Message from the Governor

Introduction

In accordance with section 67(1) of the Bank of Namibia Act (No. 1 of 2020), I am incredibly proud to present the 2025 Annual Report, which is my first edition since taking over as Governor. It is my distinct honour to serve this esteemed institution as it enters its 36th year, embracing a new chapter as its seventh Governor. This milestone signifies a strategic transition that combines continuity with a clear purpose. Together, we are reimagining the future of central banking in an economy experiencing unprecedented transformation since Namibia’s Independence, and I am confident that, as a team, we are well-equipped for the challenge.

The year 2025 was marked by a growing call for central banks to enhance resilience through robust supervisory frameworks and better monetary policy tools amidst growing emerging risks and geo-economic uncertainties. Our existing tools and approaches were not spared from the challenges related to the rapid pace of technology adoption and fluctuating commodity prices. Furthermore, as a small, open economy, Namibia remains highly exposed to external shocks such as shifts in demand, changing trade patterns and financial flows. Thus, the observed potential growth in major Advanced Economies (AEs) and key Emerging Markets and Developing Economies (EMDEs) continues to generate strong headwinds for Namibia, as it limits external demand. Managing these uncertainties requires that we adopt more agile, data-dependent strategies with robust scenario analysis to navigate an ‘unknowable’ future accompanied by continuous stakeholder engagement to align perspectives and expectations.
 

Reflecting on the Bank of Namibia’s 35th anniversary

Having accomplished its 35th year, the Bank marked the moment for reflecting on how far it had come, and on the values that continue to define its purpose.

In terms of its mandate on price stability, the Bank of Namibia has, through prudent monetary policy, managed to reduce inflation from its peak of over 18 per cent in the early 1990s to 3.5 percent in 2025. This achievement was underpinned by the continued maintenance of the currency peg of the Namibia Dollar to the South African Rand, complemented by appropriate monetary policy interventions. In this regard, the repo rate declined significantly from its peak of more than 18 percent on average in 1998 to 6.50 percent in December 2025. In particular, the Bank responded aptly to both external and internal inflationary pressures, most notably during the 2007/8 global financial crisis, and more recently during the coronavirus disease pandemic that broke out in December2019.

From the introduction of its own currency in 1993, Namibia has steadily built a sovereign, resilient and modern monetary system. With the first Namibia Dollar coins issued in 1993 and the full banknote series completed in 1996, currency in circulation expanded from N$200 million to N$5.86 billion in 2025 – a powerful reflection of the nation’s economic growth, the deepening confidence Namibians place in their currency, and the advancing sophistication of the cash cycle under the Bank’s stewardship.

This nearly thirty-fold increase represents far more than rising volumes: it reflects the growth of institutional capability, national confidence and operational excellence. Over three decades, the Bank of Namibia has transformed a young currency into a secure, resilient and modern ecosystem that serves every Namibian with reliability and trust. This is how the Bank honours its responsibility to Namibia and her people: by ensuring that the country’s currency remains a symbol of stability, confidence, dignity and national progress.

From those early issuances to the upgraded banknotes and new coinage introduced in 2025, Namibia’s currency continues to evolve in security, durability and design. As the institution entrusted with this constitutional mandate, the Bank remains unwavering in safeguarding the integrity and quality of the Namibia Dollar, ensuring that every note and coin placed in the hands of the country’s citizens reflects the pride, excellence and aspirations of the Namibian nation.

It is incumbent on us to recognise that central banks live and die by confidence. Confidence is earned in moments of uncertainty, tested in times of crisis, and sustained through disciplined, principled action. The Bank’s operational credibility rests on the belief that its policies are technically sound, its leadership is independent and prudent, and the institution itself is durable, well- managed, future-focused and above external influence. In times of comfort, institutions may operate quietly; in times of strain, they are called on to stand firm. And history ultimately measures them by how they respond when stability is under threat.

Over the past 35 years, the Bank has grown into a modern, independent and well-governed institution that is measured by its resilience, transformation, and the steady pursuit of macroeconomic and financial stability. This progress is owed in large measure to my predecessors, Governor Tom Alweendo, Governor Iipumbu Shiimi and Governor Dr Johannes !Gawaxab, whose stewardship has laid a strong foundation, strengthened institutional governance, deepened technical capacity, and modernised Namibia’s financial and payments architecture. Each Governor built upon the last, charged by different economic cycles, global shocks and domestic transitions, nonetheless ensuring that there was optimal continuity.

