibia 2014-2020 CPS Results Matrix Evaluation29 Program outcome Outcomes/Indicators Status at CLR WBG instruments and objectives outputs Pillar 1 Improve the state’s capacity to design, implement, and monitor policies on strategic issues 1.Economic 1.1 Debt management and The World Bank supported the GRN through technical assistance and analysis to Technical assistance to Management. To analysis capacity increased: review relative costs and risks in a debt management strategy, the linkages MoF on economic build public sector • 2014: debt strategy between the debt strategy and other macroeconomic policies, and the strategy's management (June 2016) capacity to enable informed by risk-cost consistency with debt sustainability. Based on this TA, Namibia developed a better management analysis Sovereign Debt Management Strategy 2018-2025 and subsequent MTEFs and BoN Analysis and Options for of the economy. • 2015: MoF fiscal framework Financing Strategy Documents reflected results of DSAs and risk-cost analyses Namibia’s includes results from DSA indicating that the targets were met, although later than planned. Medium-Term Debt MOSTLY ACHIEVED • 2015: BoN economic Strategy outlook includes results of Other partners (IMF, AfDB) provided complementary TA and budget support. (Report Number 78485- DSA NA) ACHIEVED 1.2 Capacity to manage PPP Planned outputs related to Procurement Law and PPP policy were provided Technical assistance to created. under Technical Assistance to Ministry of Finance on Economic Management MoF on economic • 2015: WBG comments of The PPP Policy was issued in 2015. management, (June 2016) Procurement law Namibia enacted The PPP Act 2017, which came into operation in early 2018 and • 2015: WBG comments of PPP Transport Sector PPP provides a legal framework for PPP projects; establishes the PPP Committee; and policy Support ASA (June 2018) regulates PPP projects through the stages of initiation, preparation, procurement, conclusion, and implementation. MOSTLY ACHIEVED Transport Sector SOE The PPP framework became operational with the enactment of PPP legislation, Reform ASA (June 2019) issuance of the related regulations, and establishment of the PPP Committee. The PPP screening framework and appraisal guidelines were approved in 2021. However, PPP project preparation funding and staff capacity constraints persist. Hence while World Bank TA contributed to the creation of basic enabling legislation, capacity to engage in transactions remains limited. 29 For the purpose of CLR evaluation and in order to align the results framework more closely with the current guidelines, the PLR results matrix was modified using the Desired Outcomes from the CPS to serve as CPF objectives, see page 22-27 of CPS. 46 The World Bank also provided TA in the form of PPP options analysis studies related to specific transactions. One of these, related to Walvis Bay, led to the adoption of a PPP approach although the transaction has yet to reach closure. As a result of this and TA from partners, Namibia has a sound albeit nascent PPP system. Implementation capacity is developing but remains limited. Namibia benefited from TA from AfDB. 1.3 City of Windhoek’s Analysis of the financial systems, and asset register audits were completed. The Assistance on Financial financial management TA supported the city to adopt a new accounting framework as required to issue Reporting for the City of capacity increased bonds, switching to International Public Sector Accounting Standards that are Windhoek (March 2015) • 2015: Analytical report of based on accrual accounting principles. However, the opportunities for knowledge Windhoek’s financial system exchange were limited as the client was not fully capacitated to share lessons with completed. other municipalities. ACHIEVED 1.4 Efficiency measures in Diagnosis of the Social Protection System was performed with a view to integrate Support to Improving place to reduce fiscal cash transfer payments to improve cost effectiveness. An assessment to integrate Social Protection pressures. databases of the Old Age Pensions, Child Grants, Veterans and House Affairs grants Information Systems TA was carried out along with a compilation of international examples for the (June 2019) • Social protection programs coordination of social programs. Presentations/workshops on international are rationalized and