Forget what you thought you knew about Namibia's economy. It's not just the big businesses and formal sectors that are driving growth. The informal sector is a powerhouse, contributing a staggering 26.5% to the country's GDP, which translates to roughly US$13 billion based on purchasing power parity (PPP) levels for 2025. This isn't just a small side hustle; it's a major pillar of the Namibian economy.
This data, released by the Ministry of Finance during the launch of the Diagnostic Report on Informality in Namibia, shows a significant rise from 24.7% in 2023, when the sector was valued at around US$8 billion. This growth highlights the increasing importance of this often-overlooked part of the economy.
According to Michael Nokokure Humavindu, Executive Director of the Ministry of Finance and Chairperson of the National Working Group on Informality, the 2024 National Informal Economy, Startups, and Entrepreneurship Development Policy (NIESEP) already recognized the informal economy's significance. The new diagnostic report builds on this, offering a comprehensive look at the size, contribution, and structure of the informal sector across Namibia.
Humavindu emphasized that the informal economy is crucial, providing livelihoods for an estimated 58% of the workforce. He stated, "It contributes a significant portion of our GDP that demands our respect and full integration." He also highlighted that the sector is largely driven by women, who make up over half of informal enterprises, and young people who are starting businesses despite facing challenges like limited capital and regulatory hurdles.
But here's where it gets controversial... This report isn't just a collection of numbers; it's a reflection of the realities faced by many Namibians. It reveals that the country cannot achieve shared prosperity while a significant portion of its workforce struggles between survival and exclusion. The Executive Director noted that Namibia cannot effectively diversify its economy without supporting its indigenous entrepreneurial capital.
The report was created through a participatory approach, directly involving informal workers like street vendors, taxi drivers, mechanics, and food sellers. This process revealed key challenges such as a lack of security, financial exclusion, and a burdensome regulatory environment.
Humavindu explained that the report provides a roadmap for legal reforms, inclusive finance, business registration, spatial justice, and digital inclusion. He stressed that transitioning to formality should be seen as an opportunity for dignity, productivity, and protection, not as a punishment. He also acknowledged the support of the Government of Namibia, the Bank of Namibia, and the United Nations in making the report possible.
He concluded, "The informal economy does not need our sympathy. It needs policy. It needs supportive legislation. It needs reform. It needs investment. Above all, it needs respect."
Ebson Uanguta, Deputy Governor of the Bank of Namibia, added that the report provides evidence to guide targeted infrastructure, financial, and social development strategies. He said, "This report gives voice to the aspirations and challenges of individuals in our open markets, agricultural corridors, home-based businesses, and informal settlements. It reminds us that for a majority of Namibians, the informal sector is the economy."
He emphasized the need for policymakers and institutions to translate the report's findings into tangible reforms. Uanguta urged collaboration between government, regulators, civil society, and the private sector to move beyond discussion and implement structural solutions that promote dignity and opportunity for informal workers.
And this is the part most people miss... The report's findings underscore the urgent need for comprehensive policy changes to support and integrate the informal sector. It’s not just about acknowledging its existence; it's about actively creating an environment where informal workers can thrive.
What do you think? Do you agree that the informal sector deserves more attention and support? What specific policies or reforms do you think would be most effective in Namibia? Share your thoughts in the comments below!
