The Economic & Geopolitical History of Namibia: Part 1

The Other Former Apartheid State & Germany's 1st Genocide

Namibia, a 33 year old, Southern African country, boasts vast deserts and a sparse population, ranking as the world’s 2nd least densely population nation. It gained independence from South Africa in 1990. The country is as big as Western Europe and the population is 2.8M. It has one of the highest average living standards on the continent, and it is one of the few “upper-middle income” countries in Africa, along with its neighbors South Africa and Botswana. Additionally, it boasts the continent’s 5th highest sovereign credit rating and has not taken an IMF loan yet.

World Bank

Namibia derives its name from the Nama word “vast place”, referencing the Namib desert. Its populace is mainly Black Africans composed of diverse tribes (Ovambo, Kavangos, Herero, etc.), with 6.5% classified as “Coloured” (Mixed race) and 6% as White. The average Namibian makes $5010 annually at current exchange rates but adjusted for purchasing power parity, it’s around $11,000. Below you will see Namibian annual incomes every year since independence, at current exchange rates expressed in 2022. Peak Namibian living standards was at 2012-2013 when copper and gold had high commodity prices. However, as of 2022, adjusted for inflation, Namibians make only slightly more than they did after independence, while inequality has improved somewhat. Post-2014, slipping commodity prices, driven by China's slower growth and the Covid pandemic, have weakened the Namibian dollar against the USD, impacting purchasing power and living standards.

Incomes come from World Bank and then I adjusted it for inflation using an inflation calculator expressed in 2022 dollars.

Entrenched from the apartheid era, Namibia faces enormous income inequality, ranking as the fourth most unequal country globally according to the World Inequality Database (WID) losing to South Africa, Mexico, and Mozambique. In 1990, the top 10% earned 71% of the income, in 2022 inequality diminished a bit to the top 10% earning 65% of the income. Using WID and The World Bank data, the data illustrates that the top 10% live comparably to Spanish or Portuguese ($32K per year), the middle 40% to North Africans ($3.7K per year), and the bottom half live very impoverished lives akin to the Democratic Republic of Congo ($630 per year).

Land ownership and electricity access disparities mirror this inequality, with white farmers own 70% of the commercial farmland, while “previously disadvantaged groups” own 16%. A little over half the country has access to electricity and in 2021 43% of the country is living in multidimensional poverty, as reported by Namibia’s statistics agency.

However, unlike South Africa, agricultural yields in Namibia are dismal. Besides meat production, agricultural productivity is poor in the country. Over 50% of calories consumed are imported, draining its foreign currency reserves. To bolster agriculture, Namibia requires improved irrigation infrastructure, increased farmer credit access, weather insurance, resilient seeds for climate adaptation, and potential foreign investment in high-value crops to enhance farming practices for subsistence farmers. Presently, Namibia's agriculture faces water stress due to low humidity and high evaporation rates.

Namibia has the same farm land inequality that South Africa does, except South African yields are great while Namibia’s yields are terrible.

Namibia faces a youth unemployment rate (15-24 years old) of 40%. The median age of the country is 21 years old. Despite an average income 8x higher than Congo, Namibia’s life expectancy is under 60 years old which is lower than Congo due to the devastating impact of the HIV/AIDS crisis, affecting 13% of the population.

Namibia’s income inequality is due to various factors. One them is is the urban-rural divide. Another one is over 60% of its exports are either fishing or natural resource extraction (gold, diamonds, uranium, copper). Commodity mining is capital intensive, which means it doesn’t need that much labor but rather relies on machines. Meanwhile, fishing just doesn’t pay that well.

Namibia’s exports

In terms of natural resources, it is the 7th largest producer of diamonds in the world at 2M carats produced per year. Namibia produces more diamonds in 6 months than Sierra Leone, another big diamond exporter, does in a single year. Namibia has a 50:50 joint venture with the South African firm, DeBeers to mine and export diamonds.