better experience were conducted. A draft report with recommendations on improving Social Protection Review targeted as evidenced by the efficiency of SP system in Namibia was prepared. The activities helped advance (June 2018) elimination of at least one the social protection dialogue on social registries and improve client relationship duplicative program. with Ministry of Finance, Ministry of Poverty Eradication and Social Welfare, Developing a Social • At least one SOE Ministry of Gender Equality and Child Welfare and OPM. However, no program Registry Namibia: Next restructured in line with was eliminated. Steps, #138427, 2018 WBG recommendations. Under the Transport Sector PPP SOE Reform ASA, the World Bank prepared Under the Transport NOT ACHIEVED options and recommendations to support the Ministry of Public Enterprises (MPE) Sector PPP SOE Reform to develop and implement measures to effectively oversee the operations of the ASA (2019) commercial Public Enterprises, focusing on three specific commercial PEs in the Transport Sector – namely, Namport Holdings and the Namibia Airports Company that would require reform during the envisaged implementation of the PPPs, and TransNamib Holdings, the rail operator. These SOEs were not restructured in line with WBG recommendations although Government’s approach to SOEs evolved considerably during the CPS period, including a decision to merge the Ministry of Public Enterprises with the Ministry of Finance and to transition to a holding 47 company model. An ownership policy that would define the approach to restructuring of entities was also developed. Other Activities Partners: MoF; BoN; NPC, Namibia #A004 Developing Central Securities Depository and Enhancing Payment City of Windhoek Systems Oversight (2016) Report on the Observance of Standards and Codes, Insolvency and International: EU; IMF Creditor/Debtor Regimes (Dec 2014) Financial inclusion in Namibia, Report #110259, 2016 Leveraging Pension Fund Investment for Domestic Development: Namibia’s Regulation 29 Approach, Report #150770, 2020 Namibia - Risk and Resilience Assessment, Report #AUS0001152, 2019 Electronic Govt Procurement Support ASA (finalized March 2022) Namibia E-Government Procurement, Report# 169067, 2022 2. Environmental 2.1 National policy on coastal The NACOMA project aimed to help Namibia use sustainably and mainstream the NACOMA P070885 (June and Natural management is implemented biodiversity of the Namibian Coast. In addition to exceeding the target for the 2016), see ICR, Report No: Resources and the integrated coastal increase in the number of plans and strategies that that incorporate biodiversity ICR00003819, page iii, Management: Foster zone management approach is issues and the number of people engaged in sustainable use activities supported June 26, 2016 implementation of mainstreamed. by the project, the NACOMA project also exceeded targets for: coastal management • size of marine ecosystems of biodiversity under effective management Integrated Land and Water and other • Number of plans and increased to 112,185 sq km (2012) from 66,218 sq km (2005) vs a target Management in Support of environmental strategies in the coastal of 100,103; and, Namibia’s NDC Partnership policies, expand area that incorporate • increase in ha and number of terrestrial and marine ecosystems of plan (June 2021) adoption of biodiversity issues. biodiversity importance legally protected 6,621,800 ha and 3 protected environmentally Baseline: 47 (2012) areas to 11,218,500 ha and 7 protected areas against a target of Climate Smart Agriculture sensitive tourism Target: 53 (2015) 10,010,300 ha and 5 protected areas. Diagnostics (dropped. practices, and Actual: 58 (2015) Related work was carried increase jobs and ACHIEVED out Integrated Land and incomes from Reports: Forestry: “Development Opportunities for the Sustainable Use of Forest Water Management ASA) sustainable use of a) Resources in the Emerging State Forest and Community Forests in Zambezi 2.2 Expanded economic Namibia’s Region”. Climate-smart agriculture: “Namibia Agriculture Sector Risk opportunities in sustainable environment. Assessment”; “Supporting a Climate-Resilient Livestock Sector”; and “Supporting Case Study of Nature use activities. a Climate-Resilient Horticulture Sector”. Water: “Namibia Hydrometeorological • Employment in sustainable