Namibia has witnessed a turnaround in its overall risk profile during the past decade. This is reflected by a substantial improvement in its overall ECR score, which has boosted its position on ECRs rankings.
Since then, Namibias overall ECR score at 46.9 has converged with the regions two strongest economies, bringing it up to 73 on ECRs rankings. The improvement puts Namibias ECR score 18 points ahead of the sub-Saharan African average.
Additionally, Namibias ECR score for economic risk is the second strongest in the region at 5.4 and has more than doubled since September 2007. This strong score falls on the back of large stimulus measures implemented by the government since 2009 and the high commodity prices arising from improved global demand for mineral products, according to an African Economic Outlook report, published by the Organization for Economic Cooperation and Development.
These conditions are keeping the countrys GNP outlook in a favourable position. GDP growth is set to grow to 4.2% for 2012 and 2013, according to the African Development Bank. These growth forecasts compare well with the global average of 3.25% and accounts for Namibias strong GNP outlook score, which remains at 5.1 points from January 2012.
Economic activity is led by a strong mineral sector in the diamond and uranium industries, which accounts for 25% of GDP. However, this makes Namibias economy vulnerable to shifting global commodity prices.
As a report compiled by the Institute for Security Studies states: The economy is highly vulnerable to world-market price fluctuations of diamonds and uranium prices and demand remaining crucial to the countrys economic prospects.
Yet Namibias political risk of 61.1 remains substantially higher than its economic and structural assessment scores. The country ranks the highest in the sub-Saharan African region and 45th globally for political risk, putting it ahead of Italy and Hungary.
The countrys ruling party, the South West Africa Peoples Organization, has set out initiatives to strengthen Namibias pro-business environment through cutting red tape and strengthening the countrys public institutions.
As an International Monetary Fund report notes: The authorities are taking steps to lower the cost of doing business, while seeking to support private investment growth, job creation and export diversification.
This accounts for Namibias strong institutional risk score of 6.3, which is the second highest in the region.
ECRs institutional risk indicator measures the overall independence and efficiency of state institutions.