The impact of global trade agreements on Namibia’s economic diversification and industrialisation

Namibia has long relied on its rich mineral resources, especially diamonds and uranium, to fuel its economy for several decades. However, this overreliance on the extractive sector poses significant challenges, including exposure to global market fluctuations, limited job creation and insufficient value addition. To liberate itself from this dependence, Namibia is actively pursuing economic diversification, with the intent to enhance its manufacturing, agriculture, and service sectors.

At the heart of this transformative endeavour are global trade agreements, especially the African Continental Free Trade Agreement (AfCFTA) and the Economic Partnership Agreements (EPAs) with the European Union (EU). These agreements possess the capability to transform Namibia’s economic landscape by unearthing extensive market opportunities, attracting foreign investment, and establishing the groundwork for sustainable industrialisation. However, the journey towards achieving these benefits is littered with challenges, including insufficient infrastructure, skilled labour shortages and fierce competition from more industrialised nations.

Currently, the Economic and Social Justice Trust is conducting an in-depth research project to explore the impact of AfCFTA and EPAs on Namibia’s initiatives to diversify its economy and enhance industrialisation. This research intends to analyse how these trade frameworks can function as catalysts for economic transformation while identifying the structural challenges Namibia needs to overcome to fully exploit their advantages.

Although the research is ongoing, initial findings indicate the significant potential that these trade agreements have for Namibia. They present opportunities for greater market access, boost foreign direct investment and stimulate crucial sectors such as manufacturing, agriculture and renewable energy. However, Namibia continues to encounter challenges such as intricate regulations, inadequate logistics and a deficiency in specialised skills, which constrain its capacity to fully capitalise on these agreements.

Competitive position

A vital insight arising from the research is that AfCFTA has the capacity to greatly enhance regional trade and promote industrialisation – but only if Namibia is able to resolve logistical and regulatory impediments. In a similar vein, EPAs with the EU afford Namibia’s preferential access to lucrative European markets; however, the nation must bolster its industrial foundation to genuinely benefit from these prospects.

The research also emphasises key sectors that are well-positioned for significant growth within the changing global trade context. Namibia’s green hydrogen sector, renewable energy industry and agro-processing capabilities present innovative opportunities for economic advancement. With strategic involvement in these sectors, along with a solid trade policy, Namibia can establish a competitive position on the global platform.

The insights produced from this research are set to be instrumental in influencing Namibia’s future development strategies. They provide a framework for transforming the economy, diminishing reliance on primary exports and constructing a resilient and diversified industrial foundation. More critically, the conclusions drawn will present tangible recommendations for policymakers, enterprises and stakeholders on how to maximally utilise the benefits of AfCFTA and EPAs.

This endeavour transcends a mere research initiative; it represents a call to action. Namibia is positioned at the brink of a significant economic transformation and the decisions made today will shape the nation’s prosperity for generations ahead. We encourage all individuals who envision a vibrant and diversified Namibia to participate in this research, offer insights and facilitate substantial change.

*Leonard Nakawa is a political analyst at the Economic & Social Justice Trust.