Primary industries, including agriculture, fishing and fish processing, and mining are the mainstays of the Namibian economy. Since gaining independence in 1990, Namibia has been focusing on nation and institution building. Policies of national reconciliation and affirmative action have been instated and have assured a stable and peaceful social environment.

Economic growth for total production in real GDP terms in Namibia has been stable since independence. Between 1996 and 2000, the annual growth rates were between 3.2 and 4.2 percent.

Although stable growth has been a positive factor in the Namibian economy, it has been too low to provide any substantial increase in per capita income. The government is also aware that income distribution is skewed and needs to be addressed. The government plans to invest in both physical and capital assets and human resources in order to achieve higher growth in production, incomes, and also to be able to effectively address poverty.

The primary (raw material producing) and tertiary (services) sectors were the driving forces behind economic growth between 1995 and 2000. Average real growth in the mining sector has been below 1.5 percent since the mid-1990s. Ongoing investment in new mining projects is expected to turn the sector around in the near future.

During the 2000/2001 fiscal year, GDP grew by around 1.6 percent. The comparatively low growth is due to a decline in all primary industries, but was offset by impressive growth in other sectors, particularly construction. Agricultural output declined by 11.4 percent in 2001, compared to a growth of 4.3 percent in the previous year. The negative growth was a result of constant numbers of livestock in 2001 compared to a substantial increase in 2000.

The fishing and fish processing sector fell by 7.7 percent in 2001, following a decrease in fish catches. The mining sector continued to decline due to falling production in diamonds and other mining and quarrying activities. Diamond production dropped by 5.1 percent.

The star performer was the construction sector, which grew by 49.4 percent, driven by the NamPower construction project. There was also an increase in the number of building plans passed and completed in both the residential and commercial sectors.  

Namibia has an open, small economy and is vulnerable to fluctuations in the world market. The present global economic slowdown has impacted on the country’s economic growth rate, although it is expected to recover during 2002. The estimated annual growth rate over the period 2002-2005 is 3.7 percent.

Against a background of strict fiscal discipline, the 2002 Budget theme was to stimulate and support economic development and employment creation. Specific policies and programmes include building of new institutions, such as the Namibia Development Bank; the development of new infrastructure, including the northern railway extension and tarring of new roads; and the development of human resources through improved education and training programmes, such as the establishment of Science Education Centres and a centre for Innovation, Entrepreneurship and Technology.

Foreign Reserves (US$ m; year-end)

1997

1998

1999

2000

2001

Total reserves excl. gold

250.5

260.2

305.0

259.9

234.2

Exchange Rates (period averages)

1997

1998

1999

2000

2001

N$: US$

4.608

5.531

6.115

6.940

8.610

Gross Domestic Product (market prices)

1997

1998

1999

2000

2001

Total (N$ m)

At current prices

16,754

18,790

20,693

23,264

26,689

At constant (1995) prices

13,665

14,115

14,598

15,022

15,269

Real change (%)

4.2

3.3

3.4

2.9

1.6

Per head (N$)

At current prices

9,878

10,737

11,464

12,494

13,893

At constant (1995) prices

8,057

8,065

8,087

8,068

7,949

Real change (%)

1.0

0.1

0.3

-0.2

-1.5

Gross Domestic Product by Sector (N$ m; constant 1995 prices)

1997

1998

1999

2000

2001

Agriculture and forestry
Commercial
Subsistence

926
(519)
(407)

909
(489)
(420)

1,009
(495)
(514)

1,052
(648)
(405)

933
(580)
(353)

Fishing and fish processing on board

465

567

559

575

531

Mining and quarrying

1,145

1,117

1,210

1,190

1,118

Manufacturing

1,445

1,574

1,515

1,569

1,665

Electricity and water

214

223

268

299

309

Construction

367

423

364

348

520

Wholesale and retail trade

1,248

1,336

1,380

1,452

1,480

Hotels and restaurants

254

285

251

269

294

Transport, communications

962

862

978

1,041

1,080

Financial intermediation

423

450

461

489

498

Private, community services

122

122

122

133

133

Government services

2,980

3,059

3,160

3,235

3,293

Other

275

281

286

292

298

Taxes less subsidies

1,733

1,779

1,866

1,890

1,915

GDP at market prices

13,665

14,115

14,598

15,022

15,269

The mining industry plays an important role in employment, mineral production, total export earnings and social advancement in Namibia. Namibia produces gem quality diamonds, uranium, copper, lead, zinc, arsenic, cadmium, antimony, pyrite, silver, gold, semi-precious stones, industrial minerals and dimension stone.

