Namibia: The next investment frontier
A bullish case
From currency stability to resource booms: Exploring what makes Namibia an investor's choice.
Ogone Tlhage
Namibia is positioning itself as an increasingly attractive destination for South African investors, offering what economists describe as a unique combination of familiarity and frontier opportunity.
As the country recovers from post-Covid economic challenges and leverages significant resource discoveries, investment prospects are gaining momentum across multiple sectors.
Creating appeal
According to Casey Sprake, economist at Anchor Capital, Namibia presents particularly compelling opportunities for South African investors due to strong economic fundamentals and structural clarity.
“For South African investors, Namibia’s appeal lies in both its economic fundamentals and its structural clarity,” Sprake said. A key advantage is the Namibia dollar’s one-to-one peg with the South African rand, which “eliminates foreign exchange volatility” and allows investors to “easily and openly use South African currency in Namibia”.
This monetary stability, combined with deep institutional ties through the Southern African Customs Union (SACU) and the Southern African Development Community, creates what Sprake describes as “a predictable policy environment.”
The tax environment also favours investors, with Namibia’s top personal income tax rate at around 37% compared to South Africa’s 45%. “That’s quite a difference,” said Sprake, adding that investors can expect “full repatriation of capital and profits.”
Agriculture: Recovery
and resilience
The agricultural sector stands out as a primary growth driver as Namibia recovers from recent challenges. “We saw severe drought in 2024 for the Namibian economy, and we saw this strong contraction,” she said. However, “improved rainfall this year is expected to restore output and improve food security as a whole.”
This agricultural recovery is expected to have significant spillover effects on real incomes, domestic demand, and food-related manufacturing, making it a key support for near-term growth.
Mining: Uranium
leading the charge
Namibia’s mining sector, particularly uranium production, represents another vital economic pillar. “That whole sector remains robust. We see global demand for uranium fuelled by that resurgence of interest in nuclear energy,” said Sprake.
This demand has “buoyed prices and reinforced Namibia’s position as one of the world’s top producers,” with the broader mining and quarrying sector expected to remain buoyant.
Emerging opportunities:
Oil and green hydrogen
The discovery of offshore oil deposits has generated significant interest, alongside Namibia’s growing green hydrogen sector. These developments are central to the country’s industrialisation ambitions outlined in the recently launched National Development Plan 6.
Local ownership vs
foreign investment
The new development plan emphasises increased local ownership in mining ventures, presenting both opportunities and challenges for international investors. Sprake acknowledged this as a global dynamic, describing it as “a bit of a tricky catch-22.”
“Any localised economy will obviously want to try and keep profits and investments in-house, to keep making sure that money stays within the local economy, rather than dripping out to international investors,” Sprake said.
“But the difficult part is that you still need international investors, particularly within sectors such as the mining sector that have huge capital requirements.”
The solution, according to Sprake, lies in establishing “the right type of partnership frameworks in place, so that you can try and find that happy medium between getting that foreign capital buy-in, but at the same time making sure that there is enough local participation as well.”
Policy uncertainty a concern
A significant challenge facing investors is policy uncertainty, particularly regarding local content policies for oil and gas, which may extend to the green hydrogen sector. Sprake warns that this uncertainty could serve as a deterrent, using South Africa as an example of how “lack of policy certainty” has impacted investment flows.
“If international investors are uncertain of the environment that they are going to be plugging large amounts of capital into, they will be reluctant to invest, and they will look elsewhere, particularly to any other emerging markets.”
For Namibia’s industrial transformation to succeed, Sprake emphasised the need for “strengthening its infrastructure, deepening those technological capabilities, and building out occasional pipelines,” all grounded in “strong policy works and a business environment that is open and enabling, more than restrictive and uncertain.”
Long-term investment required
Potential investors should understand that returns from Namibia’s emerging sectors, particularly oil and green hydrogen, require patience. “This would be a long-term investment,” Sprake said, noting that these sectors are suited for “investors willing to take the longer play.”
While short-term returns may be limited, the successful development of these sectors could drive “rapid transformation” of the economy. “The economy isn’t a slow-moving machine. It’s a long-term fiscal outlook that you need to take,” she said.
Challenges and vulnerabilities
Despite its promise, Namibia faces several challenges that investors must consider. The country “remains sensitive to climate volatility,” as evidenced by recent drought periods, and is “particularly vulnerable to water scarcity.”
External risks include geopolitical tensions and trade concerns, particularly regarding potential changes to trade relationships under evolving US policies. “Namibia is particularly vulnerable towards commodity price fluctuations and any disruption to the trade relationship between South Africa, the US,” said Sprake, referencing concerns about the African Growth and Opportunity Act (AGOA).
Structural issues such as inequality also remain unresolved and “can temper inclusive growth outcomes.” However, Sprake pointed out that these challenges “aren’t particularly unique to Namibia” and are “prevalent across most emerging market countries.”
Breaking the middle-income trap
Namibia’s recent reclassification from an upper-middle-income to a lower-middle-income country underscores the importance of its current industrialisation efforts. The country’s ability to position itself as “an investable, self-reliant economy” will be crucial in determining whether it can “break out of the middle-income trap that it’s finding itself in.”
