Open access peer-reviewed chapter - ONLINE FIRST

Namibia’s Triple Challenge and Its Economic Development

By Vito Bobek, Jellenz Moritz and Tatjana Horvat

Submitted: May 6th 2019Reviewed: July 17th 2019Published: August 22nd 2019

DOI: 10.5772/intechopen.88638

Downloaded: 57

Abstract

This chapter consists of two parts. In the first theoretical part, economic culture and economic performance are presented. Economic performance and development of market economy institutions depend on many factors. It became evident that economic and cultural factors play an important role. There is a lot of evidence that this role has been underconceptualized and analytically-experimentally underexploited. In the second empirical part, authors dive into the complex topic of Namibia’s cultural changing process, combined with its economic development. Such development is only traceable if the historic cornerstones of the nation (e.g., colonization, genocide, apartheid, foreign administration, and independence) are taken under consideration. The emerging social and economic challenges, e.g., poverty, gender, and social inequalities as well as unemployment, will be monitored. To describe Namibia’s economic development, several indices, for instance, foreign direct investment, gross domestic product, and Hofstede six-dimension model, will be applied. Furthermore, indices of Namibia’s cultural development (CDIS) will be presented and analyzed. While demonstrating Namibia’s significant cultural and economic aspects, perspectives in regard to the well-being of the next generations are incorporated.

Keywords

  • cultural development
  • economic development
  • FDI
  • GDP
  • Namibia’s economy
  • sustainable economic development
  • unemployment

1. Introduction

Economic performance and development of market economy institutions depend on many factors. It became evident that economic and cultural factors play an important role. There is a lot of evidence that this role has been under-conceptualized and analytically-experimentally underexploited.

The sub-Saharan African country Namibia is a prime example of a country with diverse and extraordinary nature and culture but one that must overcome challenges. As a result of numerous drastic events in the past and the country’s recent national independence, Namibia’s government is facing several cultural and economic difficulties. Every 4–6 years a new National Development Plan (NPD) appears from the domestic government with different focuses. At this point of time, the fifth NPD has been introduced, describing the main goal in working together toward prosperity [1]. Similar goals have been recognized by the World Bank in 2019, stating that Namibia is facing three major long-term objectives: the combatting of inequality, unemployment, and poverty within the nation. These are formally known as the triple challenge [2].

2. Economic culture and economic success

The concept of economic culture is related to the concept of political culture which was consolidated by Almond and Verba [3] and others. Berger and Peter [4], in their book, focus on the theory of the economic culture of capitalism, exploring the social, political and cultural matrix, or context within which these particular economic processes work. In doing so, it does not presuppose a direct or indirect connection and does not presuppose that culture determines the economy or that economic factors determine culture. The concept of economic culture draws attention to the relationships that such an empirical study has to explore.

On the basis of the relevant economic knowledge, economic culture can be considered as a whole in the economy of the related knowledge, experience, perceptions, evaluations, norms, and styles of behavior of whole nations or certain groups of the population within a particular society [5], which affects the economically relevant decision-making and conduct of actors or groups of actors. Economic culture has constituent and regulatory elements [6]. Thus, the (often unconsciously) structure of economic perception of the world, as well as the values and norms that determine their motives and limitations of their behavior, is more accessible to everyday awareness [7]. According to Weiss’s and Fershtman’s economic culture, “it is by no means a static system of value fields that determine the maneuvering space of behavior and outline the directions of action that they make for meaningful” [8]. “Culture is therefore the one that directs the process of the evolution of a system” [9]. The orientation is carried out partially with the help of internationalization of value performances and, insofar as the direct guidance instruments are more abandoning, the “guiding function of cultural forms and value fields” is all the more important [5]. According to Jones “economic institutions do not exist in a vacuum but rather in a context of social and political structures, cultural patterns, and, indeed, structures of consciousness (values, ideas, belief systems). An economic culture then contains a number of elements linked together in an empirical totality. The question concerns the manner of linkage [10]. Boyd and Richerson perceive culture as “the transfer of knowledge, values and others to the behavior or behavior of relevant factors through teaching and imitation from one generation to the next” [11]. The Berger’s concept of culture argues that “economic institutions do not exist in a vacuum but rather in a context of social and political structures, cultural patterns, and, indeed, structures of consciousness (values, ideas, belief systems). An economic culture then contains a number of elements linked together in an empirical totality. The question concerns the manner of linkage” [5]. Cultural factors have a holistic impact on the process of emergence and on the structure of flows and interconnection networks within a given formal framework and affect the recognition, guidance, and also the effectiveness of formal institutions. The conflicts between formal institutions that have emerged during the transition and between cultural factors that act as informal institutions form an essential part of the societal developmental dynamics [5].

2.1 Economic culture as a factor of transition

Economic institutions do not exist in a vacuum but in the context (matrix) of social and political structures, cultural patterns, and conscious structures (values, ideas, belief systems). Economic culture (in capitalism, in socialism, in Hinduism, or in any other society) contains a number of elements linked together. The question is in what way are they connected [4].

Transition to a modern market economy requires an integrated and well-rounded study of the specific features and factors of modern economic transformation. Undoubtedly, man is always the most important factor in the production and development of the economy. An important historical role of a democratic society is to free creative human resources from social and economic barriers and to enable people to work for their own benefit and profit. Motivation and interests are of primary importance in the creation of a modern market economy. Subjective social factors are a useful aspect of economic culture. This includes the economic policy, the quality of management, and the productivity of each individual and determines the functioning of socioeconomic laws. Economic culture is constantly changing people in society who work according to their level of economic knowledge, their managerial skills, and their view of the economy [12].

