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Mining Industry has potential to drive Namibia’s economic fortunes

Mining Industry has potential to drive Namibia’s economic fortunes

By Josef Kefas Sheehama.

The Namibian mining sector remains a key driver of sustainable economic development. Indeed, this sector contributes a lot to exports as well as having crucial inter-linkages with other sectors of the economy.

The mining sector is critical for carrying out mineral exploration, extraction, processing, and marketing because Namibia lacks enough capital and technological resources to finance such capital-intensive large-scale enterprises.

It is noteworthy that in 2023, the sector contributed about 12% of GDP. Namibia’s mining sector recorded a year of strong growth of 21,6% in 2022 compared to 11% in 2021, on the back of good performance by the diamond sector. The total turnover paid to the government by chamber members increased by 29,6% in 2022 as a result of higher sales revenues and the high profits realized by individual operations, particularly from diamond mining, compared to 2021, as per the Chamber of Mines Annual Review for 2022.

The sector paid N$1,9 billion in corporate taxes in 2022, up from N$1,553 billion in 2021, and also paid N$2,154 billion in royalties and N$249,4 million in export levies, which increased by 33,7% and 7,6% from 2021 to 2022, respectively. Total direct employment increased by 6,9% in 2022 and the sector collectively employed 16,147 people. The increase was a result of the new employment positions created on Debmarine Namibia’s new mining vessel and increased exploration activities, which contributed to a higher number of contractors employed. The chamber’s report revealed, approximately 97% of employees in the mining industry are Namibians. This quantified an amount of approximately N$6,225 billion in salaries in Namibia, creating local extras that support other sectors of the economy. The mining industry spent approximately N$16,823 billion on goods and services from Namibian suppliers, contributing 74% of total procurement.

According to the Namibia Statistics Agency, Namibia’s production of gold bullion in June 2023 stood at 721 kg compared to 622 kg and 435 kg which was recorded in the previous month and in the corresponding year. Furthermore, during the period under review, 233,932 carats of diamonds were produced compared to 203,868 carats and 219,928 carats that were recorded in May 2023, and in the corresponding month of 2022.

A total of 665 tonnes of uranium was produced compared to 612 tonnes and 535 tonnes produced in May 2023 and in the corresponding month of 2022. Namibia produced 6080 tonnes of Zinc concentrate compared to 5750 tonnes and 6845 tonnes recorded in May 2023 and in the corresponding month of 202, respectively.

Overall, the mining industry has demonstrated considerable resilience against the background of the global downturn.

However, the mining industry, like many, is experiencing challenges in attracting talent. There is a significant lack of awareness of the opportunities available within the mining space and limited promotion of the benefits of working in the sector and the career paths available. Hence, it is therefore crucial that the sector remains buoyant, well into the future. But like many industries, it must continue to embrace technological advancements and develop a greener and more sustainable future for it to become future-proof.

Additionally, this supports other sectors of the economy, providing jobs and generating tax revenue that benefits all taxpayers. Mining is essential for sustaining Namibia’s economic development and growth. It contributes significantly to GDP growth and employment, provides important spin-off benefits such as increased business investment and higher exports, and supports social welfare programmes through job creation and income generation. Namibia has received Foreign Direct Investment (FDI) for its development and is still striving to attract this important resource. It is a fact that Namibia has experienced serious shortages of domestic investment to fund critical inputs in the various growth-inducing sectors of the economy, the mining sector included during the past decades, and it is believed that FDI has been of critical support to the economy.

This implies that receiving foreign capital and investment enables Namibia to make investments in human and physical capital as well as the exploitation of opportunities that otherwise could not be used for development. We need to understand that this opened an opportunity for local businesses to provide some services, and through that empowerment through skills transfer to local businesses.

But it is not the responsibility of the mining sector alone to ensure that their activities contribute to the economic development of Namibia. It is rather through effective partnerships and understanding between the public and private sectors that mining activities can thrive and continue to contribute to the country’s development in a sustainable manner.

Moreover, given the depleting nature of the extractive industries, companies in the sector have thus been called upon to actively take steps to ensure that the livelihoods of communities dependent on their operations continue to thrive and operate following mine closure. In reality, mining operations and sustainable development are the sad reality that historically, mining companies in Namibia generally do not have a convincing track record of responsible and sustainable mining approaches, leaving proceeding generations and governments with unrehabilitated mining sites and revenue gaps to fill. Mineral resources have also been the source of many conflicts in various places prompting the Ministry of Mines and Energy to intervene, hindering the maximization of economic benefit from these endowments and thus contributing very little to poverty eradication.

Going forward, mining is an important part of the Namibian economy and has been for many years. It accounts for over 12% of the country’s GDP and employs around 16,000 people. The mining sector is expected to account for even more of the GDP in the future as resources become increasingly scarce.

The mining sector has had a positive impact on the country’s overall economy. It provides jobs for people who may not otherwise be able to find work, pays taxes that help fund public services, and exports commodities that support other sectors of the economy. The mining industry has also helped to reduce poverty levels by creating wealth that can be distributed among society as a whole.

Now, Namibia’s mining sector can turn the country’s economic fortunes around by creating downstream opportunities. The policy essentially strengthens the regime for beneficiation locally, that is, to stop the exportation of raw minerals from Namibia. Thus, to encourage legal mining, the community that discovers the mineral should be allowed to partner with investors who can bring in equipment and mine in a safe way.


About The Author

Josef Sheehama

Josef Kefas Sheehama has more than 21 years banking experience serving as Manager Credit, Branch Manager and now Centralize Credit Head Office at Bank Windhoek. He holds a Certified Associate Institute Bankers CAIB (SA), Associate Institute Bankers AIB(SA), Chartered Banking Professional CHBP (SA), B Com Banking, B Com Law, Postgraduate Islamic Finance and Banking, MBA and an LLB degree. Also founder of church since 2009. He is an independent Economics and Business Researcher. Authored more than 100 articles in Economics and Business. Served on Northwest University panel (Green Hydrogen). His MBA thesis published by the International Journal of Current Research (Exploring sustainable economic challenges and opportunities).