Namibia’s FDI inflows decline in 2024 despite sectoral growth in mining and transport

By: Hertha Ekandjo

Namibia’s net foreign direct investment (FDI) inflows declined by 23.1 percent in 2024 compared to the previous year, according the latest FDI report launched on Wednesday in Windhoek.

The decline is primarily attributed to a high base effect in 2023, driven by the disposal of foreign assets in the manufacturing sector and reduced inter-company borrowing in the mining industry.

The report noted that, despite the overall drop in net FDI inflows, the mining sector continued to be the main recipient of foreign investments, particularly for oil and gas exploration and appraisal activities.

A significant portion of these investments originated from the Arab Gulf States, Portugal, France, and the United Kingdom. The report said, although still among the top three sources, inflows from China dropped markedly from N$10 billion in 2023 to N$4.3 billion in 2024 due to a decrease in inter-company debt uptake by Chinese-owned mining enterprises.

“In 2023, South Africa contributed net FDI inflows of N$4.1 billion, mainly from merger and acquisition activity in the manufacturing sector. Other notable contributors included Canada and Mauritius, with investments largely directed toward mining operations. These were particularly in the form of increased reinvestment of earnings by foreign investors,” the report noted.

Meanwhile, FDI inflows into Namibia’s transport and storage sector also showed positive momentum during 2024. This was underpinned by foreign investments linked to the concessioning of the port of Walvis Bay, a move expected to enhance the country’s logistics and trade infrastructure.

Furthermore, Namibia’s foreign direct investment enterprises (FDIE’s) have seen a steady improvement in profitability since 2019. Retained earnings, or reinvested profits, rose significantly from a net loss of N$1.6 billion in 2020 to a net profit of N$4.3 billion in 2024.

The losses recorded in 2019 and 2020 were largely consistent with a downturn in economic activity during those years. However, the economic rebound over the past four years has boosted the profitability of FDIE’s, leading to increased reinvestment of profits within the country.

The financial and insurance sector has been a key driver of reinvested earnings, with deposit-taking institutions continuing to post strong profits. This performance is supported by favourable interest rate spreads and robust non-interest income, particularly through service fees and related charges.

Despite the headline decline in overall net FDI inflows, these developments signal growing investor confidence in specific sectors and point to a continued recovery in Namibia’s economic landscape.