In a democratic society, economic culture represents economic relations and creative resources for the development of the economic life of social bodies, specialists, and entrepreneurs. They are all coordinated as the overall economic activity of people, where work practice and economic behavior play an important role in socioeconomic development. Economic culture is linked to the development of society and is crucial in ensuring a satisfactory life for people and for the development of a new quality of social life. The company is unified with economic culture, which operates not only through economic integration but also through the economic policy of the state. Democracy needs an industrial force of high quality. By people seeking new ways of satisfying their needs, economic culture is an objective need for a democratic society and becomes a coincidence for the country’s economic policy. Economic culture is changing with social development. Today, an economic-cultural person must have economic knowledge, the ability to economize resources and draw attention to the quality and quantity of production, the ability to make decisions, and care for investment in time and resources. The main components of the economic culture are [12]:

  • Economic knowledge

  • Belief

  • Experience

  • Talent

Depending on these components, economic culture can be described as a way of creatively shaping the economic activity of people, based on deep economic and technological knowledge related to their problem and profession, sufficient scope of objective laws of socioeconomic development, and belief based on economic activity and experience [12].

Economic performance and the development of market economies are dependent on many factors. According to Elster et al. [13], Bulgaria and Slovakia faced major problems in adopting democratic institutions and market economy and understanding and internalizing their will in the 1990s, as their rapid and forced industrialization was in contrast to cultural and political modernization. Because of the traditional cultural implications of the Soviet type, the basic communist concepts and perceptions of the agrarian society (mostly under cover) can survive in the behavioral patterns, values, and worldviews of the communist era. The Soviet Communist regime served as a suitable host, which enabled the sustainability of many forms of traditional dominance of agrarian society also in industrial rather than simultaneously modernized society [14]. It is important that the legacy of the social and cultural capital of the past is able to adapt to the requirements of the present [13] in: [14]. It has become evident that economic-cultural factors also play an important role. There is a lot of evidence that this role has been under-conceptualized and analytically-experimentally underexploited. The project “Researching Transition Economic and Culturally” is based on four fundamental hypotheses [5]:

  1. Success of economic transition in terms of a stable and economically viable change in the system depends on supporting economic and cultural factors.

  2. Supportive economic-cultural factors occur in different transition countries or groups of countries of varying degrees. In some countries, the prevailing economic and cultural environment for transition is more aggressive than accelerating.

  3. Further progress of transition to less successful countries depends on the extent to which the obvious conflicts between the dominant elements of the traditional economic culture and the democratic and market economy mechanisms supporting transition can be overcome.

  4. Economic culture is a concept that should be taken into account both in the analysis of global societies and in the research of individual groups of actors.

In developing the appropriate conceptuality, it is possible to rely on an increasingly detailed conceptual apparatus, which is the result of an international cultural-oriented economic research. The reasons for the breakthrough of economic cognitive research are mutually accelerating factors of real change (Asian tigers, the collapse of global political blocs that hitherto covered cultural differences, different waves of transition) and the development of theory (the growth of the influence of the institutional economy, the evolutionary economy and economic sociology).

2.2 Economic theory: culture and economic success

Culture is a dynamic category; it changes over time. Changes are positions, values, norms, principles and customs, ideology, beliefs, behavior, etc. All of this is also linked to social structures, for example, in the economic system. Culture with its elements is the basis for the design and functioning of a social order and hence of economic regulation. It is understandable that social changes are changing with the changes in culture. On the other hand, we can expect that the change in economic regulation will affect the change of culture.

Economic activity of people is thus certainly among those that need to be judged from the point of view of good or bad. In the economy, people enter into urgent interrelationships, within which the basic existential issues are addressed, both at the individual and family level and at the level of the broader society as a whole. The socioeconomic order can only be effective if at the same time as the material goods increase, it also ensures the life of a human being to as many people as possible. In ethical issues in the economy, it is primarily because in material matters we are always looking for humanity [15].

The concept of culture is very wide, as it covers every part of personal life and has a direct impact on the patterns of life. Culture is a learned way of life within a given society. In essence, culture is a set of values and patterns of learned behaviors that are shaped as a result of living within a particular society.

This is enabled by the following processes:

  • Cultural heritage as a way of transferring cultural values and norms from generation to generation (reproduction of cultural patterns)

  • Upgrading culture based on the internal potential of cultural groups

  • Borrowing from other cultures as a way of assuming certain elements of other cultures

Culture does not stand still but gradually changes.

In the broader sense, the economic system is defined as a set of mechanisms and institutions, laws, rules, traditions, and values that form a certain pattern of decision-making and the realization of economic decisions in the process of social reproduction and a certain pattern of behavior of economic operators [16].

Throughout history, each country has created an indicative concept of culture that has its own specific characteristics. In connection with these cultural characteristics, each country has also developed a specific economic arrangement. Therefore, we can not claim that the economic system is identical in all countries. Of course, this can not be true, as economic potentials and culture, as an important element of economic regulation, are different in different countries. This intertwining of economy and culture was largely neglected in older economic theories. Recent economic theorists, however, are trying to capture the cultural aspect of the economy in their theories.

