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Namibia Systematic Country Diagnostic NAMIBIA SYSTEMATIC COUNTRY DIAGNOSTIC Namibia Systematic Country Diagnostic 1 NAMIBIA SYSTEMATIC COUNTRY DIAGNOSTIC July 2021 2021 The World Bank Group 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbankgroup.org Some rights reserved 1 2 3 4 21 20 19 18 This work is a product of the staff of The World Bank Group with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the World Bank Group, its Board of Executive Directors, or the governments they represent. The World Bank Group does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of the World Bank Group, all of which are specifically reserved. RIGHTS AND PERMISSIONS This work is available under the Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) http://creativecommons. org/licenses/by/3.0/igo. Under the Creative Commons Attribution license, you are free to copy, distribute, transmit, and adapt this work, including for commercial purposes, under the following conditions: Attribution - Please cite the work as follows: World Bank Group 2021. Namibia Systematic Country Diagnostic Washington, DC: World Bank. License: Creative Commons Attribution CC BY 3.0 IGO. Translations - If you create a translation of this work, please add the following disclaimer along with the attribution: This translation was not created by the World Bank Group and should not be considered an official World Bank Group translation. 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Namibia Systematic Country Diagnostic 5 ABBREVIATIONS AND ACRONYMS AfDB African Development Bank Agribank Agricultural Bank of Namibia AIDS Acquired Immune Deficiency Syndrome BAU Business as Usual BIPA Business and Intellectual Authority CBNRM Community-Based Natural Resources Management CPB Central Procurement Board CSA Climate-Smart Agriculture CSP Concentrated Solar Power DAI Digital Adoption Index DPSM Department of Public Service Management ECB Electricity Control Board ECDE Early Childhood Development and Education EFTA European Free Trade Area EIG Emergency Income Grant ES Enterprise Survey EU European Union FDI Foreign Direct Investment FMD Foot-and-Mouth Disease FSAP Financial Sector Assessment Program FY Fiscal Year GBV Gender-Based Violence GDP Gross Domestic Product GER Gross Enrolment Rate GFCF Gross Fixed Capital Formation GNI Gross National Income HCI Human Capital Index HDI Human Development Index HIV Human Immunodeficiency Virus HRMIS Human Resources Management Information System ICT Information and Communication Technology IIP Infant Industry Protection ILO International Labor Organization INDC Intended Nationally Determined Contributions IPP Independent Power Producer ISC Industry Skills Committee LFP Labor Force Participation M&E Monitoring and Evaluation MDAs Ministries, Departments, and Agencies MERCOSUR Mercado Común del Sur; Southern Common Market MoEAC Ministry of Education, Arts and Culture 6 Namibia Systematic Country Diagnostic MoHSS Ministry of Health and Social Services MPE Ministry of Public Enterprises MSME Micro, Small, and Medium Enterprise NaCC Namibian Competition Commission NCA Northern Communal Area NCD Noncommunicable Disease NCP National Competition Policy NDC Nationally Determined Contribution NDP National Development Plan NDP5 Fifth National Development Plan NFIS Namibia Financial Inclusion Survey NHIES Namibia Household Income and Expenditure Survey NIRP National Integrated Resource Plan NSFAF Namibia Students Financial Assistance Fund NRSC National Road Safety Council NTA Namibia Training Authority NUST Namibia University of Science and Technology OAG Old Age Grant OECD Organization for Economic Co-operation and Development PER Public Expenditure Review PMR Product Market Regulation PPP Public-Private Partnership PSEMAS Public Service Employee Medical Aid Scheme PV Photovoltaic RRA Risk and Resilience Assessment R&D Research and Development RCC Roads Contractor Company REFIT Renewal Energy Feed-In