Mining contributed almost 10 percent to Namibia’s GDP in 2000, and 8 to 10 percent to total government revenues. Mining-related exports make up 40 percent of total export earnings from goods and services. To bolster the industry, government has successfully implemented the Diamond Act and has embarked upon the recruitment of Diamond Commissioners who will serve as the custodians and supervisors of the Act.

Weaker world demand has caused downward pressure on mineral prices. The United States of America, the largest market for diamonds, has recently been experiencing recession, which is expected to result in lower demand for diamonds and increased stockpiling by Namibian diamond producers. Most diamond companies in Namibia have indicated they will keep production constant, in order to safeguard jobs and be ready for a market recovery that is expected in 2003. During 2001, diamond production fell by 5.1 percent.

A source of expansion in the mining sector will be the exploitation of zinc deposits at the US$454 million Scorpion zinc mine project earmarked to be the world's lowest cost zinc producers, where production is expected to start in January 2003. Improved copper production by Ongopolo Mining and Processing, Namibia's largest producer of copper, is also expected to boost growth in the sector. Overall, the mining sector is projected to record an average growth of more than 7 percent per year between 2002-2005, despite an expected decline in value-added in uranium mining.

Namibia is one of the largest producers of gem quality diamonds with around 98 percent of production being gem quality. Diamonds are mined along the Orange river, palaeo beach deposits along the south western and western coast of the country, as well as from offshore marine deposits. Namibia has the world's richest offshore marine deposits, with an estimated reserve of over 1.5 billion carats. Marine diamonds represent about 56 percent of Namibia’s total diamond production.

The largest diamond mining company in Namibia is Namdeb, a partnership with De Beers and the Namibian government, which has both onshore and marine operations. Namdeb has opencast diamond mining operations covering nearly 130 kilometres of coastline north of the Orange river, while De Beers Marine operates deepwater mining on a contract basis for Namdeb.

Other producers include Namco and its recent acquisition Ocean Diamond Mining, and Canadian company Diamond Fields International. Namco holds prospecting rights over five marine concessions and has begun equipping its second mining vessel after its successful start to marine mining operations in 1998/1999. The new vessel will increase the company’s production to more than 300,000 carats per year, making Namco the second largest marine diamond miner in the world.

Diamond Fields International has a marine concession in Lüderitz Bay. By 2001, the company was mining the concession which is expected to produce around 40,000 carats per year.

Afri-Can Marine Minerals Corporation have established themselves as one of the largest marine diamond concession holders in Namibia with a total of 28 EPLs covering a total area of 26,500 sq. km.

AngloGold owns Namibia’s sole gold producing mine, Navachab, where reserves are expected to be exhausted by 2003. Plans to extend the open pit could extend the life of the mine until 2005. Unless the gold price improves, it is unlikely the mine will be expanded beyond that date.

South African firm IMG Tantalum plans to develop deposits of tantalite known to exist in the Tantalite valley in the southern region of Namibia. It is estimated the mining operation will produce 20 tonnes a year of high-grade ore.

Mining at Rossing Uranium by Rio Tinto has been operating at 70 percent capacity due to low international prices for the mineral. Rossing is among the top five producing uranium mines in the world, but its contract to supply French electricity supplier ELF ended in 2002

Mineral Production by Volume ('000 tonnes unless otherwise indicated)

1996

1997

1998

1999

2000

Copper in blister (99% Cu)

20.7

25.0

8.7

-

13.0

Pyrite concentrate (50% S)

90.7

 94.6

28.2

-

-

Zinc concentrate (52% Zn)

66.1

 72.8

 78.7

 70.7

 75.75

Manganese ore

 92.6

 39.7

-

-

23.0

Lead refined

18.8

1.5

 0.2

-

-

Marble

12.7

13.7

9.8

11.2

24.4

Salt

355.9

492.8

536.1

503.0

543.0

Fluorspar acid

31.5

23.2

40.7

57.6

56.0

Lithium minerals

2.0

0.6

 0.2

-

-

Gold bullion (kg)

2,015

2,301

1,855

2,008

2,399

Gold in blister (kg)

130

116

27

-

57

Silver in blister (kg)

42.3

41

 14

-

17

Diamonds (‘000 carats)

