Mining downturn hits revenue
Namibia’s mining downturn is threatening to undermine the economic recovery and complicate the government’s efforts to meet its revenue targets, despite stronger-than-expected growth in the first half of the year.
Cirrus Capital expects the economy to expand by 1.9% in 2026, well below the finance ministry’s original 3.1% forecast. The research firm projects government revenue of N$84.9 billion for the 2026/27 financial year, N$4.7 billion short of the budget estimate, as weaker mining activity and subdued corporate profitability weigh on the outlook.
The warning comes after real gross domestic product (GDP) grew by 4.8% year on year in the second quarter, following revised growth of 3.1% in the first quarter. Cirrus expects that momentum to fade as mining remains under pressure, while foot-and-mouth disease and El Niño conditions constrain activity.
“Growth was robust in the first half of 2026 at 3.1% in the first quarter (revised from 2%) and 4.8% in the second quarter, led by tertiary sectors,” Cirrus said in its FY2026/27 Mid-Year Budget Primer, released on 15 October.
“However, we maintain our ’26 real growth forecast of 1.9%, implying a broadly flat 2H, with FMD, El Niño and subdued mining output likely to constrain activity.”
Mineral production and sales data for April to June illustrate the pressure facing the sector. Gold bullion output fell 17.8% year on year, zinc concentrate production declined 24.2% and uranium output dropped 14.8%. Diamond sales volumes fell 6.7%, while their value declined 9.8%.
“Mining also remains a drag, with lower gold output during a transition year and Langer Heinrich shutdown extending into the second half of 2026,” Cirrus said.
The declines span commodities that contribute to Namibia’s export earnings and corporate profitability. However, the research firm does not quantify how much the production weakness will subtract from full-year GDP or government revenue.
Tax collections add to pressure
The slowdown in mining coincides with weaker tax receipts, increasing the uncertainty surrounding the government’s revenue projections.
Cirrus cited NamRA data showing net revenue collections of N$17 billion in the first quarter of the 2026/27 financial year, equivalent to 20.7% of its annual target.
Company income tax collections fell sharply. Based on NamRA’s newsletter, receipts declined 77.6% year on year to N$825.3 million, although Cirrus noted that previous press reports had indicated a smaller decline of 56.7%.
The firm cautioned that part of the weakness could reflect timing effects after disruption to the tax administration system, which led to an extension of the deadline for returns due on 30 June to 31 August.
“This could reflect weaker mining output and weaker profitability from export-facing businesses, but we also anticipate some timing impact,” Cirrus said.
Value-added tax collections also declined, falling 10.7% year on year to N$4.51 billion. Cirrus warned that the weakness could prove more persistent because, unlike company income tax, VAT collections had no comparable timing effect to unwind.
The figures do not establish how much of the tax decline is attributable to mining. They nevertheless point to pressure on the broader revenue base as the government prepares for the second half of the financial year.
Cirrus expects a seasonal improvement in company tax collections and a catch-up following the administrative disruption, but still forecasts full-year revenue below the original budget target.
The resulting fiscal pressure is reflected in its projected budget deficit of N$21.5 billion, equivalent to 7.5% of GDP, against the government’s estimate of N$15.8 billion, or 5.5% of GDP.