Lastly, Namibia is the third largest producer of Uranium in the world. #1 Kazakhstan, #2 Canada, #3 Namibia, #4 Australia, #5 Uzbekistan, #6 Russia, and #7 Niger. Many Western, Russian, and Chinese firms come to Namibia to mine uranium and the government collects royalties and taxes.

Financial Times

Pre-Colonialism: Ovambo, Nama, and Herero

Before German colonialism, Namibia was home to a few traditional tribal kingdoms. One of the big tribes was the Ovambo people.

The region also housed the Nama, indigenous Khoisan people, and the Herero, Bantu pastoralists who migrated to the region in the 16th century. The relationship between the Herero and Nama was complex, marked by both cooperation and conflict, including instances of servitude by the Herero over the Nama for farm labor. Notably, Namibia largely avoided the three major African slave trades (European-based Transatlantic trade, North African-based Trans-Saharan trade, and Arab-based Indian Ocean trade) until the arrival of Germans in 1882, who defined its borders and named it “South West Africa."

German colonialism: South West Africa (1884-1915)

Germany, unified as a new nation in 1871 under Otto Von Bismarck, expanded its colonial reach in Africa by leveraging trade agreements. Language barriers often led to misunderstandings with African chiefs, allowing German merchants to acquire land through exchanges of beer, food, and arms. Bismarck spearheaded the 1884 Berlin Conference to organize territorial claims in Africa to prevent European conflicts.

By 1885, Germany colonized Cameroon, Tanzania, Togo, and Namibia (then Kamerun, Tanygirka, Togoland, and South West Africa), becoming Africa's third-largest colonial empire. The Deutsche Kolonialgesellschaft für Südwest-Afrika, funded by German industrialists, held a monopoly on mineral exploration in Namibia, rich in gold, copper, platinum, and diamonds. German innovators like Karl Benz (Mercedes Benz), Carl Zeiss (Carl Zeiss AG), and Werner von Siemens (Siemens) were pioneering automotive, optical, and electrical engineering advancements. To produce and sell more engineering innovations they needed to secure raw materials. By 1908, Germany found diamonds in South West Africa which brought more immigration to the land.

Inspired by American models, Germany planned to settle Germans in South West Africa while segregating native Africans into reservations or forced labor, leading to tensions and uprisings among groups like the Herero, Nama, and Ovambos.

Despite initial "friendliness," misunderstandings in contracts led to an apartheid-like system and expropriation of land and cattle, causing resentment among native Africans. Germany deployed troops to protect its colonial interests amid the uprisings.

Herero & Nama genocide:

“Within the German borders, every Herero, with or without a gun, with or without cattle, will be shot. I will no longer accept women and children. I will drive them back to their people or I will let them be shot at".”— Lothar von Trotha, German military commander’s extermination order.

Germany overwhelmed the Africans with their industrialized technology. This lead to concentration camps in Swakopmund and death camps in Shark Island, where atrocities like starvation, forcing people to boil their own relatives, and inhumane experiments occurred. Around 60,000 Herero and Nama died (80% of Hereros, 50% of Namas) between 1904-1908, marking Germany's first 20th-century genocide. The South West African population was 250K in 1912.

Post-genocide, the Herero and Nama faced land dispossession, deportation, forced labor in mines & railways, rape, and apartheid-like conditions (the testimony of 7 Africans = 1 German). The Germans viewed Africans “baboons”, and lent money or farm tools at exorbitant rates, using the African’s farm land or cows as collateral. This all ended in WW1, where Britain and South Africa took South West Africa from Germany.

After WW1, under a League of Nations mandate, Germany had to relinquish their colonies: Togoland was split between British & French Togoland which would later become part of Ghana and French Togo. Kamerun was split between the British & French Cameroons which later became part of Nigeria and French Cameroon. German South West Africa became a British territory, which Britain gave to Apartheid South Africa.

Apartheid South Africa’s Borders from 1915-1990

South African Occupation

The League of Nations gave the mandate to Apartheid South Africa to develop South West Africa into an independent nation state. However, Apartheid South Africa did not care about the self-determination of Africans.