1.402

1.416

1.467

1.633

1.542

Uranium

2.892

 3.425

3.278

3.095

3.201

Semi-precious stones:

Blue agate

0.150

0.175

0.161

0.095

0.096

Amethyst

0.019

0.023

-

-

0.5

Chrysocolla

-

0.017

0.013

-

-

Rose quartz

0.190

0.220

0.454

-

0.074

Mineral Sales by Value (N$ m)

1996

1997

1998

1999

2000

Diamonds

2,099

2,292

1,960

2,922

3,658

Gold bullion

110

117

101

121

157

Gold in blister

9

7

2

0

1

Silver in blister

31

29

15

0

18

Copper in blister

154

194

53

0

58

Zinc metal contained

135

119

116

116

142

Lead concentrate

-

-

-

9

21

Other

114

57

49

47

108

Total

2,652

2,815

2,296

3,215

4,163

AGRICULTURE

Following a decline of 11.4 percent in 2001, the agricultural sector is expected to grow at an average of 4.2 percent between 2002-2005. The downward pressure on meat prices, as a result of mad cow and foot and mouth diseases, is expected to ease and indications are that prices have started to recover. The government’s diversification policy places particular focus on the agricultural sector. Initiatives have also been set up to support the domestic production of fruit and vegetable, eggs and pork.

Although irrigation potential is limited in Namibia, there is room for expansion beyond present levels. As part of its policy of crop diversification, government is encouraging cultivation of high-value crops. Recent studies have shown that non-traditional crops such as table grapes, dates, cotton, tobacco, lucerne and devil’s claw have potential for expansion. Fruit growing for export also has good potential as Namibia can harvest earlier in the season than South Africa, providing substantial price advantages in the European Union.

At present a small number of commercial and communal farmers produce cotton as a rain-fed crop. In 1999, production was 5,037 tonnes, which was mainly exported to South Africa. Government has set up a Task Team to implement its Cotton Development Plan with the aim of increasing production to around 15,000 tonnes. Once production reaches this level, the construction of a ginnery would be justified.

The country’s table grape production is expanding rapidly, mainly to meet demand in the European Union. Production value more than doubled between 1994 and 1998 and it is expected to double again by 2003. Government has completed a series of feasibility studies for the expansion of table grape production along the Orange river. It is looking into ways of developing irrigation plans in the area. Private sector development will be encouraged in Tandjieskoppe (near Noordoewer) and in the Lower Orange river.

As a major livestock-producing country, there is strong demand for lucerne in Namibia, particularly in years of low rainfall. At present most of the lucerne is imported from South Africa. Local production is increasing and expansion of lucerne production could significantly reduce the country’s stockfeed imports.

The commercial potential of indigenous plants such as devil’s claw, marula and mangetti, are presently being studied. Devils claw is already in production and the annual harvest of around 600 tonnes has an export value of N$10 million.

A feasibility study on sugar production was carried out in the Caprivi Strip region. It recommended 10,000 hectares of land be planted with sugar cane. An environmental impact assessment is presently being carried out.

LIVESTOCK PRODUCTION
Livestock production plays a dominant role in the agricultural farming system and within the sector as a whole. Farming in the central northern plateau (cattle and mixed stock) and the arid south (mutton, goat, karakul sheep and ostrich) normally contributes 80 to 90 percent of the value of commercial agricultural production depending on rainfall. Commercially marketed cattle are either exported live to South Africa or slaughtered locally. Abattoir capacity has been expanded to take advantage of the country’s potential for beef, lamb and goat exports. The government’s intention is to add value through increased local processing of livestock. Namibia has several European Union approved abattoirs and is in the process of upgrading the other abattoirs to meet regional and international market demands.

Beef is the single largest contributor to agricultural GDP and export earnings. South Africa is the country’s main export destination, although the European Union is becoming an increasingly important market.

Besides meat, there are opportunities for investors to add value locally in leather and tallow products such as glue and gelatine. Similarly, there is scope for the processing of pelts and wool of the hardy Karakul sheep. Small and medium-size farming is being encouraged to develop this recovering sector.

Scope also exists for the breeding of goats and rabbits for mohair and in the poultry sector for eggs, meat and poultry feed. More investment is needed for the production of dairy products such as cheese, butter, baby foods and ice creams.