An indirect link between culture and economy is possible through the role of the state as an institution and instance. In a dynamic market system with incomplete and diffuse information, culture is always the basis for competitive advantages in the realization of transactions.

North [17] states that the rules of the game in society are—or more formal—the constraints that people have built to create interactions. Consequently, they structure the incentives in political, social, or economic exchanges. Institutional changes shape a way of social development and are crucial to understanding historical change.

Institutions can not be seen, felt, touched, or measured—they are constructs of the human mind. However, neoclassical economists recognize their existence and are usually used (implicitly or explicitly) in their models as parameters [17]. In his work of the institution, institutional changes, and economic success, North [17] laid the foundations for the analysis of institutional changes on economic performance.

Keith Hudson [18], in his article in The Economist, asks what is crucial for the development—geography, institution, or politics. For many years, economists have emphasized the importance of good economic policy, and lately more emphasis is placed on long-stay institutions—political stability, property rights, the legal system, patterns of land ownership, etc. Other economists, on the contrary, emphasize geography, especially climate diseases, usability of certain technologies, agricultural opportunities, and access to the sea (influencing the extent of international integration). These explanatory factors do not necessarily have to be mutually exclusive1.

Easterley and Levine [19] tested the importance of these groups of factors on a sample of 72 countries. The results of the survey are very impressive, as they have shown that institutional factors have a key effect on economic performance, while other factors are almost non-negligible.

Conceptual insights from contemporary social sciences show that the modern world is increasingly aware of the cultural condition of economic decisions. The decision-makers are not only economic but also cultural-national. The awareness of these complex relationships has not yet been sufficiently defined and researched. The Hofstede’s six dimension model, where people’s behavior conditions their values, is the cornerstone for the empirical model. In any case, we are aware that such an operational model has its own shortcomings, as are all mechanical methods [20].

3. Introduction to empirical part: the case of Namibia

The sub-Saharan African country Namibia is a prime example of a country with diverse and extraordinary nature and culture but one that must overcome challenges. As a result of numerous drastic events in the past and the country’s recent national independence, Namibia’s government is facing several cultural and economic difficulties. Every 4–6 years a new National Development Plan (NPD) appears from the domestic government with different focuses. At this point of time, the fifth NPD has been introduced, describing the main goal in working together toward prosperity [1]. Similar goals are pursued also by the UNO: The Sustainable Development Goals are the blueprint to achieve a better and more sustainable future for all. They address the global challenges, including those related to poverty, inequality, climate, environmental degradation, prosperity, and peace and justice. The goals interconnect, and in order to leave no one behind, it is important that each goal and target by 2030 are achieved. Similar goals have been recognized also by the World Bank in 2019, stating that Namibia is facing three major long-term objectives: the combatting of inequality, unemployment, and poverty within the nation. These are formally known as the triple challenge [2].

3.1 Explanation

Before the in-depth explanation of the Namibian culture and economy, the reader finds a brief summary of the main indicators, in order to understand the significance of such, in the following sections.

3.1.1 Culture for Development Indicator Suite (CDIS)

As a project of the United Nations Education, Scientific and Cultural Organization (UNESCO), CDIS has been established in 2009 with the help of the Spanish government. With the contribution of more than 300 partners, the aim is to promote and to protect the diversity of cultural expressions globally. It is a multimethodological tool that measures and visualizes data in seven interrelated policy dimensions, including 22 indicators. Especially, the following dimensions that will be used in this chapter, in order to achieve fact-based assessments, are economy, education, gender equality, social participation, and heritage. This multidimensional instrument is only one project of the UNESCO, accessing international comparisons among nations and their facts of development. Culture for Development Indicator Suite gives an insight into the enrolment of culture in a nation’s development. Additional results are indicating the potential of domestic sectors and exhibit obstacles hindering full potential. Namibia’s government recognized the key factor of culture in its development process and introduced CDIS in November 2011 [21].

3.1.2 Hofstede six-dimension model

Between 1967 and 1973, the Dutch psychologist Geert Hofstede developed the origins of this model while conducting an international survey about national values for International Business Machines (IBM). He defined six dimensions that society needs in order to organize itself. A further purpose of Hofstede’s six dimension model is to understand the contribution of national culture in habits and values in a professional environment. Global data manifest into six cultural dimensions, which enable comparisons among 76 countries, while Namibia is one of them. Especially the following three dimensions will be discussed within this chapter: power distance, masculinity vs. femininity, and long-term orientation. Those dimensions can be used most effectively for the clarification of cultural and economic correlations [22].

4. Namibian government facing “triple challenge”

4.1 Status quo of inequalities

Namibia is known worldwide as having tremendous inequality conditions, which can be traced back to their past. The nation’s history still has an effect on their individual degree of trade, governance, and cultural factors [23].

These unequal conditions are affecting the 13 regions of the country in gender, education, health, wages, infrastructure, and a plethora of other aspects. When analyzing Hofstede’s six dimension model, Namibia’s ranking within the power distance dimension highlights these issues. It monitors to which extent power is distributed and how citizens of the analyzed country are satisfied with the distribution. Namibia currently reaches 65 out of 100, which indicates a hierarchical society with high inequalities [22].

