Enhancing Namibia’s Capacity for Climate-compatible Industrial Policy to Overcome the Middle-Income Trap

In 2025 Namibia reached a critical crossroad in its sustainable development journey. Namibia is facing key structural challenges characterizing middle-income countries. They are the challenge of breaking into the global economy, linking up into value chains, linking back in the domestic economy and keeping pace with technological change. The formulation of a Green Industrialization Blueprint in 2024 recognized that the country can leapfrog into a green industrialization future. The development of the oil and gas industry offers a different pathway towards a petrostate scenario. The Namibian government faces increasing trade-offs and pressure to back up one of these different types of enclave investments—one focused on green hydrogen and one on fossil fuels. There are however alternative and intermediate pathways which could be crafted through new industrial policy and mixed sectoral prioritisation strategies. Based on the assessment of Namibia’s current structural challenges as well as its industrial policy experience so far, the paper advances nine concrete and feasible policy recommendations clustered around three areas—state capacity development, sectoral development interventions, investments in social and environmental drivers.