Tio Nakasole
Every year, the World Bank Group classifies the world’s economies into four income groups: low, low-middle, upper-middle, and high. These classifications get updated each year on 1 July, based on the previous year’s Gross National Income (GNI) per capita, expressed in U.S. dollars using the Atlas method. Based on the generous numerical definition of the World Bank’s 2024 gross national income (GNI) per capita, economies are divided differently among income groups.
Using the World Bank Atlas method, income calculated per annum is low income, $1,145 or less; lower middle income, $1,146 to $4,515; upper middle income, $4,516 to $14,005; and higher income, more than $14,005. Namibia is the only country globally to have been reclassified from an upper-middle-income to a lower-middle-income country.
Namibia’s shift in income classification reflects long-term trends in its Atlas Gross National Income (GNI) per capita:
➢ 1990-2007: With a steady increase in GNI per capita from USD 2,034.86 to USD 3,341, Namibia maintained its position in the lower-middle income category during this period. This reflected post-independence recovery, economic liberalisation, and modest growth in resource exports.
➢ 2008: Based on data from the World Bank and the Bank of Namibia, Namibia crossed the USD 4,096 criterion and became an upper-middle-income country. This demonstrated robust growth driven by commodities and advantageous macroeconomic circumstances.
➢ 2009-2023: Even though growth slowed over time, the nation kept its status. Between USD 5,000 and USD 10,000, the GNI per capita was in line with upper-middle-income levels.
➢ 2024-July 2025: As of the 1st July 2025, the World Bank downgraded Namibia to lower- middle-income, as the Atlas GNI per capita fell to USD 4,240 in 2024, just below the new upper-middle-income cut-off of USD 4,495. The following pulling variables were mostly responsible for the 12.9% decline in GNI per capita.
Pulling Factors (July 2025, FY26)
➢ In 2024, the domestic economy slowed to a growth rate of 3.7 percent, compared to 4.4 percent recorded in 2023.
➢ Deflation: From 6.6% in 2023 to 3.3% in 2024, inflation (as measured by the GDP deflator) decreased.
➢ Population growth: The World Bank underprojected Namibia’s population to be around 2.6 million for 2023, while the actual census later showed that the population is over 3.02 million, 14% higher than expected in their calculation.
➢ Budget Deficit: Due to a revenue shortfall, the government budget deficit increased from – 3.3% in 2024/25 to -4.3% in 2025/26.
Contributing Factor by Sectors
➢ Slump in the main source of income: since 2022, there has been a significant decline in the primary industries such as diamond mining sector due to weak demand for diamonds in the international market, in part because of increased competition from lab-grown diamonds. Another factor is the poor performance in the “fishing and fish processing on board” sector that declined during the period under review. In the medium term, a recovery appears increasingly doubtful as trade tensions hinder growth in China and key developed nations.
This implies that the massive diamond company De Beers, which in Q1 2025 already recorded a drop in output from its worldwide operations, will keep limiting the amount of mining that can be done in Namibia.
➢ Overdependence on SACU Receipts: Namibia’s overdependence on volatile SACU receipts, accounting for over 30% of total government revenue. A 2025 IMF report notes this as a key fiscal risk, as these transfers form a significant share of government revenue.
➢ With subdued wage growth and a weak employment market, private spending is unlikely to strengthen soon.
➢ 2025–2034: Fitch Solutions’ most recent forecasts indicate that Namibia’s nominal GDP per capita will continue to rise steadily. Namibia’s GDP is expected to reach USD 5,203.54 per person in 2025. This surge is likely driven by improved performance in sectors such as green hydrogen development, tourism revival, and increased foreign investment. From 2026 onwards, the growth moderates to a still robust pace, averaging 7.0% annually between 2026 and 2029, with GDP per capita reaching USD 6,714.47 by 2029. This suggests a period of steady macroeconomic consolidation supported by rising domestic output and population stabilisation. A significant acceleration is projected in 2030, with GDP per capita jumping to USD 7,572.30 (a 12.78% increase), followed by continued strong gains into 2031–2034, where Namibia is expected to cross the USD 10,000 mark by 2034. These projections hint at a potential return to upper-middle-income status as early as the late 2020s or early 2030s.
Panoramic view
In 2013, the United Nations Development Programme highlighted that between 1990 and 2010, the Global South’s share of the middle-class population expanded from 26% to 58%. The same report projected that by 2030, more than 80% of the world’s middle class will reside in the Global South and account for 70% of total consumption expenditure. The prognosis assumes that two-thirds of this middle class will be in Asia and the Pacific, one-tenth in Central and South America, but only a bare 2% in sub-Saharan Africa. With its wealth of resources, Africa’s future is still less bright in terms of per capita income, which serves as a reminder that the majority of the continent’s population may not be fed by the resource boom unless strategic interventions are undertaken.
Developmental impasse
The debates on the African middle class are gaining momentum. Namibia successfully transitioned from low- to upper-middle-income status from 2008 to 2025. There has been a growing concern that Namibia might have fallen into a “middle-income trap,” as it has been unable to move to achieve higher levels of economic growth and further economic transformation. Despite the COVID-19 effects and a reduced poverty level, Namibia’s total factor productivity has been falling. The country heavily relied on foreign direct investment in the mining sector for technological transfer. Adequate technology creation and diffusion did not occur, and industry linkages and clustering are not widespread enough to break through a potential middle-income trap.
Despite the economic growth, which has been driven mainly by extractive industries such as mining as part of the resource boom, the size of the labour force is already characterised by significant open unemployment and underemployment. Namibia is the second most unequal country in the world after South Africa, with a 59.1% Gini coefficient of ecoefficiency, the standard indicator of inequality. One can conclude that neither economic growth nor the proclaimed rise of a “middle class” automatically heralds the spread of democratic values or the anchoring of social security for the majority of the people.
A Potential Pathway Namibia’s downgrade is not due to a single crisis but rather a combination of statistical shocks, dependency risks, and influence in budget execution. Therefore, to turn the tide will require a combination of value addition, increased local content, and diversification. This presents a good opportunity for emerging industries such as oil and gas and green hydrogen. Targeted development spending by prioritising projects with high economic multipliers is key. Additionally, the implementation of performance-based budgeting across government and its agencies should be applied.
All things considered, a nation’s classification not only indicates its degree of development but also has the power to shape its future, influencing its eligibility for official development assistance and concessional funding, which is much needed for Namibia’s development aspirations.
*Tio Nakasole is an analyst at MONASA Advisory and Associates (tio@monasa.org).
References
Fitch Solutions. (2025). Namibian public debt to gradually decline over coming quarters.
United Nations Development Programme. (2013). The rise of the South: Human progress in a diverse world. Human Development
Report 2013.
World Bank. (2024). World Development Report 2024: The Middle-Income Trap [Overview]. Washington, DC:
1af2e017
Namibia Statistics Agency. (2025). Annual National Accounts 2024. Windhoek: Namibia Statistics Agency. https://nsa.org.na/wp-
content/uploads/2025/03/ANNUAL-NATIONAL-ACCOUNTS-2024.pdf?utm_source=chatgpt.com