4.1.1 Societal segmentation

The Republic of Namibia has witnessed turbulent historic times, including colonization by several foreign powers, genocide committed by the German’s, and foreign administration by South Africa.

During the nineteenth century, Victorian Britain and Germany were the major players involved in the nation’s colonialization [24]. In the early twentieth century, Namibia experienced the nation’s first genocide. It was committed by the German general Lothar von Trotha, which killed more than 75,000 African primary residents and destroyed their tribal structures. Particularly the ethnic groups of Herero and Nama suffered the most from this event, which led to losses of approximately 80% (Herero) and 50% (Nama) in their tribal size [25, 26].

The previous influence of foreign policies in the twentieth century, e.g., the racial segregation formally known as apartheid, continues to impact the nation to this very day. Such events influenced the population in terms of behavior, structures, and their growth. However, these historic incidents have evoked societal inequalities [24, 27].

Although there is a lack of historical content from generation to generation, former leader of the ethnic group Nama has written controversially in his dagboek (diary, English translation): “… no person, nor his money comes short in our way of living” [24]. According to additional diary entries, it is liable that there have not been major inequalities in at least one of the ethnic groups before 1905 [24].

The national independence obtained in 1990 was an important first step out of several dependencies toward an emerging national and societal self-perception.

Nevertheless, Namibia suffered from a fragmented society in post-independent times: a gap between ethnic groups of the poor and rich arose. This created political and economic instability [28].

A new constitution was written with several different focuses, but the most intriguing was the empowerment of women and gender equality. It states that there should not be any discrimination because of sex [21].

The nation’s second president, Hifikepunye Pohamba, also made these issues to one of his major duties in his period from 2005 to 2015, as well as several National Development Plans that followed [27].

According to data from the World Population Review, Namibia exhibits nine different ethnic groups. The largest ones are the Ovambo with 49.8%, followed by Kavango (9.3%), Herero (7.5%), Damara (7.5%), Whites (6.4%), Nama (4.8%), Caprivian (3.7%), San (2.9%), and Basters (2.5%). Whites are mainly consisting out of Portuguese, British, and German origin. The remaining 5.6% are assigned to a group of mixed races [29].

Currently, 65% of Namibia’s population are living in communal areas owned by the government, which are covering only 40% of the nation. Such is attributable to the event of caging ethnic groups into rural areas in the mid-twentieth century, by the white population [27, 30].

Since their national independence, there has been a lot of resettlement within the nation. Unfortunately, inequalities are still present. An example is the distribution and access to information differentiate among inhabitants. Namibian society records high inequalities in information, information in technology such as TV and radio, and in financial facilities and services.

Furthermore, these issues also occur in terms of natural resources, e.g., water and fish stock [31]. According to the World Population Review, only 91% of Namibia’s population has access to clean drinking water, while 65% is struggling to gain access to appropriate sanitation facilities [29].

One reason for these inequalities is the ongoing exclusive access to private farmlands by the wealthier population. In the long run, this will lead to even higher inequalities as well as challenges among demographics, environment, land distribution, and enjoyment of cultural rights [21, 28].

With a Gini coefficient of 61 out of 100—an indicator of a nation’s distribution of income, economic inequality, and wealth distribution—it again gets determined Namibia is facing high inequalities [32]. The authors Humavindu and Stage strengthen this statement, by speaking distinctly about one of the highest unequal distributions of income on the continent of Africa. Typically, the rural areas are suffering from lower income, in comparison to cities [32].

A controversial impression of Namibia’s society is indicated by Hofstede’s masculinity vs. femininity dimension. Such provides information about the internal societal interaction. Namibia indicates with its result—40 out of 100—to be a rather feminine society. This is reflected in habits such as caring about each other, solidarity, and resolution of conflicts by negotiation. According to Hofstede, social status and inequalities should be of secondary importance which contradicts the situation in Namibia [22].

4.1.2 Gender inequalities

Another determining index is the Gender Inequality Index (GII), which measures gender-based inequalities out of the following three dimensions: reproductive health, empowerment, and economic development. The nation achieved position 115 out of 160, which confirms gender inequality as a major problem [33, 34].

CDIS is also observing gender inequality in one of their dimensions. According to their expendable result in the Gender Equality Objective Outputs indicator—0.84 out of 1—the governmental efforts are being reflected [21].

According to Ferrant’s article “How do gender inequalities hinder development?,” gender roles and gender inequalities emerge out of culture, religion, and agricultural practices [23].

4.1.2.1 Gender roles

Confirmable to the issue of gender inequality is the description of gender roles within the nation. There are minor differences in describing their functions among the nine different ethnic groups, but this is summarized as men enjoy higher status in Namibian society than women. When separating into core tasks and functions, men are known as the pillar for family and house. Their characterization is strong and tough and includes tasks, e.g., the protection of their families, responsibility for providing food and income, and livestock farming.

On the other hand, women are seen as physically weak and a dispensable tool for men. Women would not be able to survive without men. Interestingly, some of the ethnic groups are connecting women as the mother of the nation but still giving them a secondary legal status by describing them as a second-class citizen or as the property of men [31].

Women’s suppression leads to governmental recognition. In Namibia’s third National Development Plan, women are empowered to play a full cultural, social, and economic role. According to Ferrant, gender equality is leading to an increasing capita per income which results in long-term advantages for national economies [1, 23].