Conservancies Joint ACHIEVED Assessment”. Ventures (March 2015) use activities Baseline: 18,795 (2012) 48 Target: 21,975 (2015) Okavango Multi-Sector Actual: 33,396 (2015) Investment Opportunity ACHIEVED Analysis), FY2017 2.3 Increased knowledge of Part of the Catalytic subprogram of the Cooperation in International Waters in options to address access to Africa (CIWA) MDTF, this work analyzed water and irrigation issues of the river The Cubango-Okavango water and investment basin and produced several scenarios and suggested interventions to that would River Basin Multi-Sector opportunities in the Cubango- be part of a Sustainable and Equitable Climate Resilient Investment Program. Investment Opportunities Okavango River Basin Indicative joint actions include, but are not necessarily limited to, the following: Analysis: Summary Report, Livelihood Enhancement Program offers a relatively short-term intervention that 2019 • Completion of a Multi- can build on existing initiatives to provide quick returns in addressing the Sector Investment underlying drivers of poverty. Assessment of Opportunities Analysis for Hydrometeorological the Cubango-Okavango Tourism Investment Framework provides an illustration of how the OKACOM Services in Namibia, River Basin could facilitate the mobilization of private sector resources and consolidate the Report # 161369, 2021 cooperative venture among the Member States for the sustainability of the ACHIEVED system. Partners: GRN; Cooperation in International Waters in Africa (CIWA); Okavango River Basin Commission (OKACOM); GEF 3. Statistical 3.1 Increased capacity of NSA Survey preparation, design, implementation, and data collection of the 2017 Southern Africa Capacity: To increase to gather and release statistics Namibia Financial Inclusion Survey (NFIS) were completed. The survey was the Programmatic Poverty the frequency, in accordance with fourth of its kind to be conducted in Namibia. The survey report was launched in Assessment and Statistical quality, and international standards. August 2018. The micro-data was made publicly available on NSA’s website. Capacity Building (Namibia dissemination of Poverty Methodology statistics and policy • Score on World Bank Index of Assessment and evaluation of the 2015/16 Namibia Household Income and Report, 2017) analysis, and expand Statistical Capacity* Expenditure Survey (NHIES) was carried out and Namibia’s Quality Assurance use of data and Baseline: 56 (2012) Framework for Statistics (NQAFS) report was produced. Training was received by Collection, Analysis and statistics to monitor Target: 78 (2018) NSA staff in: (a) Financial management and procurement; and (b) Poverty and Dissemination of and evaluate public Actual: 51 (2020) inequality measurement, as well as hands on training using Stata software. An Household Survey Data policies Implementation plan for NQAFS was adopted in 2020. However, only a modest (TFSCB grant, June 2019) Source: World Bank, Bulletin improvement (using the SPI) was noted between 2016 and 2020. PARTIALLY Board on Statistical Capacity ACHIEVED (bbsc.worldbank.org). 49 Note: The World Bank replaced the Statistical Capacity Indicators and Index (SCI) with the new Statistical Performance Indicators (SPI) in 2021. Using this measure, Namibia’s performance improved slightly between 2016 (49.5) and 2020 (53.6) PARTIALLY ACHIEVED With World Bank support, NPC completed its diagnostic report on existing Namibia Performance 3.2 NPC’s capacity to monitor government M&E practices in 2014 and established an inter-ministerial M&E Management and M&E IDF NDP4 and NDP5 increased. Technical Committee in 2013. Based on this support and support from partners, Grant • 2014: sectoral baseline including the EU, Namibia established an Integrated National Performance indicators compiled. Framework (2016) and the M&E Manual (2016) to institutionalize M&E practice Partners: MoF; NPC; NSA • 2017: national M&E across government. Source: draft National Monitoring and Evaluation Policy framework finalized. International: OECD; Other evidence: The 20210 Harambee Prosperity Plan II further institutionalized resident UN agencies ACHIEVED strengthened M&E with the establishment of a Performance Delivery Unit (PDU) to support planning, execution, augment monitoring & evaluation, closeout and reporting of key projects under The Harambee Prosperity Plan II (covering the period 2021-2025) HPPII. 