The Bank of Namibia’s strength also lies in the calibre of leadership it cultivates. Over the past three decades, the institution has become a crucible for national leadership, producing trail-blazers who have gone on to helm institutions with powerful mandates across the public and the private sector. These individuals are a credit to the depth of discipline, technical competence and public service ethos forged within the Bank.

Moreover, the Bank has evolved its reserves accumulation strategy from a passive reliance on Southern African Customs Union (SACU) receipts and mineral exports to a more active, liability management approach. A significant shift occurred in the past decade, with the issuance of Namibia’s inaugural Eurobond of US$500 million in 2011 and a subsequent issuance of US$750 million in 2015, which substantially bolstered the official foreign exchange reserve stock. To further diversify accumulation channels, over the past ten years, the Bank has effectively leveraged the country’s financial markets through asset swap arrangements. By engaging with domestic institutional investors, the Bank has been able to direct foreign currency liquidity from the private sector into official reserves, thereby reducing reliance on external debt while simultaneously building a buffer against balance-of- payment shocks.

The investment performance of these reserves has been defined by resilience underpinned by a defensive positioning strategy that prioritises capital preservation and liquidity over aggressive yield- seeking. Maintaining a robust strategic asset allocation enables the Bank to successfully navigate periods of extreme global market volatility and domestic fiscal pressure. This resilience was most recently demonstrated during the successful redemption of the 2015 Eurobond in late 2025. Despite the significant outflow, the Bank’s foresight in utilising a sinking fund and its prudent liquidity management ensured an import cover in line with international benchmarks, consequently preserving financial stability.

Economic performance and developments

Global gross domestic product (GDP) registered steady growth in 2025 compared with 2024 and is projected to increase similarly in 2026. World output rose at a pace of 3.3 percent in 2025, reflecting its rate in 2024. The incline was supported by technology- related investment, accommodative fiscal and monetary support, broadly accommodative financial conditions, and adaptability of the private sector. Looking ahead, global growth is anticipated to slow to 3.2 percent in 2027 as the underlying structural challenges such as elevated public debt and geopolitical uncertainties begin to weigh more noticeably on economic activity.

Risks to the forecast remain skewed toward weaker outcomes and encompass commercial and geopolitical frictions.In this regard, trade disputes may escalate, extending uncertainty and exerting further strain on economic performance. In addition, geopolitical conflicts could flare up, adding fresh layers of unpredictability and unsettling the global economy through their effects on financial markets, production networks and commodity costs. Expanding fiscal imbalances and elevated government indebtedness may also drive up long-term interest rates and, consequently, tighten overall financial conditions.

Global inflation decreased in 2025 relative to 2024 and is forecast to decelerate further in 2026 and 2027 to conform to inflation targets. Global headline inflation declined to 4.1 percent in 2025, compared with 5.8 percent in 2024, mainly ascribed to a fall in energy prices. Going forward, world inflation is forecasted to continue its gradual decline, easing further to 3.8 percent in 2026 and 3.4 percent in 2027, supported by moderating global price pressures and steady policy normalisation. The decline in inflation is also expected to be driven by softer global demand and lower energy prices. Additionally, the moderation reflects cooler labour markets and the gradual easing of earlier supply chain adjustments following global trade tensions. Key risks that could drive inflation upwards include an escalation of geopolitical tensions, renewed supply chain disruptions and the potential de-anchoring of inflation expectations.

Domestic headline inflation slowed in 2025 in relation to 2024.Namibia’s headline inflation decelerated throughout 2025, averaging 3.5 per cent against its 2024 level of 4.2 percent. This downward trend was primarily driven by a reduction in transport inflation, supported by declining global crude oil prices and the strengthening of the domestic currency. Furthermore, moderating price pressures in the housing, alcoholic beverages and tobacco categories exacerbated the slowing trend. Moreover, despite a robust domestic harvest in 2025, food inflation remained stagnant at 5.2 percent, effectively moderating the broader decline in the consumer price index.

Concluding remark

In conclusion, I wish to thank the Board of Directors, Management and all Bank staff for delivering on the Bank’s mandate with unwavering resolve in 2025. I am confident that, as a team, we will continue striving to advance policies that will support the sustainable growth and long-term prosperity of all Namibians.

Ebson Uanguta
Governor