4.1.2.2 Enrolment and wages

These monitored gender roles are leading to the disqualification of women in society. This is visible in their limited access to assets, resources, technology, education, and employment.

Especially female-headed households are worse off. The usual case describes the eldest son as a decision-maker. However, these outcomes are also affecting the careers of female habitants. For instance, when applying for a profession, women have fewer chances to succeed when competing against man [31].

Alternatively, a household including male and female often leads to domestic abuse victims. As reported in the case study of Angula, the violence against women and children is still increasing in Namibia [31]. Additional evidence is given by the Perception of Gender Indicator of CDIS, stating that 38% of Namibian population thinks beating wives is fair enough when she, for instance, argues, burns the food, or denies sexual activity [21]. Outreaching, such behavior is leading to absenteeism of women, lower productivity, and collateral reduction in women’s wages. Furthermore, it creates an inferiority cycle for women in Namibian society and economy [23].

4.1.3 Economic development and healthcare

As mentioned above, gender inequalities do influence social and economic development. Ferrant confirms this statement by announcing that gender inequalities are internationally leading to a decrease of 3.4% in income per capita [23]. The empowerment and increasing wages of women are leading to a lower fertility rate and more consumption in nutrition, instead of alcohol and cigarettes [28]. That is also confirmed by growth literature, explaining that human and physical capital are the main drivers for economic growth [23].

Another example monitored in Ferrant’s article describes the impact of an increased enrolment of women. If sub-Saharan African females have the same status than Western Europe’s female, the mortality rate for children—less than 5 years—would decrease by 25% [23]. Namibia’s current mortality rate for children under 5 years is 44.2 deaths per 1000 live births [35].

Additionally, according to studies from Ainsworth, Fransen, and Over in 1998, there is a positive correlation between gender inequality and health, especially AIDS/HIV. The HIV infection rate in cities with higher gender gaps increases stronger compared to low gender gap cities [36]. Latest results from UNAIDS are displaying Namibia’s situation. There has been an estimated number of 200,000 people living with HIV and alarming 7400 new infections in the year of 2017. While the number of people living with HIV is slightly increasing, the infection rate in previous years has decreased [37].

4.1.4 Education

Often the foundation for economic and cultural inequalities emerges out of a weakened education sector. In the case of Namibia, a controversial but still similar situation is present.

In previous times, the Namibian population suffered from a low level of education and unskilled workers. The government recognized this issue and destined one-fourth of its annual budget for the national education system [28]. Likewise, education became part of their new constitution in post-independent times. It reports the access and right to education should be given to all citizens [21]. These various governmental efforts have been—partly—prosperous.

The second dimension of CDIS, Education, displays Namibia’s adolescents—aged from 17 to 22—contributing in schooling by 8.4 years on average, while only 9% of them are showing less than 4 years of education [21]. The government succeeded partly because still the access and the contribution between male and female differ. Namibian women are still worse off in education than of their male counterparts [23].

Ferrant emphasizes that the level of corruption and nepotism is decreasing if the contribution of women in education increases. Women are simply less affected by such behavior compared to men [23]. Less corruption and nepotism will also influence the well-being of the next generations, the level and quality of human capital, and the nation’s economic growth in a positive way, as already stated under Section 4 [38].

Even Namibia’s high adolescence birth rate—75% out of 1000 women aged from 15 to 19 in 2016—is indicating a minor education status within the nation [32]. Such behavior influences participation in the labor market, as well as the health situation of adolescent Namibians [21].

Another example of Klaasen, Gatti, and Dollar is strengthening these statements. If a society has the same number of males and females participating in education but distributes scarce knowledge unequal, the outcome will represent more educated men that are less able than women. Furthermore, a gap in education leads to an unequal distribution of income and results in an even higher gender gap [38].

4.1.5 Governmental recognition of inequalities

There has already been recognition among several inequality issues by the Namibian government [31]. Working against them is their objective. But how is it possible to escape the vicious cycle of inequalities or at least to raise the equality standard?

Namibian governmental efforts are reflected in the contribution of several programs and by introducing new policies. Policies, for instance, to strengthen the perception of gender equalities, education, and culture and arts, have been designed [21]. The government of Namibia is also revising their National Development Plans every 4–6 years. A focus on crucial equality and cultural aspects has been made by the governmental third National Development Plan [1]. Namibia, with these actions, is trying to bridge the gap between postapartheid and post-independent times. It hopes to get the nation on a reliable track.

As indicated in CDIS education and social participation dimensions, further efforts should be made toward the thinking of Namibian citizens [1]. Due to the horrific events in former times, e.g., decades of occupation and genocide, the Namibian majority is not able to trust each other or to respect other cultures. Mostly there is low recognition of significant benefits emerging out of their multicultural society [1]. If changing these societal perspectives to preferable ones, the equality conditions will be favored in Namibia. Such will lead to greater achievement of sustainable cultural and economic development, as described in Krugmann’s article [28].

4.2 Unemployment

The second out of the Triple Three governmental objectives deals with the diminishment of Namibia’s unemployment rate [2]. Due to the fact that women and the young population are affected, it is interlinked to the previous topic of inequality.

According to data from Trading Economics, the unemployment rate in Namibia has increased from 27.9–34% in the years of 2014–2016. Current numbers monitor a minor decrease to 33.4% in 2018, which is equivalent to 364,411 unemployed persons. The youth unemployment rate of 46.1% in 2018 has experienced an all-time high [32]. Adolescents between the ages of 20 and 24 are majorly affected [39].