By 1945 after WWII, the League of Nations was replaced by the United Nations (UN). Instead of relinquishing South West Africa to UN Trusteeship, South Africa annexed it as its fifth province in 1949. Apartheid was established, limiting representation to whites in parliament.

As other European powers granted independence to their colonies in the 1960s, pressure mounted on Apartheid South Africa to do the same. However, South Africa resisted, prompting the UN to declare its control of South West Africa as an illegal annexation. In response, South Africa instituted a "Homelands" policy, creating traditional black Bantustans in South Africa and South West Africa ruled by chiefs.

Everything Colored is an a “black homeland” or a Bantustan. Everything in gray is a land for non-blacks

Urbanized Black Africans resisted returning to traditional African norms. Bantustans had limited prospects, lacking electricity, with poor schools and housing. Africans were paid worse than Europeans. The Apartheid government tried to forcefully relocate the blacks from the capital of Windhoek to the run-down township of Katutura. The Africans rebelled, and the Apartheid government killed protestors by gunshot.

A 34 Year Armed Struggle For Independence

By 1964, SWAPO (South West Africa People’s Organization), led by Sam Nujoma, aimed to oust Apartheid South Africa. Viewing their struggle as part of the broader fight against white rule, SWAPO adopted Marxist-Leninist ideologies to garner support from the Communist bloc. Collaborating with other liberation movements, they sparked the Southern African Wars.

A 34 Year Fight for Liberation

Two sides emerged in the conflict:

Side #1: African Revolutionaries and Their Communist Backers
1. SWAPO - a Marxist group fighting for Namibian independence from Apartheid South Africa
2. Angola’s MPLA & Mozambique’s FRELIMO - Marxist groups fighting for independence from Fascist Portugal’s rule in their countries
3. South Africa’s ANC - a Rebel group fighting to end Apartheid in South Africa with diverse ideological elements (including socialists)
4. ZANU/ZAPU - A socialist/communist rebel group fought to end apartheid in Rhodesia

These African Liberation organizations received support from:
1. African nations (Tanzania, Libya, Zambia, Botswana, Nigeria, Ghana, Egypt)
2. Communist Countries (Soviet Union, China (until 1975), the other Warsaw Pact Alliance nations ( East Germany, Poland, Hungary, Czechoslovakia, Bulgaria, & Romania) & North Korea)

Side #2 - The White Minority Rule Regimes
1. Apartheid South Africa which controlled South Africa & Namibia
2. Apartheid Rhodesia which controlled Zimbabwe
3. Fascist Portugal which controlled Angola & Mozambique

America and the West refrained from direct involvement since they disliked Fascists/Apartheid governments and hated communists. Also Fascist Portugal was part of the North Atlantic Treaty Organization (NATO). This war contributed to why some Africans have fondness for Communism, Russia, Cuba, and China while look at the West with distrust. It was only by 1977, when France, UK, America, Canada & West Germany took a decisively, Anti-Apartheid stance against Rhodesia and Apartheid South Africa.

By 1974 - Portugal had a revolution to end Fascism and Angola & Mozambique received independence, followed by cold war style civil wars
By 1980 - Apartheid rule in Rhodesia ended & became Zimbabwe
By 1990 - Apartheid rule in South West Africa ended & became Namibia
By 1994 - Apartheid rule in South Africa Ended

Independence & Sam Nujoma (1990-2005)

Sam Nujoma shaking hands with his nemesis FW de Klerk, the President of Apartheid South Africa as he gains independence.

When Sam came into power, he ended the Bantustan policy, assured whites he wouldn’t drive them out like Zimbabwe did, and crushed a secessionist movement in Caprivi, He inherited a state with 70% illiteracy at independence.