Tariff RFA Road Fund Agency SACU Southern African Customs Union SADC Southern African Development Community SAM Social Accounting Matrix SAPP Southern African Power Pool SASA Southern Africa Solar/Renewables Accelerator SAT Standardized Achievement Test SCD Systematic Country Diagnostic SME Small and Medium Enterprise SOE State-Owned Enterprise SSA Sub-Saharan Africa SWAPO South West Africa People’s Organization STR Student-Teacher Ratio TEIs Tertiary Education Institutions TFP Total Factor Productivity THE Total Health Expenditures TVET Technical and Vocational Education and Training UNAIDS Joint United Nations Programme on HIV/AIDS UNAM University of Namibia VTC Vocational Training Center WBG World Bank Group WHO World Health Organization Namibia Systematic Country Diagnostic 7 TABLE OF CONTENTS Table on Contents 8 Figures / Tables / Boxes 10 Acknowledgments 12 Executive Summary 15 A. Sources of Growth and Poverty Reduction 18 B. Binding Constraints to Wealth Creation and Sustainable Economic Development 21 C. Pathways to Overcome Growth and Inclusiveness Challenges 22 D. Establishing an Environment for Private Sector-led, Job-creating Activities 23 E. Building Human Capital and Increasing the Productive Potential of the Labor Force 25 F. Reducing Inequalities through better Services Delivery 26 G. Reducing Vulnerabilities to Climate Change and Environmental Shocks 28 H. Prioritization of Constraints and Interventions 29 CHAPTER 1: Introduction and Analytical Framework 33 1. Introduction 34 2. The Historical Context and the Legacy of Apartheid as a Defining Feature 35 3. Framework for the SCD Analysis: “Changing Wealth of Nations” 36 CHAPTER 2: Achievements Since Independence and the Main Challenges 39 1. Namibia’s Success Story and Achievements since Independence 40 A. National Wealth Has Increased 40 B. Political Stability and Investment in Produced Capital Led to Rapid Economic Development 41 C. Investment in Human Capital Led to Strong Economic Performance, Fast Poverty Reduction and Better Access to Services 45 2. Low Human Capital Levels and Low Growth Potential Remain Challenges 47 A. Wealth Remains Relatively Low Compared with Other Countries 47 B. The Middle-Income Trap: Myth or Reality for Namibia? 48 CHAPTER 3: Challenges of Maintaining Sustainable Economic Growth and Wealth Accumulation 51 1. Low TFP, Deterioration of Fiscal Liquidity, and High Macro Volatility 52 A. High Investment in Mining and Infrastructure but Weak Productivity and Inefficient Inter-sectoral Allocations 52 B. Deterioration of Fiscal Situation and Liquidity Challenges 58 C. Country Dependence on the Global and Regional Context and Price Volatility 61 2. Barriers to Input Markets and Technology Limit Growth Potential 66 A. High Unemployment, Limited Jobs Opportunities, and Polarized Labor Market 66 B. Poor Competition and Low Entrepreneurship 69 C. Poor Access to Financing 75 D. Skewed Access to Land and Low Affordability in the Housing Market 76 E. Low Use of Digital Technology 78 F. Challenges of Low Productivity in Agriculture 81 8 Namibia Systematic Country Diagnostic 3. Incomplete Structural Transformation and Infrastructure Gaps 83 A. Growing Imbalances between Sectors 83 B. Declining Trade Fitness and Low Export Complexity 85 C. Fast Urbanization and Poor Urban Infrastructure 87 D. Economic Transformation Is Held Back by Remaining Infrastructure Gaps 88 CHAPTER 4: Challenges of Inclusiveness and Services Delivery 93 1. Relative High Poverty and Low Human Capital 94 2. Namibia Is the Second Most Unequal Country in the World 100 3. Low Efficiency of the Social Protection System 102 4. High Spending on Education and Health Care Produces Poor Outcomes 105 A. High Spending but Low Outcomes of the Educational System 106 B. High Spending on the Health System but Outcomes Could Be Improved 112 5. Institutional Gaps and Challenges of Services Delivery 114 A. Socioeconomic Inequalities Have Not Been Substantially
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