Compared to the previous numbers, the female unemployment rate is slightly lower. Latest data from 2018 monitor the female unemployment rate achieving 24.7% [2]. This is due to a high informal market within the nation [21].

Yet, women are not the only ones suffering in the Namibian labor market. Also, certain ethnic groups experience disadvantages in the job market due to historic events, cultural habits, and different values. For instance, members of the ethnic group San, which are mainly working in the service sector, are the first ones to be fired, because of their nomadic behavior. Sylvain describes them as decentralized workers in western clothing and justifies their manners with the statement: “You can take the Bushmen out of the bush, but you can’t take the bush out of the Bushman” [30].

In addition, there is the presence of dealing with unemployment: Once Namibians are unemployed, their majority is seeking for assistance of families or friends, in order to get a new job.

An additional observation made by the Namibian Labor Survey 2016 states that the majority of unemployed citizens stays without employment for at least 1 year. This indicates whether there is a low amount of available jobs, labor institutions need to improve, or inhabitants are indolent when it comes to finding new employment [39].

There are different reasons for the current situation of Namibia. First, it is explained by the historic labor movements. At the beginning of the twentieth century, Namibia was a cattle-based society, and wealth was equivalent to a high stock in cattle. However, all of these growing herds needed to be managed. This evoked a labor migration which resulted in a higher population and later in less labor due to changing professions [40].

Second, the Culture for Development Indicator Suite describes Namibia’s tiny industry and the resulting low level of production as another reason for the present situation. The World Bank announces Namibians’ major source of income as a third reason. The minority of Namibia’s population is relying on income from employment, while the majority banks on subsidence farming, pensions, and grants [21].

One aim of the Namibian government is to promote the domestic labor market, especially for women. Their goal is to achieve a rate of 50% of female in decision-making positions, while, e.g., currently only 8% of them are working as regional councils. This rate can be traced back to the minor degree of access to the labor market, as well as the disadvantageous situation for women when competing against men [21].

The Namibia Labour Force Survey 2016 states that the unemployment rate of a nation is directly linked to its economic growth. It is explained as follows: a decreasing unemployment rate, as it is hardly visible in Namibia, is a sign for economic growth. An increasing rate, as there are in the unemployment rates of women and youth, indicates an economy that is not able to absorb the people in working age [39]. Though to the slow but almost steady economic growth (described under Section 12) which results in job creation then, there is an improvement in sight [2].

Another correlation is being made between unemployment and poverty, which arose in post-independent times and will be discussed in the following section.

4.3 Poverty

The third aspect of Namibian governmental triple challenge is the fight against poverty. Poverty goes hand in hand with inequality and especially with unemployment and thereby arises the difficulty of monitoring the aspects of poverty isolated.

Namibia is reflecting poverty particularly in female-headed households, extended families, inhabitants with a low level of education, and farmworkers. When separating the occurrence of poverty into regions and economic sectors, it holds true for the rural communal land and the informal urban sector [2]. Nevertheless, which leverage yields out for Namibian inhabitants?

According to authors Humavindu and Stage and data from the World Bank, most of Namibians had to live with less than 2 USD per day in 2018 [2]. Even worse is the fact that the majority has to deal with an annual income of less than 100 USD [33, 34]. Plenty of inhabitants call upon urbanization, in the hope of better access to resources and professions, but mostly end up in worse conditions or the black market. Namibia’s cities are currently recording an annual population growth of around 5–6% [28].

Wealth and income are distributed by far unequal, as already indicated with the Gini coefficient under Section 3. This also clarifies why the World Bank classified the nation in 2019 as an upper-middle-income nation while having tremendous poverty issues [2].

In terms of the Human Development Index (HDI), which focuses on people and their capabilities by analyzing data from three different dimensions—long and healthy life, being knowledgeable, and decent standard of living—Namibia ranked itself in position 129 out of 189 countries. This refers to a medium human development, which is surprisingly higher than the average in sub-Saharan Africa [33, 34].

Another indication strengthening the country’s poverty is the small degree of domestic industry, as previously described. It causes minor economic development which results in negative outputs for domestic education, employment, and especially the nation’s poverty.

Again, the contribution of history influences the current situation. Former drastic events, as already mentioned under Section 4, are responsible for the dominant degree of poverty in Namibia. Decades of suppression, exploitation, and slaughtering native population has long-lasting effects on their self-perception. Those effects are staying within the Namibian population and do not erase with their national independence or any other progressive event. It takes time to change the social and economic thinking toward favoring the nation and a self-decision-making concept. Namibian population is currently still suffering from former times. CDIS describes that such is especially visible in the gap of tolerating, trusting, and accepting other cultures [21].

Health and nutrition are also influencing the degree of poverty within Namibia. A constant nationwide supply leads to food security, agricultural production, and higher wages, which in return has a positive impact on the degree of poverty [28].

Furthermore, the “western economic” long-term thinking is missing. Namibia scored low in Hofstede’s long-term orientation dimension—35 out of 100—which reflects a normative culture that thinks suspiciously among societal changes and that focuses on accomplishing quick results [22]. Namibian governmental efforts would be wasted if their inhabitants refuse to change. An example of the majorly nonexisting long-term thinking is described by Sylvain. In her article, she characterizes the San—besides their unfavorable economic situation—as spending all their wages on payday [30].

