Namibia’s mining sector has emerged as a major weakness in the country’s economic outlook, with declining production and diamond sales contributing to a sharp slowdown that could leave economic growth at just 1.9% in 2026, according to Cirrus Securities’ mid-year budget primer.
The report, released on 15 October ahead of finance minister Erica Shafudah’s mid-year budget review, shows that production and sales across several important mineral commodities contracted during the second quarter of 2026, placing further pressure on an economy already struggling with weak domestic demand and subdued private-sector activity.
According to Cirrus, gold bullion production declined by 17.8% year on year between April and June, while zinc concentrate production fell by 24.2%. Uranium output contracted by 14.8%, diamond sales volumes declined by 6.7%, and the value of diamond sales dropped by 9.8%.
The figures show that the weakness was not confined to diamonds, which have faced difficult international market conditions, but extended to gold, uranium and zinc, commodities that have played important roles in Namibia’s mining industry.
The simultaneous declines across these minerals have implications for the country’s economic growth, government revenue and the performance of industries linked to mining.
Cirrus estimates that Namibia’s economy will grow by only 1.9% in 2026, following growth of 1.7% in 2025. The outlook is considerably weaker than the growth rates recorded earlier in the decade, when the economy expanded by 5.4% in 2022, 4.3% in 2023 and 3.8% in 2024.
Although the report does not calculate the mining sector’s precise contribution to the projected 2026 growth rate, the contraction in mineral output is an important part of the broader economic weakness identified by Cirrus.
Mining weakness adds to economic slowdown
Cirrus says Namibia’s economy is expected to remain under pressure from subdued mining activity, weak consumer spending and limited private investment.
The research firm identifies mining as one of the sectors contributing to the difficult economic environment, with the second-quarter production figures illustrating the scale of the challenge.
Zinc concentrate recorded the largest contraction among the mineral commodities highlighted in the report, falling by almost a quarter compared with the corresponding period in 2025.
Gold bullion production declined by nearly a fifth, while uranium production was down by almost 15%.
These contractions are significant because mining contributes to economic activity through mineral production, exports, employment, procurement and associated services.
Lower production can also affect the performance of transport operators, equipment suppliers, contractors and other businesses that depend on mining operations.
However, the extent to which the second-quarter declines will affect full-year mining output will depend on production during the remaining months of 2026.
Diamond sales remain under pressure
Diamonds presented another challenge in the second quarter, with both sales volumes and sales value declining.
According to the Cirrus figures, the quantity of diamonds sold fell by 6.7%, while the value of sales declined by 9.8% compared with the same quarter last year.
The larger decline in sales value suggests that the diamond industry’s difficulties extended beyond the number of carats sold, although the figures alone do not establish how much of the difference resulted from prices, product mix or other factors.
The figures are particularly important for Namibia because diamonds have historically been among the country’s major export commodities and sources of government revenue.
Weak diamond sales can affect the earnings of mining companies and the taxes and royalties generated from the industry, although Cirrus does not provide a separate estimate of the resulting loss in government revenue.
The decline also comes at a time when Namibia is facing wider fiscal pressures, with the government expected to collect less revenue than originally budgeted.
Revenue projections under strain
Cirrus estimates that government revenue for the 2026/27 financial year will reach N$84.9 billion, approximately N$4.7 billion below the N$89.6 billion originally budgeted.
The research firm expects the revenue shortfall to contribute to a larger budget deficit, estimated at N$21.5 billion, equivalent to 7.5% of gross domestic product.
This compares with the government’s original deficit projection of N$15.8 billion, or 5.5% of GDP.
While the report does not isolate mining-related taxes and royalties as the principal cause of the revenue shortfall, weaker mineral production forms part of the economic environment in which the government’s revenue projections are being tested.
Cirrus identifies weaker tax collections, subdued economic activity and pressure on corporate profitability among the factors affecting the revenue outlook.
The report says corporate income tax collections during the first quarter of the financial year were particularly weak, while value-added tax collections also fell short of expectations.
The mining sector’s performance is relevant to these projections because lower production and sales can reduce profitability and potentially affect company tax payments, depending on individual companies’ costs, earnings and tax positions.
However, the primer does not provide sufficient information to determine how much of the corporate tax weakness is directly attributable to mining companies.
Uranium and gold fail to offset declines
The second-quarter figures are notable because uranium and gold, two commodities with significant operations in Namibia, also recorded substantial production declines.
Uranium output contracted by 14.8% year on year, while gold bullion production fell by 17.8%.
The declines demonstrate that the country’s mining sector cannot rely on stronger performance from these commodities to compensate automatically for weakness in diamonds.
They also underline the difference between investment and exploration activity on the one hand and actual mineral production on the other.
Although Namibia continues to attract interest in mineral exploration and mine development, the economic contribution of these activities is not the same as that of operating mines producing and selling minerals.
The Cirrus figures measure changes in production and sales during the second quarter rather than the value of new investment commitments or the longer-term potential of mining projects.
As a result, the performance of existing operations remains central to the sector’s immediate contribution to economic growth.
Pressure on government finances
The broader fiscal consequences of Namibia’s weaker economic outlook are reflected in Cirrus’s projections for government expenditure, borrowing and debt.
The research firm estimates expenditure of N$106.4 billion for 2026/27, compared with projected revenue of N$84.9 billion.
It also expects interest payments to reach N$16.5 billion, equivalent to 19.4% of government revenue, compared with the 18.1% originally budgeted.
Total government debt is projected at N$197 billion, representing 68.9% of GDP.
The combination of slower economic growth, weaker revenue and rising debt-service costs leaves the government with less room to accommodate unexpected expenditure or further revenue disappointments.
Cirrus also notes that net domestic borrowing requirements have increased to N$27.3 billion, the largest amount on record.
These pressures place additional importance on the performance of major productive sectors, including mining, which can contribute to export earnings, corporate profitability and government revenue.
For the mining industry, the immediate question is whether production can recover sufficiently during the second half of 2026 to limit the impact of the second-quarter contractions.
With gold, zinc, uranium and diamond sales all recording declines in the second quarter, the mining sector enters the remainder of the year as a source of uncertainty rather than a demonstrated driver of recovery.
