By Dhiladhila Magazine · Issue 12

The economy grows a little faster, but the budget still leans on revenue it has yet to earn.

Namibia’s finance minister rose on 26 February 2026 to make a modest central claim: the economy would grow a little faster this year than last. Reuters reported the government as seeing slightly higher economic growth ahead, with output projected to expand 3.1 per cent in 2026 after a revised 2.9 per cent in 2025. It is a recovery, but a shallow one.

The shallowness is the story. Growth of 3.1 per cent sits below the 3.7 per cent the economy managed in 2024 and only a little under the 3.3 per cent medium-term average the Treasury pencils in. Ericah Shafudah tabled a N$87.9 billion budget, about US$5.5 billion, under the theme People, Productivity and Prudence, resting on the hope that the recovery holds long enough to carry the figures beneath it.

A recovery that leans on revenue, not restraint

The budget balances on the revenue line. Government income for 2026/27 is projected at N$89.56 billion, around 34.1 per cent of GDP, against total spending of N$105.92 billion once statutory commitments are counted. The gap is meant to close over the medium term, but it closes because revenue is assumed to keep climbing, not because spending is being cut hard now.

Analysts have flagged the reliance. Cirrus Capital noted that the budget leans increasingly on revenue growth rather than on expenditure restraint, after 2025/26 revenue was revised down to N$87.4 billion, roughly N$4 billion below the earlier plan. A budget that depends on receipts rising is a budget exposed if they do not.

A plan that consolidates by earning more, not spending less, is only as safe as its revenue forecast.

Where the growth is meant to come from

Shafudah pointed the economy at five sources of new activity: manufacturing, tourism, agriculture, the digital economy and energy, with the offshore oil and gas discoveries held out as the longer prize. The reasoning is that a broader base of production widens the tax base without raising the burden on the taxpayers already inside it.

The near-term arithmetic is harder. Lower receipts from the Southern African Customs Union and falling diamond revenues pull in one direction, with firmer gold earnings only partly offsetting them. Growth of 3.1 per cent has to be delivered against those headwinds, which is why the Treasury itself calls the recovery fragile rather than secure.

The growth story is a diversification bet; the revenue story is still a commodity one.

The deficit narrows, but the debt does not

The deficit is on a declining path. The budget projects it easing to 5.5 per cent of GDP in 2026/27, from a higher prior level, then to 3.8 per cent in 2027/28 and 3.3 per cent the year after. On paper that is consolidation, and it is the number the market will watch to judge whether the Treasury means it.

The debt tells a slower story. Public debt stood at N$174.6 billion, or 65.2 per cent of GDP, in January 2026, and is projected to keep rising toward N$217.3 billion by 2028/29 before stabilising near 67.5 per cent. A shrinking deficit still adds to the stock; it merely adds to it more slowly.

That distinction matters for anyone pricing Namibian risk. A deficit falling on schedule supports confidence, but a debt ratio still grinding upward for three more years keeps the cost of borrowing in view. The market is being asked to reward the direction of travel while the absolute burden is still growing.

A narrowing deficit is progress; a rising debt ratio is why the progress has to continue.

The market read

Underneath the percentages sits a structural fact the budget cannot quickly change. Namibia has a population of about 3.02 million but only some 15,000 formal employers, a narrow base that limits both job creation and the tax revenue the whole plan depends on. Growth that does not widen that base does little for the fiscal maths.

For a market participant, the signal from 26 February is a recovery worth taking seriously but not at face value. The 3.1 per cent forecast is credible, the diversification is real, and the exposure to customs and commodity receipts is equally real. The budget asks investors to price a fragile upswing, not a turning point.

This is a floor being defended, not a ceiling being lifted.

For an investor or executive reading Windhoek in early 2026, the budget offers a recovery with its risks left in plain sight: growth a little firmer, a deficit a little narrower and a revenue line doing most of the work. The decision is whether to position for the 3.1 per cent the Treasury is forecasting, or for the softer number a fall in customs or diamond receipts could still produce.

Sources: Reuters; Shafudah walks fiscal tightrope as growth slows (The Namibian); Budget 2026/27: revenue, jobs and growth (New Era)