4. Health and 4.1 Increased integration of The GRN launched a national nutrition plan; adopted policies to better control The Economics of Tobacco Nutrition. systems for communicable tobacco use; and supported measures to prevent and control cervical cancer Control in sub-Saharan Implementation of and non-communicable within HIV/AIDS programs. Africa reforms that enable diseases Health Sector Public GRN to deliver • 2014: national nutrition The Scaling-up Nutrition Country Implementation Plan (2013-2016) was Expenditure Review health, education or plan launched. developed with support from UN REACH and includes a results matrix and a (Report No: 168550) 2019 social protection • 2015: tobacco control dashboard of indicators to monitor SUN progress and is used as the costed services more framework strengthened. common results framework for improving nutrition. In 2015, the Ministry of Health SABER school feeding effectively. • 2015: cervical cancer and Social Services, in collaboration with FAO. The Cabinet approved the Namibia country report: Namibia, control measures Zero Hunger Strategy and Roadmap. Based on the available data, aggregate Report #100073, 2015 PARTIALLY incorporated in HIV/AIDS government expenditure on nutrition (nutrition-specific, nutrition-sensitive and ACCHIEVED program. enabling environment) has modestly trended upwards over the past 5 years. (UNICEF, 2021) ACHIEVED 50 4.2 Draft UHC policy prepared The Tobacco Products Control Act, 2010 came into operation on April 1, 2014, Partners: Ministry of by Ministry of Health (drawing pursuant to Government Notice No. 34 of 2014 (published in the Government Health; Office of the Prime on recommendations of World Gazette on March 27, 2014). The smoking rate in Namibia decreased from 17% in Minister Bank study) 2015 to 15% in 2020 (Source: WDI) International: UN agencies PARTIALLY ACHIEVED The Namibia Cervical Cancer Screening and Treatment Programme launched in (WHO, UNICEF, UNAIDS); October 2018 USAID In 2018-19, the Ministry of Health developed a draft plan for a Universal Health Coverage Policy that sets out the main strategies for achieving universal health coverage in Namibia. The focus is on two key objectives, based on the guidelines of availability, accessibility, equality, affordability and quality in the provision of essential services. Other evidence: Health Sector PER was not envisaged in the CPS but was carried out and provides a detailed analysis of the current situation of financing, investments, deficiencies, coverage, and options for the health sector. Ministry counterparts noted that recommendations from the PER have been adopted such as the approach to pooled procurement. New Study on UHC policy – The study was not completed but technical assistance was provided. A formal policy on UHC is still under development. Nevertheless, the government is in the process of developing an Essential Health Service Package (EHSP) which is critical to achieving UHC. Pillar 2: Increase the Private Sector’s Ability to Generate Jobs and Incomes 5. Regulatory 5.1 More resilient and Report prepared detailing gaps and weaknesses on crisis management procedures Crisis Management Plan Framework for a supportive financial sector and processes of BoN including recommendations and an outline of an ideal Crisis (June 2016) Competitive and Management Plan (CMP), identifying responsibilities of Namibia Financial Resilient Private PARTIALLY ACHIEVED Institutions Supervisory Authority (NAMFISA), and MoF. Comments on the Enterprise surveys: Sector. Government creation of a Deposit Insurance Fund were provided by the World Bank in 2014. Namibia country highlights introduces reforms • New IFC investments in 2014, Report# 99371, that reduce Bank Windhoek A Competition Policy Assessment report “Boosting Investment and Well - 2015, IFC transaction costs and • Expanded IFC investments Functioning Markets: A Competition Policy Approach” reviewed restrictive Strengthening Namibia’s increase the in Trustco product market regulations and antitrust framework in Namibia. The participants Competition Policy resilience of markets, reported the benefits of having had a crisis simulation exercise early on to start to ASA(JUNE 2015) especially financial IFC’s investments focused on assess the gaps, and activities proved useful to help modernize