The ostrich industry is a growing sector in Namibia. In 1990 live ostriches were exported to the United States of America, Holland, France, Italy, Canada and Mexico. Ostrich skins have already been sold since the early 1980s mainly to the United States of America, Japan and Germany. Namibia has an European Union standard ostrich abattoir and exports ostrich meat to several European Union member countries. A new price structure for ostrich products, announced in 2000 by Ostrich Production Namibia, has increased competitiveness with South African prices and is expected to encourage increased investment in the industry.

FISHERIES
Namibia is a significant player in the international fishing industry, ranking among the top 10 in the world as to the value of catches. The main exploited species are hake, horse mackerel, tuna, rock lobster, monk and crab but a valuable fishery also exists for pilchard, kingklip, orange roughy and swordfish. Oyster and mussels are being farmed.

The government aims to maintain a sustainable utilisation of all living marine resources to ensure maximum benefit to all Namibians through local processing and value-added products. There are many opportunities for investment in the fish processing industry as well as within mariculture. There are also significant opportunities within the fishing support industries including marketing, processing technology, packaging, storage and transport.

The value of production and exports from the sector rose sharply from around N$500 million in 1990 to level off at N$1.3 - 1.4 billion from 1994 to 1996 and thereafter growing sharply again exceeding N$2.8 billion in 2000.

The fishing industry suffered a setback during 2001 due to unfavourable marine conditions. Government efforts to keep the fishing stock at a sustainable level are expected to result in moderate growth in the coming years. However, continued concerns over the declining pilchard industry could impact negatively on the sector in the medium term. The fishing sector as a whole is expected to grow at about 3 percent on average between 2002-2005, although the industry is vulnerable to oceanic conditions. The outlook is for further expansion in the Namibian fishery industry with a scope for a significant increase of the real value of the sector output in the medium term.

The commercial fishing fleet operating in Namibia grew consistently after independence from 214 vessels in 1991 to 332 vessels in 1996, declining to 293 vessels in 1999. There were 309 vessels in 2000. This reduction in capacity, while catches have increased, indicates a more efficient fishing fleet. The major area of growth has been in the demersal fleet, targeting hake. The largest markets for Namibian fish can generally be summarised as follows:
-    Pilchard, canned, almost exclusively to South Africa.
-    Horse mackerel is sold mainly to African countries. Various West African countries have traditionally bought horse mackerel, and some is exported to the Democratic Republic of Congo, Mozambique, South Africa and Zimbabwe.
-    Rock lobster and crab are mainly exported to Japan.
-    Hake is mostly exported to Europe where Spain is the largest market, but France, Germany, Italy and Portugal are also receiving considerable amounts.

Agricultural Production ('000 tonnes; July-June crop years)

1997/98

1998/99

1999/00

2000/01

2001/02

Millet and sorghum

37.5

49.2

86.0

73.3

36.0

Maize

13.7

22.9

49.4

19.0

27.4

     Commercial areas

12.7

20.8

35.3

14.5

25.3

     Communal areas

1.0

2.1

14.1

4.5

2.1

Total coarse grain

51.3

72.1

135.5

92.2

63.3

Wheat

5.0

3.2

4.5

6.3

5.5

Total

56.3

75.3

140.0

98.6

68.8

Livestock Production ('000 head)

1997

1998

1999

2000

2001

Cattle

227

321

351

260

291

Locally slaughtered

134

172

199

181

171

     abattoirs

102

145

179

159

143

     butchers

32

27

20

22

28

Live exports to RSA

93

149

152

79

105

Small stock

954

1,194

1,206

987

1,221

Locally slaughtered

88

108

298

235

304

     abattoirs

0

3

237

215

255

     butchers

88

105

61

20

49

Live exports to RSA

866

1,086

908

752

918

Pigs

27

9

6

3

...

Imported

20

5

6

3

...

Ostrich

47

52

33

48

...

Birds slaughtered (no.)

Total

1,255

1,576

1,596

1,295

…

Fish Landings (tonnes)

1996

1997

1998

1999

2000

Pilchard

1,171

27,685

68,562

44,653

29,702

Anchovy

1,080

2,545

2,748

412

146

Hake

135,993

117,583

150,695

164,250

194,636

Horse mackerel

321,344

301,847

311,826

322,075

353,039

Monk

9,748

10,259

16,429

14,802

14,812

Kingklip

3,560

2,297

2,211

3,706

4,568

Tuna

1,797

1,314

1,442

1,155

1,419

Rock lobster

269

199

350

304

365

Crab

1,709

1,478

2,283

2,074

2,549

Orange roughy

13,379

13,314

10,945

3,473

1,647

Total

490,050

476,224

567,491

556,904

602,883

Namibia’s manufacturing sector is relatively small as compared to the other sectors of the economy and it contributes little to the GDP. Government is determined to work towards broadening and diversifying the country’s industrial sectors. It is focusing on three programmes to achieve greater diversification in the manufacturing sector.