Efforts against poverty have been made by the Namibian government by doing it carefully and always in regard to the possible side effects, e.g., exploitation of natural resources. In compliance with Krugmann’s article, the domestic government is working against poverty in direct and indirect ways. The direct way is tackling health, education, housing, pension, and resources, while the indirect form is dealing with topics as investment promotion and taxes [28]. Hence, Namibia was able to succeed by reducing the national poverty line from 69.3% to 17.4% in the years of 1993–2016, altogether in accordance with an upward trend and stability in their economy and politics [2].

5. Development of Namibia’s economy

Besides the Triple Three challenge, sustainable economic growth is an additional objective that wants to be achieved by the Namibian government [28].

Humavindu and Stage are describing the current domestic economy as the combination of a modern market sector industry with farming while mainly focusing on sectors that have been successful in the past, e.g., the mining sector [33, 34]. Furthermore, the level of industrial activities remains low which represent an obstacle for sustainable economic growth. As one possible solution, the economic diversification of Namibia has been announced by Krugmann [28].

Additional assistance to achieve sustainable growth is generally given by the implementation of economic favoring policies. However, Namibia, as well as other emerging markets, is often confronted with institutional voids, which result in a lack of the governmental implementation process. One example is monitored by the government dimension of CDIS, describing issues in the implementation of Namibia’s tax policies [21]. Multinational enterprises (MNEs) are able to recognize the favorable situation as comparative advantages while the local content is remaining low. The Institute for Public Policy Research (IPPR) describes the situation as an exploitation of Namibia. To a great extent, these are fundamental obstacles in order to achieve sustainable development [41].

5.1 Gross domestic product and trade

In accordance with the low level of industrial activities, Namibia has a relatively small economy that gets reflected in the nation’s Gross Domestic Product (GDP). The World Bank indicates an increasing GDP of 14,522 billion USD in 2018, which is projected as a minor steady growing one [2].

Namibians have a high level of consumption of foreign goods, services, and activities. This has developed a domestic economy that is highly dependent on imports and exports [2]. Hence, Namibia’s economy has reached a high degree of openness, which is visualized in the domestic GDP. More than 90% of it stems from imports and exports [33, 34]. The main imported goods are to the greatest extent represented in consumer goods, e.g., petroleum products, pharmaceuticals, plastic products, rubber, spare parts, textiles, and timber [42].

On the other hand, there are exported goods largely consisting of raw materials and semifinished goods, for instance, copper, cut diamonds, gemstones, granite, lead products, marble, uranium, and zinc. A large proportion of exported goods are represented in beef, which is mostly transferred to South Africa and the European Union [42].

The steady increasing economic growth of African emerging markets is favoring the economic situation of Namibia. Primarily responsible are their neighboring countries, such as Angola, Botswana, and South Africa [2].

5.2 Social accounting matrix

Defining economic key sectors is essential for any domestic economic growth. Key sectors represent the largest amount of independence among the rest of the economy. If investing in them, the probability of economic growth will be higher than investments into several non-key sectors [33, 34].

One possibility to highlight key sectors of any economy is the use of a social accounting matrix (SAM). The matrix merges data from all international and regional transactions, as well as transfers within the target economy. The most common sectors are resulting out of these data sets, defined as key sectors. In order to process a reliable output, a vast number of national data are needed [43]. Thus, the number of SAMs of emerging markets is slightly poor. Even if an emerging market succeeded in applying a social accounting matrix, their government often will not be able to encourage or invest in the defined key sectors.

Namibia achieved its first and last SAM in 2012, determining mining, mineral processing, and manufacturing as key sectors. According to the output, the nation is highly dependent on trade as already described in its domestic GDP. Such information is important for the improvement of Namibia’s economy, in order to generate the highest possible output [33, 34].

Also relying on such information is the governmental policy-making process. Hence, the government is able to tailor policies to the needs of the domestic economy. Again, institutional voids may hinder such process, as described under Section 12.

5.3 Economic sectors

Apart from mining, other sectors of Namibia’s economy are represented in mineral processing, governmental services, tourism, transport, logistics, agriculture, fishery, and manufacturing [33, 34].

The High Commission of the Republic of Namibia describes Namibia’s mining sector as the fourth biggest nonfuel mining sector in Africa [42]. Accessing new technologies and including seabed operations enabled the sector to achieve an annual growth rate of 11% in 2018 [2]. Namibia’s mineral resources include offshore oil, diamonds, lead, zinc, tin, silver, and tungsten. Additionally, the nation is globally known as the fifth biggest uranium producer [42].

The second-largest sector with the highest shares in Namibia’s gross domestic product is tourism [42]. In 2015, it experienced a peak of 16.5% in domestic GDP, which decreased to a contribution of 13.8% in 2017 [35]. According to Trading Economics, the number of arrivals has reached almost 1.5 million in 2016 [32].

The agricultural sector of Namibia accomplished 6.85% of GDP in 2016, while more than 70% of their population is depending on farming [32, 33, 34]. Agriculture represents the main income of Namibia’s population and includes, e.g., farming of cattle or crops. Nevertheless, there is still potential in the domestic agricultural sector which can be seen in the example of 2005 where Namibia still imported 50% of its cereals [42].