the financial services and capital access to finance totaled system institutional framework and reduce systemic risks. markets, and that 51 reduce the costs that US$64 million during the CPS Analysis provided on obstacles to SME finance on the demand and supply side, Supply Side SME Financing firms face in period. determining root causes and providing recommendations. Two Policy Notes were P147539, (Nov 2016) complying with produced: (1) supply side (financial institutions); and (2) demand side (SMEs) business regulations. In 2016 IFC launched the first integrated into an SME Study. bond by a non-resident issuer PARTIALLY in the Namibian capital market, Assistance provided to BoN and relevant authorities to establish a modern CSD Developing Central ACHIEVED raising 180 million Namibian and strengthen the Legal, Regulatory and Oversight Framework for the Payments Securities Depository and dollars ($US12 million) for and Securities Settlements Systems through adopting international standards, Enhancing Payment private sector development namely the CPSS-IOSCO Principles for Financial Market Infrastructures. A review Oversight P149105 (June under the IFC’s Pan-African of the legal and regulatory framework identified gaps for corrective action to be 2016) Domestic Medium Term Note considered. Program. The ICR ROSC analyzed the insolvency and creditor/debtor regime of Namibia. ROSC ICR P144909 (Dec. In 2021 IFC partnered with the Access to credit is uneven, esp. finance for small and medium enterprises. 2014) pan-African finance organization, Letshego’s A joint World Bank-IFC study explores priority reform opportunities to address five subsidiary in Namibia with cross-cutting bottlenecks to revitalize private sector for creating resilient and CREATING MARKETS IN US$50 million financing facility inclusive markets and putting the economic growth on a green, resilient, and NAMIBIA, Creating to subsidize affordable housing inclusive trajectory. Resilient and Inclusive financing for over 4,000 Markets (July 2022) Namibians. The development of an integrated resource plan identified the supply mix to meet the near and long-term electric power needs in Namibia in a sustainable, efficient, safe and reliable manner at the lowest reasonable cost. It focused on electricity Partners: BoN, MoF, supply; it took into account the impact of developing other energy sources and NAMFISA demand side management measures capable of reducing electricity demand. International: IMF, GTZ A 2018 FSAP found that financial sector oversight had been strengthened significantly since the 2006 FSAP, but further upgrades are needed. Subsequently the following legislative amendments were adopted: Bank of Namibia Act (2020), Namibia Financial Institutions Supervisory Authority Act, (2021), Banking Institutions Act (2023), Financial Institutions and Markets (2021). A new deposit guarantee Act was approved in 2018. Levels of financial inclusion in Namibia compare favorably to peer economies, but despite the large and sophisticated financial system, a significant share of the low-income and rural population is excluded from formal financial services. 52 6. Support for 6.1 Strengthen capacity to IFC delivered TA on the Kudu GAS project. However, the project faced several Ejuva One and Ejuva Two Investments in undertake projects in energy, delays, including financial considerations, fluctuations in global energy markets Solar Energy Projects, Production and incl. through PPP affecting the economic viability of the project, and technical complexities US$17.2 million, Project Infrastructure. associated with offshore gas extraction. #13755 • IFC delivers TA on PPP for Increase the number Kudu gas field project. of investments made MIGA made multiple guarantees for investments in solar power, facilitating a total MIGA - KARIBIB SOLAR by the IFC or with • MIGA develops projects in of 25 megawatts of new solar generating capacity. PLANT, US$2.2 million, Bank Group support. energy. Project # 14317, 2019 PARTIALLY ACHIEVED On May 18, 2018, MIGA issued US$20,682,000 in reinsurance to the Overseas NCF & Tandii Solar PARTIALLY 6.2 Strengthen productive Private Investment Corporation’s (OPIC) for coverage it was providing Projects, US$1.1 million, ACHIEVED capacity in tourism and to SilverStreet Private Equity Strategies, an agricultural fund focused on investing Project #14321, 2019 agriculture. in sub-Saharan Africa. The project created 144 full-time jobs. Kasada Hospitality Fund • MIGA completes a project in LP, US$18 million, 2022, agribusiness. The findings of the Case study on conservancies were shared at a global event in Project #14936 • Case study completed on Namibia with over 300 private and public sector representatives. The work communal conservancy demonstrated the business model and technical aspects of financing joint tourism joint ventures. ventures, and enabled partnership between World Bank and IFC Advisory Services MIGA - Silverlands (Investment Climate) and WWF with the GRN. Vineyards (Pty) Ltd. PARTIALLY ACHIEVED US$20.68 million, Project #13105 6.3 PPP approach adopted for Two Public-Private Partnership (PPP) Options Analysis Reports supported the GRN Case Study of Nature new container terminal at in making decision whether to proceed with the PPP for the pre-identified Conservancies Joint Walvis Bay port. transport sector transactions at the Port of Walvis Bay and the Hosea Kutako Ventures P144878 (March ACHIEVED International Airport (HKIA). 2015) Output: “Getting NAMPORT has since moved ahead and in 2022 MSC subsidiary Terminal Financed: 9 tips for 6.4 PPP approach analyzed for Community Joint Ventures expansion of Hosea Kutako Investment Limited (TIL) was awarded a concession to run the Walvis Bay container terminal. in tourism”, a joint International Airport publication of the IFC, PARTIALLY ACHIEVED The follow-up intervention in the transport sector aimed to facilitate the process World Bank and WWF. to develop the shareholder functions while also assisting Government in its process to decide on the implementation of the two respective PPPs. Development of the integrated resource plan for Namibia, (2014) 53 In July 2022 MIGA issued a guarantee of US$18 million to Condor Kite WDH Ltd, a Namibia National subsidiary of a Mauritius Kasanda Hospitality Fund LP for its equity investment in Electrification Program Safari Hotels Limited in Windhoek. (FY20-23) Solar Risk Mitigation initiative (FY18-20) Transport Sector PPP Support (June 2018) Transport Sector SOE Reform ASA (June 2019) Partners: GRN, NAMPORT NGOs: WWF; Walvis Bay Corridor group. 54 CLR Annex 2: Namibia IBRD 2014-2020 Advisory Services Task Completion Task ID Task Name Status Type - FY P118089 Namibia Climate Risks Policy Dialogue Advisory 2014 Dropped P122209 Development of the Integrated Resource Plan for Namibia / SAFETE Advisory 2014 Completed P143427 Strengthening Namibian Competition Policy Advisory 2014 Dropped P132068 Namibia #10218 Crisis Management Plan Advisory 2015 Completed P144878 Namibia: Case Study of Nature Conservancies Joint Ventures Advisory 2015 Completed P144909 Namibia - ICR ROSC Analytical 2015 Completed P145015 Assistance on Financial Reporting for the City of Windhoek Advisory 2015 Completed P145647 Strengthening Namibia Competition Policy Advisory 2015 Completed Namibia - Technical Assistance to Ministry of Finance on Economic P133682 Management Advisory 2016 Completed Namibia #A004 Developing Central Securities Depository and Enhancing P149105 Payment Systems Oversight Advisory 2016 Completed P147539 Namibia Supply Side SME Financing Advisory 2017 Completed P163654 Namibia FSAP Update Analytical 2018 Completed P164542 Namibia Social Protection Review Advisory 2018 Completed P165419 Transport Sector PPP Support Analytical 2018 Completed P164362 Namibia FSAP Follow-Up Advisory 2019 Completed P168420 Transport Sector PPP SOE Reform Advisory 2019 Completed P168906 Support to Improving Social Protection Information Systems Advisory 2019 Completed P169605 Risk and Resilience Assessment for Namibia Analytical 2020 Completed P167301 Solar Risk Mitigation Initiative Advisory 2020 Completed Integrated Land and Water Management in support of Namibia’s NDC P169960 Partnership Plan Analytical 2021 Completed P175972 Namibia Electronic Government Procurement Support Advisory 2022 Completed P171529 Namibia National Electrification Program Analytical 2023 Completed P130777 ML National Risks Assessment of Namibia Advisory 2014 Completed P167299 Climate Smart Agriculture Diagnostics Dropped P150383 Okavango Multi-Sector Investment Opportunity Analysis ESW 2017 Completed Southern Africa Programmatic Poverty Assessment and Statistical Capacity P164927 Building Advisory 2022 Completed P159953 