The Industrial Development Programme aims at establishing industrial parks in various locations. It also includes the completion of an industrial census, as well as a number of policies for promoting production and employment in small and medium enterprises.

An attractive package of fiscal incentives for local and foreign investors through the Namibian Export Processing Zone (EPZ) programme was launched in Walvis Bay in 1995. The programme has begun to attract some foreign investments in a range of non-traditional manufacturing activities. Five international companies have already established themselves in the zone, whilst another five are scheduled to start operations in 2001. Most factories are being established in the Walvis Bay EPZ where services are provided by the EPZ Management Company. However, single-site EPZ status can also be accorded to new and existing factories.

The Walvis Bay EPZ Management Company was established in June 1996 by the Walvis Bay Municipality and local enterprises to provide a supporting framework for the EPZ. Some of the services offered include tailor-made factories, administrative and secretarial services, shipping and forwarding and personnel recruitment.

Investment opportunities through the EPZ programme includes textile and garments, footwear and leather products, manufacturing and assembling of electronic and micro-electronic equipment, food stuff and beverages, assembling or production of electrical household products, warehousing and storage and re-packaging. To date, more than 58 companies have EPZ status, with total projected investments of nearly N$8 billion and 5,000 jobs, once all these companies are operational.

The Trade Promotion Programme aims at reviewing the export development strategy to increase its beneficiaries and is also directed at increasing Namibia’s share of intra-regional trade. A Quality Control and Standardisation body will be established, and an Industrial Property Act and a Competition Law will be introduced to help improve the legal basis for industrial activities.

The manufacturing sector posted an overall increase of 6.1 percent in 2001. The growth was driven by meat processing, beverages, and the copper smelter. A number of new projects being developed are expected to increase the growth rate of the manufacturing sector substantially in coming years.

Processing of raw material for both domestic consumption and export is the predominant industrial activity. One-third of the manufacturing firms are engaged in food and beverage production. Preserved and processed fish and meat, beer and soft drinks, dairy and other food products account for about 80 percent of value output. Other activities include metal fabrication, fish can production, furniture and wood products, chemicals including paints, plastic packaging, clothing and leather products.

The government’s 'Policy Beyond 2000' lays emphasis on the development of the Small and Medium-Sized Enterprise (SME). To this end, the State has devised several supportive measures, including the provision of seed capital, micro loans and credit guarantee schemes.

Tourism is Namibia’s third biggest foreign exchange earner after mining and manufactured products, including fish and meat products. The sector recorded strong growth since independence and earnings have risen substantially in the last 10 years.

The Namibia Tourism Board (NTB) is responsible for the promotion of Namibia as a tourism destination, both locally and abroad. The Namibia Wildlife Resorts Limited (NWR) - a parastatal which became operational in April 1999 - manages 12 tourist resorts and a number of camping sites, situated in nature reserves and conservation areas.

Much of Namibia is marked by spectacular deserts, canyons and mountains. The Namib desert consists of miles of sweeping red dunes where some of the world’s most unusual flora and fauna can be found. Amongst Namibia’s famous tourist attractions are the Fish River Canyon, the world’s largest after the Grand Canyon, Skeleton Coast, Etosha National Park and Namib-Naukluft Park. Around 15.5 percent of the country is made up of game parks, nature reserves and resorts.

The government intends to target high-value, low volume tourism. This underscores the need to adopt a sustainable ecotourism approach to protect Namibia’s rare and fragile natural resources. Hunting, touring, recreation and accommodation all provide distinct investment opportunities.

Foreign trade has always been a very significant component of overall economic activity, and since 1990 exports have, on average, accounted for some 50 percent of GDP. Primary products in largely unprocessed form have traditionally accounted for 80 percent of exports, leaving earnings exceptionally vulnerable to fluctuating international commodity prices and changes in the value of the Rand. Major trading partners are the European Union, Japan, the United States of America, Switzerland, Zimbabwe and member States of both the Southern African Customs Union and the Southern African Development Community.