Namibia is positioning itself as an increasingly attractive destination for South African investors, offering what economists describe as a unique combination of familiarity and frontier opportunity.
As the country recovers from post-Covid economic challenges and leverages significant resource discoveries, investment prospects are gaining momentum across multiple sectors.
Creating appeal
According to Casey Sprake, economist at Anchor Capital, Namibia presents particularly compelling opportunities for South African investors due to strong economic fundamentals and structural clarity.
“For South African investors, Namibia’s appeal lies in both its economic fundamentals and its structural clarity,” Sprake said. A key advantage is the Namibia dollar’s one-to-one peg with the South African rand, which “eliminates foreign exchange volatility” and allows investors to “easily and openly use South African currency in Namibia”.
This monetary stability, combined with deep institutional ties through the Southern African Customs Union (SACU) and the Southern African Development Community, creates what Sprake describes as “a predictable policy environment.”
The tax environment also favours investors, with Namibia’s top personal income tax rate at around 37% compared to South Africa’s 45%. “That’s quite a difference,” said Sprake, adding that investors can expect “full repatriation of capital and profits.”
Agriculture: Recovery
and resilience
The agricultural sector stands out as a primary growth driver as Namibia recovers from recent challenges. “We saw severe drought in 2024 for the Namibian economy, and we saw this strong contraction,” she said. However, “improved rainfall this year is expected to restore output and improve food security as a whole.”
This agricultural recovery is expected to have significant spillover effects on real incomes, domestic demand, and food-related manufacturing, making it a key support for near-term growth.
Mining: Uranium
leading the charge
Namibia’s mining sector, particularly uranium production, represents another vital economic pillar. “That whole sector remains robust. We see global demand for uranium fuelled by that resurgence of interest in nuclear energy,” said Sprake.
This demand has “buoyed prices and reinforced Namibia’s position as one of the world’s top producers,” with the broader mining and quarrying sector expected to remain buoyant.
Emerging opportunities:
Oil and green hydrogen
The discovery of offshore oil deposits has generated significant interest, alongside Namibia’s growing green hydrogen sector. These developments are central to the country’s industrialisation ambitions outlined in the recently launched National Development Plan 6.
Local ownership vs
foreign investment
The new development plan emphasises increased local ownership in mining ventures, presenting both opportunities and challenges for international investors. Sprake acknowledged this as a global dynamic, describing it as “a bit of a tricky catch-22.”
“Any localised economy will obviously want to try and keep profits and investments in-house, to keep making sure that money stays within the local economy, rather than dripping out to international investors,” Sprake said.
“But the difficult part is that you still need international investors, particularly within sectors such as the mining sector that have huge capital requirements.”
The solution, according to Sprake, lies in establishing “the right type of partnership frameworks in place, so that you can try and find that happy medium between getting that foreign capital buy-in, but at the same time making sure that there is enough local participation as well.”
Policy uncertainty a concern
A significant challenge facing investors is policy uncertainty, particularly regarding local content policies for oil and gas, which may extend to the green hydrogen sector. Sprake warns that this uncertainty could serve as a deterrent, using South Africa as an example of how “lack of policy certainty” has impacted investment flows.
“If international investors are uncertain of the environment that they are going to be plugging large amounts of capital into, they will be reluctant to invest, and they will look elsewhere, particularly to any other emerging markets.”
For Namibia’s industrial transformation to succeed, Sprake emphasised the need for “strengthening its infrastructure, deepening those technological capabilities, and building out occasional pipelines,” all grounded in “strong policy works and a business environment that is open and enabling, more than restrictive and uncertain.”
Long-term investment required
Potential investors should understand that returns from Namibia’s emerging sectors, particularly oil and green hydrogen, require patience. “This would be a long-term investment,” Sprake said, noting that these sectors are suited for “investors willing to take the longer play.”
While short-term returns may be limited, the successful development of these sectors could drive “rapid transformation” of the economy. “The economy isn’t a slow-moving machine. It’s a long-term fiscal outlook that you need to take,” she said.
Challenges and vulnerabilities
Despite its promise, Namibia faces several challenges that investors must consider. The country “remains sensitive to climate volatility,” as evidenced by recent drought periods, and is “particularly vulnerable to water scarcity.”
External risks include geopolitical tensions and trade concerns, particularly regarding potential changes to trade relationships under evolving US policies. “Namibia is particularly vulnerable towards commodity price fluctuations and any disruption to the trade relationship between South Africa, the US,” said Sprake, referencing concerns about the African Growth and Opportunity Act (AGOA).
Structural issues such as inequality also remain unresolved and “can temper inclusive growth outcomes.” However, Sprake pointed out that these challenges “aren’t particularly unique to Namibia” and are “prevalent across most emerging market countries.”
Breaking the middle-income trap
Namibia’s recent reclassification from an upper-middle-income to a lower-middle-income country underscores the importance of its current industrialisation efforts. The country’s ability to position itself as “an investable, self-reliant economy” will be crucial in determining whether it can “break out of the middle-income trap that it’s finding itself in.”
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