By: David Shoombe
Although it contributes to about 26.5% of the national GDP, the informal economy faces numerous challenges, particularly in business operations.
The economic structure of Windhoek is shaped by both the formal and informal sectors, which together contribute to the country’s financial circulation. An analysis of the informal economy in Windhoek by The Villager revealed that several vendors struggled during January, with some customers taking items on credit.
One such vendor, Shafondino Lukas, said the month nearly collapsed his business. Operating in the Havana informal settlement, Lukas explained that “the food business is generally sustainable, however, the lack of money among regular customers can be a major setback.”
He described January as a particularly challenging month, as many of his customers are casual workers who were unemployed during that period and depended on his business for daily meals.
Lukas added that although some customers earn weekly incomes, the temporary halt in work during the December holidays made January quite difficult. To keep his business running, Lukas said he was forced to limit the amount of food, such as meat and fat cakes, that customers could take on credit.
“My clients usually have money during the week, but January has been a month of trouble. Some clients will not repay all their debts, but we have to continue with the business,” he said.
Also speaking to The Villager, Penny Kakoto, who sells second-hand clothes known as ‘fardo’ and perfume, said that “in the hustle of Windhoek, clients not returning is something I have made peace with.”
Kakoto noted that she has learned to understand the clients she works with and to develop recovery strategies, knowing that some customers fail to return. Moreover, she explained that it is difficult to recover goods or demand payment when there are no clear agreements between the parties involved.
She further stated that operating in the informal market often means losing not only merchandise due to unpaid debts, but also facing pressure from community members seeking financial assistance.
Youth activist Andrew Namaseb stated that “since 1990, constituency councillors in the Khomas Region have failed to introduce meaningful initiatives to support local businesses. They have not delivered on the jobs they promised, however, the least they could do is push for financial support to help local businesses improve their operations.”
Namaseb believes that assisting those who are already in business would boost morale and improve the circulation of money in the economy.
According to the Bank of Namibia’s Informality Diagnostic Report of 2025, the informal market employs 58% of Namibians and contributes up to 26% of the national GDP. The report also highlights the need to formalise the informal economy in order for Namibia to operate within a more structured economic framework.