During 2001, the value of total fob exports increased by 12.6 percent to N$8.9 billion, while the value of total cif imports increased from N$9.8 billion in 2000 to N$10.9 billion in 2001. Namibia’s overall balance of payments during 2001 saw a widening trade deficit, a decline in net current transfer receipts, and a widening deficit in the capital and financial account. Despite these developments, the overall balance of payments still yielded a positive balance. The situation of a positive current account balance, offset by a deficit on the capital and financial account, has become a structural feature of the Namibian economy. It is a result of a substantial excess of savings over investment in the economy, which, in turn, has led to an outflow of capital over the years. The challenge facing the country is how to redress the situation by creating more investment opportunities that will stimulate economic growth and development.

As a Lome Convention signatory, Namibia enjoys preferential access to the European Union on a wide range of products, while in 1991 the United States of America granted duty-free access under its Generalised System of Preferences (GSP), covering some 4,000 trade items, including all of Namibia’s major existing exports.

Membership of International Organisations
Namibia is a member of the Common Monetary Area (CMA), Southern African Customs Union (SACU), Southern African Development Community (SADC), Common Market for Eastern and Southern Africa (COMESA), African Union (AU), Commonwealth, United Nations, World Trade Organisation (WTO), African Development Bank (ADB), World Bank and International Monetary Fund (IMF).

Foreign Trade by Value (N$ m)

1996

1997

1998

1999

2000

Export of goods:

Animals (live, products)

563

312

390

379

312

Live animals

546

295

367

350

276

Animal products

17

17

23

29

36

Fish and fishing products

16

13

15

16

32

Ores and minerals

3,193

3,422

3,134

4,016

5,993

Metal ores, uranium ore

838

905

945

1,104

1,109

Other minerals

28

22

39

53

37

Diamonds

2,328

2,495

2,150

2,860

4,847

Electricity

0

0

2

3

4

Manufactured goods

2,322

2,419

3,224

3,072

3,692

Meat and by-products

555

410

463

532

540

Prepared, preserved fish

1,188

1,387

2,142

2,090

2,528

Beverages, food products

326

319

409

302

411

Copper

154

194

52

-

25

Other

99

109

158

148

188

Total including others

6,095

6,167

6,766

7,487

10,033

Imports:

Total including others

7,182

8,077

9,112

9,834

10,879

Main Trading Partners (% of total)

1999

2000

Exports fob to:

N$ '000

% of total

N$ '000

% of total

United Kingdom

2,298,661

35.07

2,995,084

41.23

South Africa

2,318,107

35.37

2,304,365

31.72

Spain

1,033,996

15.78

908,742

12.51

France

149,135

2.28

312,432

4.30

Switzerland

266,491

4.07

283,216

3.90

Belgium

254,779

3.89

167,887

2.31

Italy

87,518

1.34

142,754

1.97

Germany

72,288

1.10

95,742

1.32

Japan

72,962

1.11

54,205

0.75

Total

6,553,937

100.00

7,264,427

100.00

Imports cif from:

South Africa

7,669,274

93.32

8,423,569

95.25

Germany

177,880

2.16

191,254

2.16

United States of America

255,489

3.11

124,147

1.40

France

57,950

0.71

60,730

0.69

Russian Federation

57,726

0.70

43,652

0.49

Total

8,218,319

100.00

8,843,351

100.00

Established in 1990, the Bank of Namibia has a mandate to promote and maintain internal and external monetary stability, and to foster monetary conditions to assist sustained economic development in the country.

The Banking Institutions Act of 1998 incorporates the requirements of the Basle Core Principles as a minimum standard of regulation and is aimed at promoting a stable macro-economic environment.

As part of government efforts to promote sustainable economic growth and boost the financial sector, a Namibian Financial Institutions Supervisory Authority has been created.

The Namibia dollar (Namdollar) was introduced on 15 September 1993 although Namibia opted to maintain the South African Rand as legal tender. In practice, as long as Namibia remains a member of the Common Monetary Area (CMA), monetary policies will continue to be influenced by those in South Africa. The Namibia dollar is fixed at parity with the South African Rand with which it is fully convertible.

Five commercial banks (Bank Windhoek, City Savings and Investment Bank, Commercial Bank of Namibia, First National Bank of Namibia and Standard Bank Namibia), one building society, one investment bank (Nedcor Investment Bank Holdings Limited) and five insurance companies, account for Namibia’s banking industry. With the exception of one, all the aforementioned commercial banks have substantive South African shareholding interest.

