Josef Kefas Sheehama
Namibia relies heavily on imports, and rising geopolitical upheaval may limit the country’s economic growth. Within this framework, the growing geopolitical environment, which includes the war between Russia and Ukraine, unrest in the Middle East, and a series of sanctions aimed at preventing Russia’s military-industrial complex from obtaining critical and essential goods such as sophisticated machinery and electronic components, can be attributed for inciting World War III.
It is worth noting that Namibia saw positive growth in the first quarter of 2024, despite expectations that real growth would slow to 3.7 percent in 2024. However, real economic growth is predicted to increase by more than a point to 4.1 percent in 2025. World trade growth is expected to be 3.2 percent in 2024 and 3.3 percent in 2025, lower than its historical average of 4.9 percent, owing to persistent geopolitical tensions and policy uncertainties. The escalation of conflicts between Israel and Hamas, as well as between Russia and Ukraine, has hampered energy and food supplies and contributed to further destabilization. Inflationary pressures have risen since 2022 as costs have increased. Ukraine’s aggressive push towards the Kursk area on Russia’s border will aggravate tensions. Additional sanctions have been imposed on Russia, raising the possibility of a third global conflict.
Geopolitical conflicts increase uncertainty, lowering investment and economic growth. Conflicts and wars have the potential to rduce global supply capacity, which could lead to inflation. However, if the Middle East conflict escalates, oil prices might jump by 30% beyond the baseline estimate of $81 per barrel in 2024. According to the World Bank’s most recent Commodity Markets Outlook, this might boost global inflation and reduce global growth by 0.2 percentage point.
As a result, Namibia and its businesses can better address geopolitical concerns while maintaining economic growth. Namibia should prioritize institutional strengthening in agriculture, energy, transparency, and good governance in order to attract international investment and maintain a stable economy.
How can Namibia and businesses navigate geopolitics to sustain economic growth? We must understand Namibia’s trade with the Middle East, Asia, Europe, and the United States, among other destinations. As a result, any global trade developments will affect Namibia. Namibia should maximize the market’s role, create a more equal and dynamic market environment, and allocate resources as efficiently and productively as possible.
Namibia will be able to reduce its dependency on imports to keep the national economy running smoothly while simultaneously releasing Namibians’ local driving forces and creativity. Namibia must ensure that companies with varied forms of ownership compete in the market on an equal footing and are protected by law as equals, allowing them to complement and grow. Therefore, In order to preserve a positive maintainable and guarantee sustainable economic growth, it is imperative that economic policies be flexible and up to date. Since the downstream operations are farther away, a greater number of new capabilities must be developed concurrently in order for them to be realized.
Moreover, it is vital that Namibia use the Sixth National Development Plan (NDP6) to steer reform and lay the groundwork for development. We must deepen supply-side structural change, enhance incentive and control strategies that promote high-quality development, and endeavor to create new growth drivers and strengths.
Namibia must improve its structures and processes for promoting quality productive forces in accordance with the local context, stimulating full integration of the real and digital economies, developing the delivery industry, improving infrastructure, establishing an effective local content policy and potential prior to operation, and strengthening the resilience and safety of industrial and supply chains. As a result, Namibia should foster good relationships and increase capacity building in mining, green hydrogen, oil, and gas for local content growth. Namibia should invest in education, technology, and skill development.
A country is vulnerable if it does not comprehend its economy and global trade. Namibia should execute effective macroeconomic policies to boost domestic demand, create new international trade drivers, expand the blue economy and nuclear power plants, improve people’s well-being, and create more jobs.
Additionally, the political and economic spread of conflict beyond its geographic borders has a significant indirect effect, as evidenced by deteriorating regional investment climates and crowding out pro-growth policy priorities that would otherwise receive more attention. Namibia’s food supply is under pressure, necessitating significant investment to ensure food security, as the country relies on imports. Investments must boost the productivity and revenue of small-scale farmers while also diversifying their income through value chain development and creating more and better jobs for the rural poor.
Agriculture is vital in transforming economies to achieve the aim, as are other critical development goals such as guaranteeing food security and boosting nutrition. As a result, agricultural transformation must become a reality in order to eradicate hunger and malnutrition while also increasing economic growth.
From traditional to contemporary technology, agriculture to industry and manufacturing, and finally to a high-income service economy. To ensure the success of this process, the agricultural sector must be modernized. As a result, governments must create conditions, such as irrigation and enhanced market infrastructure, to allow farmers to obtain these inputs and sell their agricultural products.
Namibia will also need to invest in human capital to create a trained labour force capable of mastering new technology, managing logistics, and enhancing each node of the value chain.
Namibia has the opportunity to undertake critical macroeconomic and structural improvements that will reduce crisis vulnerabilities while increasing growth. This would increase income per capita, reduce poverty. Namibia must behave differently to avoid an economic disaster in the middle of geopolitical conflict.
As a result, in order to maintain economic recovery and growth, Namibia must make substantial headway towards doing things differently and remaining competitive. Namibia must consciously pay more focus to reform and deepen reform entirely with the purpose of boosting Namibian industrialization in order to better deal with challenging changes both at home and abroad, adapt to the new round of geopolitics and technological revolution and industrial transformation, and live up to the new expectations of Namibian.
To this end, geopolitical volatility has emerged as a substantial source of uncertainty, and it will likely remain so in the future years.
As a result, the world will almost probably remain conflict-prone. However, the international community can play an important role in reducing escalation by pursuing a cease-fire rather than giving weapons to discourage other fighting countries, while also considering the long-term effects of its policies.
