Windhoek's cost of living is swallowing household incomes

In my recent article on the Bank of Namibia's repo rate increase, I argued that monetary policy decisions are not merely technical matters for economists and bankers. They have direct consequences for households and borrowers.

That discussion has become even more relevant as Windhoek residents face another source of financial pressure: rising municipal service charges.

Windhoek is becoming increasingly expensive to live in, and the burden is being felt most acutely by ordinary households.

The City of Windhoek has announced an average tariff increase of 4% for services including water, rates and taxes, sewerage, waste management, refuse removal and the fire brigade levy. These are not discretionary expenses; they are essential services that underpin daily life.

Before going further, it is useful to explain a few economic terms in plain language.

The repo rate is the interest rate at which the Bank of Namibia lends money to commercial banks. When the repo rate rises, banks generally increase lending rates, making loans more expensive for households and businesses.

Inflation refers to the general rise in prices over time. When inflation outpaces income growth, people's purchasing power declines because the same amount of money buys fewer goods and services.

Municipal tariffs are the charges residents pay for services provided by the City of Windhoek, including water, waste collection and sewerage.

These definitions matter because the rising cost of living cannot be attributed to a single factor. Rather, it is the result of several pressures occurring simultaneously. The recent repo rate increase raises borrowing costs for people with loans. Inflation, currently around 4.4%, erodes household purchasing power. Municipal tariff increases raise the fixed cost of living, while wages remain low for many workers.

Everyday expenses

Namibia's minimum wage is about N$4 000 a month. In Windhoek, that income is quickly absorbed by everyday expenses. A worker may spend about N$700 a month on transport alone. Daily living costs in the capital can be estimated at between N$200 and N$450, depending on household size, location and individual circumstances.

Even at the lower end of that range, spending N$200 a day amounts to about N$6 000 over a 30-day month. That already exceeds the minimum wage before rent, school fees, healthcare or financial support for extended family members are taken into account.

This is why the cost-of-living debate must be viewed from the perspective of households rather than national averages.

A 4% tariff increase may appear modest on paper, but for a low-income family, it could mean choosing among paying a municipal bill, buying sufficient food, or covering transport costs to get to work. In economics, percentages can sometimes conceal hardship. The real question is not simply how much prices increase, but whether household incomes can keep pace.

The labour market makes the challenge even more severe.

Namibia has a population of more than three million people, but only about 867 000 are economically active. The unemployment rate stands at 36.9%. The employment-to-population ratio is also low, at 33.4% for men and 25.2% for women. As a result, many households rely on a single income, while others survive through informal employment, remittances or temporary work.

Urban unemployment

Urban unemployment remains high at about 36.4%, while rural unemployment is estimated at 38.0%. These figures demonstrate that moving to the city does not automatically provide economic security.

Windhoek offers opportunity, but it also requires money every day. Residents need transport to look for work, electricity to study or operate small businesses, water to meet basic living standards, and food to remain productive.

The rising cost of living is steadily eroding household living standards and limiting broader economic participation.

Families are increasingly spending most of their income on basic survival, leaving little to save, invest, educate their children or support local businesses. Businesses, in turn, suffer because consumers have less disposable income. Over time, these pressures are likely to slow economic activity and deepen existing inequality.

None of this suggests that the City of Windhoek should neglect infrastructure maintenance or that the Bank of Namibia should ignore inflationary risks.

Public services must continue to be funded, and inflation must remain under control. However, policymakers should also consider what households can realistically afford. When interest rates, municipal tariffs, food prices and transport costs all increase at the same time, the cumulative burden becomes difficult for many residents to bear.

The response should therefore be practical and balanced.

Government and local authorities should strengthen targeted support for low-income households, improve public transport, encourage job creation and ensure that tariff increases are accompanied by visible improvements in service delivery.

The City of Windhoek should also explain more clearly how additional revenue will improve water supply, sanitation, waste management and emergency services. Residents are more likely to accept higher charges when they can see tangible improvements.

Dignity beyond reach

Windhoek is the economic heart of Namibia, but it must not become a city where the cost of basic living places dignity beyond the reach of workers and job seekers.

The cost-of-living squeeze is not merely a household concern; it is a development challenge.

If wages remain low, unemployment stays high, and the cost of essential services continues to rise, the city's economic potential will inevitably weaken. A healthy economy is measured not only by gross domestic product or trade statistics, but by whether ordinary people can afford a decent standard of living, including opportunities for recreation and social wellbeing.

Equally important, decisions to increase the cost of essential services should not be taken in isolation or without accountability. Public authorities should ensure that residents understand why increases are necessary and how the additional revenue will be used to improve services.