The market is small and highly competitive. All the banks provide comprehensive domestic and international services. Short term insurance and life insurance broking, estate planning and factoring are some of the ancillary services provided by the banking sector.

Foreign investors may avail themselves of local borrowing via the companies in which they invest. Limits on such borrowing depend, inter alia, on the size of the investment and the percentage of foreign shareholding. Earnings, after taxation, are freely transferable, subject to auditors’ verification of the authenticity of profits. Forward exchange cover for up to one year is available for imports, exports and approved foreign currency loans.

The Ministry of Finance is also in the process of establishing the Namibian Development Bank (NDB), whose objective is to mobilise development funding from domestic and international sources on a wholesale basis. Acquired funds will provide competitively-priced financing, which NDB will forward through on-lending arrangements to beneficiaries, such as parastatals and income-generating development projects. The NDB will provide and coordinate other key development finance programmes and will provide coverage for foreign exchange risks connected to offshore funding denominated in foreign currencies. Lending procedures will be based upon commercially accepted operating principles and it will only be allowed to fund financially-viable projects. The Development Fund of Namibia will cease to exist and will be incorporated into the NDB.

To ensure there is a source of long term funding, not presently available in the banking sector, the government announced in the 2002 Budget that it will provide the initial capital requirements for the Namibia Development Bank.

The Namibian Stock Exchange
Founded in October 1992, the Namibian Stock Exchange (NSX) experienced subdued trading during 2001 with the local price index dropping from 91 points in January 2001 to 59 points by December. The local market capitalisation declined from N$4.3 billion in January 2001 to N$1.8 billion in December.

The NSX is well-positioned within the SADC region to provide investors with access to the mining and fishing sectors. These industries form a strong contingent on the local index. The liquidity of the exchange is the main concern. Efforts directed at raising awareness within the economy (locally and internationally) and ensuring institutional trading, are ongoing, but in order to increase liquidity, unrestricted access to markets is a pre-requisite.

The non-profit making Namibian Stock Exchange Association is the custodian of the licence to operate the stock exchange. It is a self-regulatory organisation which approves listing applications, licences stockbrokers, and operates the trading, clearing and settlement on the exchange.

NSX is one of the most technically advanced bourses in Africa. Since November 1998 it has used the Johannesburg Equity Trading (JET) system, operated by the Johannesburg Stock Exchange (JSE) Securities Exchange South Africa. It also uses the JSE’s Broker Deal Accounting (BDA) systems, which enables better surveillance and detailed client protection.

The NSX is regulated by the Stock Exchange Control Act of 1985. Amendments to the Act have recently been approved. They include:
•    Permission for corporate membership on the exchange;
•    Introduction of principal trading as principal trading has the potential to increase liquidity on the NSX significantly. New NSX rules will be introduced shortly to properly regulate the additional risks related to principal trading through the new surveillance system;
•    Introduction of new capital adequacy requirements depending on each member’s risk profile; and
•    Generally bring Namibian legislature in line with international standards.

During August 2001, the NSX introduced a settlement system which enables dual-listed securities traded on the NSX to be settled electronically. The settlement of dual-listed shares is linked into the South African Central Depositories with stockbrokers and institutional clients being required to appoint a SA Central Depository Participant (CSDP).

The JSE and the London Stock Exchange (LSE) have entered into two agreements. The first will see each exchange assist in the marketing of the other’s data, together with arrangements to facilitate cross-membership and the dual-trading of securities on both exchanges. The second is a provision by the LSE to the JSE of technology services, which are to be provided through the trading system and the information dissemination system. The application of these agreements has been extended to include the NSX.

Exchange Controls
The Bank of Namibia is continuing with the process to gradually liberalise exchange controls. The government plans to embark on a new approach for the management of exchange controls and collection of data for all cross-border transfers. Instead of outlawing all foreign transactions and then introducing deviations from this rule, the new approach will categorically allow all foreign transactions and will restrict those movements for which controls are still considered necessary. Emphasis will shift from a rigid control function to capturing vital statistical information on foreign transaction.

In the 2002 Budget, the government announced that authorised dealers in foreign exchange might release all Emigrant Blocked Funds held back in Namibia up to and including 28 February 2002. The amount of funds blocked is around N$3.1 million. Any remaining funds have been placed under the physical control of a local authorised dealer who may only release such funds for approved purposes within the Common Monetary Area. Announcements on other exchange control limits are expected in the near future.