The informal economy is no longer on the periphery of the domestic economic landscape but has instead evolved into a powerful engine of employment, household income and economic survival. It is estimated that Namibia's informal economy accounts for 26.5% of gross domestic product (GDP) and employs close to 60% of the country's workforce.
Industries, Mines and Energy Minister Modestus Amutse used the inauguration of the first National Steering Committee on the Informal Economy at NIPAM in Windhoek on Friday to put the scale of the sector into sharp perspective, arguing that Namibia cannot achieve meaningful industrialisation while leaving such a substantial part of its economy outside the mainstream.
The inauguration of the steering committee represents more than another government structure but is actually a test of whether Namibia can turn the vast economic activity already taking place outside the formal system into a stronger pipeline of productive businesses, jobs, investment and industrial growth. According to two major studies cited by Amutse, Namibia's informal economy was valued at about US$13 billion in purchasing power parity terms in 2025, equivalent to 26.5% of GDP. The figures underline the enormous economic weight of informal traders, small-scale producers, service providers and other entrepreneurs who operate outside, or only partially within, the formal economy.
The sector also accounts for 58% of Namibia's workforce, with 59.8% of informal economic activity located in rural areas.
Follow us on WhatsApp | LinkedIn for the latest headlines
For government, the message is that the informal economy is already too large and too important to be treated as an economic afterthought.
Amutse said the sector provides employment, generates income and sustains livelihoods in both urban and rural communities, particularly among women and young people.
"Families meet their daily needs, children are supported and livelihoods are sustained" through participation in the informal economy, he said, highlighting its role as an economic lifeline for thousands of Namibian households.
But despite its contribution, the sector remains constrained by many of the same barriers that have historically prevented small businesses from scaling up.
Amutse identified limited access to affordable finance, suitable trading premises, markets, business development services, technology and reliable infrastructure among the major obstacles facing informal businesses. Regulatory and administrative barriers also make it difficult for operators to move from survivalist activities into sustainable enterprises.
The government's challenge, therefore, is not simply to register informal operators and force them into compliance, but to make formalisation economically attractive. Amutse said formalisation should not be understood merely as registration and regulatory compliance. Instead, it should provide informal businesses with tangible benefits, including access to finance, markets, infrastructure, business development support, social protection, information and new opportunities.
"Let us move from viewing formalisation as a regulatory requirement to making it a pathway to opportunity, productivity, protection and growth," he said.
That shift could prove critical if Namibia is to unlock more value from an economy that already supports the majority of its workforce.
The newly inaugurated National Steering Committee is expected to provide advice and guidance on policies and strategies for the informal economy while coordinating interventions across government institutions aimed at transitioning businesses into the formal economy.
Amutse warned that the committee's performance should ultimately be judged by results rather than meetings.
"I expect this Committee to be action-outputs-outcome oriented," he said, adding that its success should not be measured by the number of meetings held but by the "practical improvements experienced by informal workers and businesses across the country".
The committee brings together various ministries, the central bank and sector associations, reflecting government's recognition that the informal economy cuts across virtually every part of the national economy. The Ministry of Industries, Mines and Energy has already finalised the National Informal Economy, Startups and Entrepreneurship Development Policy (NIESED), which is intended to create a more enabling environment for informal businesses, start-ups and entrepreneurs.
The ministry is also providing competency-based entrepreneurship training aimed at equipping informal operators with the skills and mindset required to develop sustainable businesses.
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
However, Amutse acknowledged that government cannot transform the sector alone.
Financial institutions, private-sector organisations, development partners, labour organisations, informal traders' associations, civil society, training institutions, regional councils and local authorities all have to play an enabling role.
Moreover, the stakes extend beyond simply improving the fortunes of informal traders, as Amutse linked the transformation of the sector directly to Namibia's industrialisation ambitions, Vision 2030, the Sustainable Development Goals and the objectives of the Sixth National Development Plan.
He thus called for stronger links between informal enterprises, start-ups, small businesses and larger industries to encourage value addition, productivity and job creation.
The ultimate ambition, Amutse said, should be to create a business environment where an entrepreneur selling products today can become an employer tomorrow.