Collection, Analysis and Dissemination of Household Survey Data in Namibia RETF 2017 Completed P124968 Namibia Performance management and M&E IDF 2011 Completed P143756 The Economics of Tobacco Control in sub-Saharan Africa Analytic 2016 Completed 55 CLR Annex 3 IFC Investments FY14-21 Total IFC Investment Project Name Industry Status Approval Date as approved by Board, US$ Letshego Namibia Financial Institutions Active 06/23/2021 50,000,000.00 Housing Purros Investments (Pty) Financial Institutions Completed 04/23/2015 14,120,000.00 Ltd 56 CLR Annex 4 MIGA Contracts Issued FY14-20 Project Investor Effective Expiration Investor Sector FY14 FY15 FY16 FY17 FY18 FY19 FY20 Name Country Date Date Silverlands United States Vineyards United International 05/18/2018 01/26/2023 Agribusiness 0.0 0.0 0.0 0.0 20.7 20.7 20.7 Limited States Development (SVL) Investec Ejuva One South Bank 12/15/2017 04/04/2038 Infrastructure 0.0 0.0 0.0 0.0 8.6 8.7 8.5 (Pty) Ltd Africa Limited Investec Ejuva Two South Bank 12/15/2017 04/04/2038 Infrastructure 0.0 0.0 0.0 0.0 8.6 8.7 8.5 (Pty) Ltd Africa Limited Mettle Solar Tandii Investments South Investments 06/28/2019 06/27/2034 Infrastructure 0.0 0.0 0.0 0.0 0.0 0.6 0.6 Proprietary Africa (Pty) Ltd Limited Mettle Solar NCF Energy Investments South 06/28/2019 06/27/2034 Infrastructure 0.0 0.0 0.0 0.0 0.0 0.6 0.6 (Pty) Ltd Proprietary Africa Limited Sustainable Karibib Solar Power South 06/28/2019 06/27/2034 Infrastructure 0.0 0.0 0.0 0.0 0.0 2.2 2.2 Park Solutions Africa Investments Condor Safari Hotel Kite WDH Mauritius 7/15/2022 6/29/2037 Tourism 0.0 0.0 0.0 0.0 0.0 0.0 0.0 LTD Total Outstanding Exposure 0.0 0.0 0.0 0.0 37.8 41.5 41.1 Number of projects 0 0 0 0 3 6 6 57 Annex 3: Summary of Findings from the FY24 Namibia Country Opinion Survey Overall perceptions of the WBG’s work in Namibia: This year, stakeholders reported higher levels of familiarity with the WBG than in the FY18 Country Survey, although overall familiarity remains moderate, particularly among those respondents who do not collaborate with the WBG. Stakeholder ratings for the WBG’s alignment with Namibia’s development priorities have improved significantly since FY18; however, all key performance indicators, including the WBG’s relevance, effectiveness in achieving results, and trust in the Bank, remained rather moderate. Compared to other countries, stakeholder ratings on WBG key performance indicators in Namibia were lower than in other AFE countries surveyed in FY24. The WBG’s engagement on the ground: In FY24, perceptions of the WBG’s openness (sharing data and other information) and accessibility have improved compared to the FY18 survey results. Views of the Bank’s responsiveness and flexibility are also on the upward trajectory. While the overall engagement indicators remain quite moderate, respondents who collaborate with the WBG share very positive perceptions of the Bank as a long-term partner for Namibia that works effectively with the national government. In the future, nearly half of respondents indicated that the WBG should collaborate more with the private sector. In addition, targeted outreach to civil society is recommended, as these respondents had low familiarity with the WBG and held the most critical views of the institution’s work. Development priorities: Agriculture/food security, education, energy, water/sanitation, and jobs were identified as the top areas where stakeholders would like the WBG to focus its resources in Namibia. Respondents in this year’s survey considered energy and climate change of much greater priority than a few years ago. The Bank’s support to the country in macroeconomic stability and energy received the highest ratings of effectiveness. Respondents who collaborated with the WBG had significantly more positive perceptions of the WBG’s work in all sectoral areas than other respondents. We recommend increasing communications about the WBG’s results in the priority sectors to build positive perceptions about the Bank’s work in the country. Looking forward: When asked about the most important thing the WBG could do to increase its effectiveness in Namibia, respondents in their qualitative comments highlighted the need for the WBG to improve capacity building in the country through skills development, technical training, and knowledge sharing in the identified priority sectors. Stakeholders