Forgoing Marxist Roots:
''We are committed to a mixed economy,' In this regard, we look forward to a good partnership between the state and the private sectors, because only through working together will our economy prosper. Our young country will not be able to generate all the capital necessary for economic development, We welcome inflows of capital and technical know-how from abroad. Private enterprise will be needed to employ our work force.” — Sam Nujoma

He initially wanted to go the communist route. But within a year of his power, Eastern Europe rebelled against communism left the war saw Pact. Then in December 26 1991 the Soviet Union died, the writing was on the wall that communism wasn’t a great idea. He also learned from the mistakes of Angola, Zimbabwe and Mozambique and saw that expelling productive white farmers & businessmen to make state owned farming cooperatives led to massive decline in food productivity, hemorrhaging limited foreign currency on food imports, and economic catastrophe. He saw when Mugabe did not make an investment code in Zimbabwe 1980, new firms were afraid to invest there initially. He saw the only solution would be Multi-racial democracy and mixed economy as the solution. The government owns & operates many enterprises but also allows the private sector.

Sam came to power at a difficult time; the Soviet Union collapsed and split into 15 countries. Big tin producers like Russia and etc flooded international markets for the first time. This made tin prices so low, that the Uis pit closed down for some time due to the flood of supply making tin prices to tumble. If a commodity price falls below the cost of production, then it isn’t profitable to produce to mineral.

Land Reform:
Sam pursued a cautious land reform, avoiding the Zimbabwean model of expropriation. Zimbabwean black farmers didn’t know the modern agricultural techniques after taking the land from the whites which made Zimbabwe turn from a bread basket to a food importer. Zimbabwean President Robert Mugabe admitted that was a mistake himself. Instead, Namibian President Sam adopted a 'Willing Buyer, Willing Seller' approach, aiming to transfer land from white to black ownership.

This policy has been very slow. (The growth of Black commercial land ownership has been 1% per year from 1990-2004). Why was it slow?
A) Not many white farmers want to sell their land
B) Black Namibians usually don’t have the money to pay the white farmer at the price they want.

The process was so slow that sometimes the government would buy white owned farms and lease it black families (1000 Black families received leases out of the 240K waiting list by 2004). Many black families in Namibia are still landless today, contributing to the current crushing inequality.

Hifikepunye Pihamba (2005-2015)

Pihamha is deployed a new strategy to deal with inequality during his tenure.

Tap into the Eurobond market
A eurobond is a government-issued bond typically denominated in US dollars, enabling access to a broad investor base in the West, Arab World, Brazil, China, and Japan. While it offers relatively easy capital raising, the downside of the debt emerges if the nation’s currency depreciates to the US dollar. Namibia raised its debut $500M, 10 year eurobond in 2011 at a 5.5% interest rate to invest in infrastructure, healthcare, and education. Namibia successfully paid off its first eurobond in 2021, without having to issue new debt to pay back the old debt like Kenya does.

More minerals exploration & More state ownership:
He has been contracting licenses to find more resources in his country. Western firms to find oil & gas and Russian firms to find more uranium.

He also signed legislation for more state ownership in the mining sector. Through state ownership, the government has influence in the employment and wages in the mining sector. Although it isn’t very investor friendly.

Strengthening relations with China:

Former Chinese President Hu Jintao and Former Namibian President Hifikepunye Pihamba

Pihamba developed a strong connection with Chinese President Hu Jintao. China awarded Namibia a $55.3M, low interest loan, so Namibia could buy cargo scanners to stop trade smuggling in Namibia. China has been offering below market loans, as low as 2.5% for a $100M loan over 20 year term.

Conclusion:

Namibia has massive land inequality due to German and Apartheid South African colonialism. To not face the post colonial issues of Zimbabwe, Mozambique, and Angola, swift land reform and kicking out white people was not pursued. To this day, Namibia is deep land inequality. It’s “upper middle income” status is a result of the few whites living like Europeans and blacks living in subsistence.

The income inequality and inflation adjusted incomes per person has barely moved a dent since independence, only growing up during commodity price booms and declining once uranium prices crash down. The nation must go beyond selling diamonds and uranium to grow.

Was it better to violently take land like Zimbabwe? Or is a gradualist approach better. Your answer depends on how much you weigh moral and economic values.

Next time we will discuss how Namibia’s plans under its 3rd President, Hage Geingob. He has been conjuring up and executing on big plans that could either bring his country to rich status by 2035 or remain a stagnant upper-middle income, unequal country.

Links are attached!