Figure 1: Current Account Balance in Namibia (2016-2024)
Source: IMF 2019, Namibia 2019 Article IV Consultation. Note: (*) Figures from 2019 onwards are projections.
Total merchandise imports to Namibia increased to USD 8.3 billion in 2018, from an annual average of USD 7.0 billion for 2015 to 2017[1]. Exports increased to USD 5.2 billion in 2018, from an annual average of USD 3.8 billion for 2015 to 2017[2]. The faster growth in exports has improved Namibia’s current account deficit from an average of -USD 908.3 million (approx. -7.5% of GDP) for 2016 to 2018, to a deficit of -USD 586.0 million (approx. -4.1% of GDP) in 2019[3]. The faster growth in export earnings has improved Namibia’s balance of payments and gross official reserves have increased despite the narrowing capital and financial account surplus.
Figure 2: Capital and Financial Account Balance in Namibia (2016-2024)
Source: IMF 2019, Namibia 2019 Article IV Consultation. Note: (*) Figures from 2019 onwards are projections.
Namibia’s capital and financial account balance deteriorated from a surplus (net inflows) averaging USD 1.0 billion (approx. 8.3% of GDP) for 2016 to 2018, to a surplus of USD 819.0 million (approx. 5.7% of GDP) in 2019[4]. As a result, Namibia’s balance of payments improved from an average of USD 41.0 million (approx. 0.1% of GDP) for 2016 to 2018, to a surplus of USD 233.0 million (approx. 1.6% of GDP) in 2019[5]. Gross official reserves increased from USD 1.8 billion in 2016 to USD 2.2 billion in 2018, and continued increasing to USD 2.4 billion in 2019[6]. During this period, Namibia experienced decreasing inward FDI inflows.
Inward FDI inflows decreased from USD 933.3 million in 2015 to USD 461.2 million in 2017, and continued decreasing to USD 195.8 million in 2018[7]. As a result, Namibia’s inward FDI stock increased from an average of USD 6.1 billion for 2015 to 2017, to USD 6.7 billion in 2018[8]. Namibians’ investments abroad have been volatile as inward FDI to the country decreased.
Figure 3: Gross Official Reserves and Balance of Payment in Namibia (2016-2024)
Source: IMF 2019, Namibia 2019 Article IV Consultation. Note: (*) Figures from 2019 onwards are projections.
Outward FDI outflows decreased from USD 88.4 million in 2015 to net repatriations of -USD 58.9 million in 2017, before recovering to USD 76.2 million in 2018[9]. As a result, Namibia’s outward FDI stock decreased from an average of USD 639.8 million for 2015 to 2017, to USD 553.9 million in 2018[10]. These capital flows have improved Namibia’s balance of payment but deteriorated the country’s net international FDI position.
Figure 4: Inward Foreign Direct Investment in Namibia (2015-2018)
Sources: UNCTAD 2019, UNCTADStat Database.
Namibia’s balance of payment has been supported by the narrowing current account deficit despite the weaker capital and financial account surplus in the period from 2015 to 2018. Outward FDI flows have been volatile as inward FDI inflows decreased. Namibia’s net international FDI position deteriorated from net liabilities amounting to an average of -USD 6.0 billion (approx. -49.1% of GDP) for 2015 to 2017, to net liabilities amounting -USD 6.3 billion (approx. -43.4% of GDP) in 2018[11].
Figure 5: Outward Foreign Direct Investment from Namibia (2015-2018)
Sources: UNCTAD 2019, UNCTADStat Database.
At these levels Namibia’s foreign liabilities remain significant as a proportion of GDP. Given the relatively narrow domestic capital markets, Namibia should focus on attracting inward FDI in sectors that will expand its productive capacity and diversify its exports because the country is still heavily dependent on agricultural and raw commodity exports. Nevertheless, Namibia’s balance of payments surplus is projected to deteriorate to a narrower surplus in the medium-term, which is projected to decrease gross official reserves.
Figure 6: International Foreign Direct Investment Position in Namibia (2015-2018)
Sources: UNCTAD 2019, UNCTADStat Database.
The persistent capital and financial account surplus should support Namibia’s balance of payments surplus despite the widening current account deficit in the forward-looking medium-term. The current account deficit is projected to widen from a deficit of -USD 586.0 million (approx. -4.1% of GDP) in 2019 to an average of -USD 638.0 million (approx. -3.8% of GDP) from 2020 to 2024[12]. Namibia’s capital and financial account balance is projected to moderate to a surplus (net inflows) averaging USD 707.0 million (approx. 4.2% of GDP) from 2020 to 2024[13]. Therefore, the balance of payment is projected to moderate from a surplus of USD 367.0 million in 2020 to a surplus of USD 92.0 million in 2024, which is equivalent to an average deficit of USD 69.0 million (approx. 0.4% of GDP)[14]. Thus, Namibia’s gross official reserves are projected to decrease from USD 2.7 billion in 2020, to USD 2.6 billion in 2024[15].
[1] UNCTAD 2019. UNCTADStat Database, United Nations Conference on Trade and Development: Geneva. Available At: https://unctadstat.unctad.org/ [Last Accessed: 8 March 2020].
[2] UNCTAD 2019. UNCTADStat Database, ibid.
[3] IMF 2019. Namibia 2019 Article IV Consultation, International Monetary Fund: Washington, D. C. Available At: https://www.imf.org/ [Last Accessed: 8 March 2020].
[4] IMF 2019. Namibia 2019 Article IV Consultation, ibid.
[5] IMF 2019. Namibia 2019 Article IV Consultation, ibid. There are relatively significant errors and omissions in Namibia’s balance of payments data equivalent to USD 292.0 million in 2016, USD 211.0 million in 2017, and -USD 265.0 million in 2018.
[6] IMF 2019. Namibia 2019 Article IV Consultation, ibid.
[7] UNCTAD 2019. UNCTADStat Database, ibid.
[8] UNCTAD 2019. UNCTADStat Database, ibid.
[9] UNCTAD 2019. UNCTADStat Database, ibid.
[10] UNCTAD 2019. UNCTADStat Database, ibid.
[11] UNCTAD 2019. UNCTADStat Database, ibid.
[12] IMF 2019. Namibia 2019 Article IV Consultation, ibid.
[13] IMF 2019. Namibia 2019 Article IV Consultation, ibid.
[14] IMF 2019. Namibia 2019 Article IV Consultation, ibid.
[15] IMF 2019. Namibia 2019 Article IV Consultation, ibid.
