Budget will test Namibia’s ability to break free from commodity dependence – analyst

Namibia’s latest budget is seen as a key test of its ability to reduce commodity dependence, stabilise revenue, and navigate economic uncertainties, an analyst says.

The head of investments at Simonis Storm Securities, Max Rix, says on the surface, the 2025/26 fiscal framework promises moderate progress on deficit reduction and debt stabilisation, while continuing to invest in social protection and infrastructure.

“But a closer look, reading between the lines, raises important questions about whether the new administration’s policies can withstand the shifting headwinds of global trade, regional uncertainty, and the weight of domestic structural challenges.

“A truly rigorous ‘devil in the detail’ analysis reveals the many assumptions underpinning this budget and exposes how a few missed targets could quickly unravel the best-laid plans,” says Rix.

He says while the budget sets total revenue at N$92.6 billion, about 1.9% above the revised 2024/25 estimate, “the big swing factor is the N$6.9-billion drop in Southern African Customs Union (Sacu) receipts, to just N$21.1 billion.

“That cut would be devastating on its own had the government not become adept at finding other revenue sources in personal income tax, VAT, and non-mining corporate tax,” he says.

He says the budget envisages notable gains: N$2.6 billion more in VAT, N$1.8 billion more from individuals, and N$1.3 billion more in non-mining corporate tax.

“In theory, those sums replace what is lost in Sacu flows, but it assumes robust compliance, steady employment, and buoyant consumer spending. Although the Namibia Revenue Agency collected a commendable N$3 billion in the ongoing tax amnesty, it remains to be seen how sustainable that level of compliance is once the amnesty ends and businesses and individuals face renewed economic strain.

“More broadly, global growth is uncertain, meaning the slump in diamond-related taxes could widen if key markets fail to recover, or if new export routes do not materialise as quickly as hoped,” Rix says.