The Bank of Namibia on Wednesday decided to maintain its repo rate at 6.50 percent, emphasizing the need to protect the one-to-one peg between the Namibia dollar and the South African rand while supporting domestic economic activity.
Speaking at the first monetary policy announcement of 2026, Governor Ebson Uanguta said the policy stance aims to ensure orderly capital flows and sustain the currency peg. Commercial banks are expected to keep the prime lending rate at 10.00 percent.
Economic growth in 2025 was weaker than previously projected, with contractions in agriculture, fishing, mining, and manufacturing contributing to the slowdown in the first three quarters of the year. Nevertheless, inflation remained contained, averaging 3.5 percent in 2025, down from 4.2 percent in 2024, reaching a post-pandemic low. January 2026 data show inflation fell further to 2.9 percent, with projections indicating a slight easing in 2027.
The central bank reported that international reserves increased to 51.9 billion Namibian dollars (approximately US$3.2 billion) at the end of January, equivalent to 3.3 months of import cover, sufficient to maintain the currency peg and meet foreign financial obligations.
Governor Uanguta said the Bank of Namibia’s current monetary stance balances the need to safeguard financial stability with support for domestic economic activity, noting that the low inflation environment provides room for measured policy continuity amid global uncertainties.
Namibia’s close economic integration with South Africa through trade and currency arrangements makes maintaining the rand peg a key priority for policymakers, ensuring predictability in cross-border transactions and preserving investor confidence.
Namibia’s monetary policy is closely linked to that of South Africa, due to the one-to-one peg of the Namibia dollar (NAD) to the South African rand (ZAR). The peg, in place since 1993, is designed to provide currency stability, facilitate cross-border trade, and maintain investor confidence, but it also constrains independent monetary policy, as domestic interest rates must generally align with South African levels.
The Bank of Namibia sets the repo rate—the rate at which commercial banks borrow from the central bank—to influence lending, inflation, and liquidity in the economy. The prime lending rate, which is typically a fixed spread above the repo rate, determines borrowing costs for households and businesses.
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Namibia’s economy is heavily dependent on mining (diamonds, uranium, copper), agriculture, and fisheries, sectors which are sensitive to global commodity prices and climate conditions. Manufacturing and services also contribute to growth, but economic activity is vulnerable to external shocks, including fluctuations in commodity markets and changes in the South African economy.
Inflation in Namibia has been relatively low in recent years, aided by subdued domestic demand and stable import prices linked to the rand peg. Average inflation fell to 3.5 percent in 2025, the lowest post-pandemic level, and further eased to 2.9 percent in January 2026, reflecting contained price pressures.
Namibia maintains international reserves to support the currency peg and external obligations. At the end of January 2026, reserves stood at 51.9 billion NAD (around US$3.2 billion), covering 3.3 months of imports, considered sufficient to stabilize the currency and meet short-term foreign commitments.
The central bank’s policy decisions, including the recent decision to hold the repo rate steady at 6.5 percent, reflect a balance between supporting domestic growth, ensuring financial stability, and safeguarding the NAD-ZAR peg, amid slower economic growth and ongoing global uncertainties.