called for deeper collaboration with local governments, civil society, and the private sector to ensure that WBG-supported projects are inclusive and tailored to local needs. There was also a strong demand for greater transparency and visibility of WBG activities in Namibia. Therefore, enhancing WBG’s presence, engagement, and communications efforts could significantly strengthen its impact and improve perceptions of its work in Namibia. Communications and message recall: 60 percent of respondents recalled seeing or hearing something about the WBG recently, most often about the WBG’s economic forecasts and its work on climate change and ending poverty. When communicating about climate change, specifically, survey results suggest that stakeholders’ greatest concerns were related to more frequent/severe droughts, decreased water availability, and food insecurity; therefore, incorporating these concerns in your messaging would make communications related to climate change more impactful. Respondents reported that they prefer to receive communication from the WBG via direct contact with WBG staff, events/conferences (in person or online), or WBG e-newsletters. 58 Annex 4 Operations Pipeline (IBRD and ASA) IBRD Pipeline FY25-26 Project Name Len. Comm Fiscal Inst (US$) Year Type Total Namibia Green Hydrogen Support IPF 150.00 2025 Namibia Energy Access Expansion IPF 100.00 2026 Namibia Finance for Infrastructure and Jobs IPF 150.00 2026 ASA Pipeline, FY25-26 Task Name Completion FY Agriculture and Water Sectors Public Expenditure Review 2025 Southern Africa Financial Sector Development (Regional) 2025 Southern Africa Programmatic Poverty Program (Regional) 2025 Botswana/Namibia Digital Health Blueprint 2025 Energy Sector Transition in Botswana and Namibia Programmatic ASA 2028 Botswana & Namibia Country Climate Development Report (CCDR) 2025 Water Security and Resilience in Southern Africa (Regional) 2026 Gender Equality and Citizen Engagement PASA (Regonal) 2027 Jobs and Economic Transformation in Southern Africa 2.0 (Regional) 2026 Response of the social sectors to climate change and other shocks Regional) 2026 Southern Africa Digital Engagement Phase 2 (Regional) 2026 Leveraging green minerals for economic transformation (Regional) 2026 Namibia Urban and Housing TA 2025 Namibia: Entrepreneurship Ecosystem Diagnostic 2027 Namibia Digital Tax Transformation for Improved Revenue Collection and Equity 2026 Poverty and Equity Assessment 2026 Disaster Risk Finance Policy and Strategy 2026 IBRD Active Trust Funds, CPF FY25-29 Grant Name TF Number Operation Name Grant Grant Closing Grant Type Date Amt. (US$k) Namibia Renewable Energy Scale Up Support TF0C2513 Namibia Renewable Energy BE 30-Jun- 60 Project - BETF Scale Up Support Project 2027 Namibia Renewable Energy Scale Up Support TF0C2512 Namibia Renewable Energy RE 31-Dec- 4,440 - RETF Scale Up Support Project 2026 Namibia Variable Renewable Energy TF0C0697 Namibia Renewable Energy BE 30-Jun- 300 Integration Support Scale Up Support Project 2024 Namibia NPC Investment Plan Preparation - TF0C3854 Agriculture and Water Sectors BE 30-Jun- 60 Country Engagement (NPC CE-IP Budget) Public Expenditure Review 2024 Namibia Agriculture and Water PER TF06C4042 Agriculture and Water BE 30-Jun- 160 2024 59 Annex 5 Statement of IFC’s Held and Disbursed Portfolio 1. Namibia Investment Portfolio by Industry Group (as of June 30, 2024) Industry Group FIG MAS Total Committed Exposure 45.1 - 45.1 Portfolio Outstanding 45.1 - 45.1 of which Loan Outstanding 45.1 - 45.1 of which Equity Outstanding - - - Undisbursed - - - Non-Performing Loans (NPLs) - - - NPL Ratio (%) 0.0% 0.0% 0.0% 2. Portfolio Client by Committed Exposure in Namibia (as of September 30, 2024) Committed Portfolio Client Industry Industry Group Sector Exposure Outstanding Letshego Namibia (LBN) FIG Financial Markets 45.1 45.1 60 Annex 6 MIGA’s Guarantee Portfolio MIGA Portfolio (US$ million) (as of October 31, 2024) Project Name Investor Name Business Investor Exposure Sector Country (US$ million) South Ejuva One (Pty) Ltd Investec Bank Limited Infrastructure 4.7 Africa South Ejuva Two (Pty) Ltd Investec Bank Limited Infrastructure 4.7 Africa Sustainable Power Solutions South Karibib Solar Park Infrastructure 2.2 Investments (Proprietary) Limited Africa Safari Hotel Condor Kite WDH LTD Tourism Mauritius 18.0 29.6 61