Due to Namibia’s coastline of more than 1500 km, their fishery sector is also of high importance and represents one of the tenth largest globally. Main catches are hake and horse mackerel which are mostly exported to the neighboring countries, as well as the European Union [44].

5.4 Population

Namibia’s economy is a rather small one compared to its dimensions. According to data from the World Bank, Namibia’s population has increased to 2,448,255 million in 2018 [2]. It represents the second least populated country in the world—directly after Mongolia—with a population density of 3.13 people/km2 [29].

The number of inhabitants is still increasing and indicates a relatively young population with high unemployment rates, as already mentioned under Section 14. The young population correlates with the national median age of 21.2 years, published by the World Population Review [29]. Complementarily to the described issues of unemployment and inequalities above is the fact that only 58.5% of women and 65.3% of man participated in the labor market in 2018 [33, 34].

5.5 Historical impact on Namibia’s economy

In former times, the Namibian economy was not dependent on singular sectors. Missionaries that arrived in southern Africa during the nineteenth century, mostly due to the geographical and political importance of the trade network Cape Colony, described Namibian communities as multi-resource shepherds. Namibians in all its ethnics have been characterized as flexible and determined, with a wide range of interrelated economic activities [40].

Thus, at the end of the nineteenth century, most of Namibia’s ethnic groups became part in a cattle-based society in which the number of cattle was a crucial sign of wealth. Consequentially, not everyone was able to grow stock organically, and raiding cattle among residents occurred. Some become wealthier, while others changed back to hunting and gathering society or suffered from starvation [40].

Additionally, trade also took place between Namibians and foreign powers. They have been trading cattle for horses, guns, ammunition, and several consumer goods, e.g., tobacco. As a result, a gun society emerged among those inhabitants who had the possibility to take part in trade. Due to repetitive years of raiding, gun owners were better off. Raiding was simply the most effective and common way to prosperity in former times [40].

In the late nineteenth century, Namibia became known as a nation rich in natural resources, e.g., uranium, vanadium, lithium, and tungsten but especially diamonds. Initially, ethnic tribes were able to gain advantages out of the economic situation by renting ox wagons to foreign missionaries [45].

The authors Bollig, Schnegg, and Wotzka are describing the phenomenon of ethnic groups establishing an intra- and inter-regional network of trade, where locals have been able to determine prices. At the beginning of the twentieth century, these golden economic ages were destroyed by colonial powers that occupied Namibia and forced its inhabitants to unfree labor and slavery [40].

The League of Nations in 1920 advocated for Namibia—at that time known as the protectorate of South-West Africa—by announcing South Africa as foreign administrator. Unfortunately, instead of administrating Namibia, South Africa made use of its power and exploited the nation. South Africa suppressed the Namibian economy, as well as their society until the national independence in the late twentieth century [27].

After all of its tumultuous history, Namibia continues facing economic and social disadvantages, for instance, the minor industry and inequalities among ethnicities.

5.6 Governmental efforts and foreign participation

Besides the Triple Three challenge and the aim of sustainable development, the Namibian government is trying to transform the country into an economic gateway of sub-Saharan Africa with several actions [46].

One of them is dealing with stimulating economic growth and employment. Thus, the government is trying to reach a broader scope internationally. The processes of redesigning and promotion of policies are also included, for instance, the Green Scheme program introduced in 2005. Such program is supporting the agricultural sector, in order to create more employment [42].

Additional economic weaknesses of Namibia are also pointed out by CDIS. According to Culture for Development Indicator Suite, the Namibian government should further work on the domestic level of education. Such results in higher gender equality and will lead to economic growth [21].

In order to achieve further development, CDIS also suggest investments to infrastructure, transportation, and information and communication technology (ICT). These suggestions have already been recognized and were part of Namibia’s fourth National Development Plan during 2012/2013 and 2016/2017 [1, 21].

Foreign direct investments (FDIs) are another crucial component for the development of any economy [47, 48]. The Global Economy indicates significant economic success with a continuously annual FDI of approximately 5–6% of GDP [49].

Between the years of 1986 and 2017, Namibia achieved an average FDI rate of 4.21% in GDP [49]. According to latest data from the World Bank, the nation accomplished an amount of almost 220 million USD in FDI in 2018 [2].

The Namibian government tries to increase these numbers by several incentives which favor MNEs to invest. For instance, a no-tax policy for certain machinery and special amortization plans have been introduced [46].

Furthermore, Namibia joined several programs, institutions, and trade zones: World Trade Organization (WTO), World Bank, International Monetary Fund (IMF), Foreign Investment Act, Doha Development Agenda, Export Processing Zone, and South African Customs Union (SACU).

This should lead to higher profits from trade, an increasing number of FDIs, and a greater awareness of the country [42].

Namibia’s Ministry of Industrialization, Trade and SME Development introduces further incentives. These incentives give Namibia access into the manufacturing markets of the USA, the EU, and other nations. They also promote foreign investments by allowing manufacturers to locate their operations wherever they want [46].

5.7 Sustainable development and economic diversification

On the one hand, the Namibian government tries to raise its reputation on the global trade market. MNEs should invest in the nation and stimulate the domestic industry toward sustainable development. This needs to be done carefully because the current degree of industrial action is low. MNEs have high influence and could also harm their economy or even worse exploit them [28].

On the other hand, the government of Namibia needs to pay attention to its already limited natural resources. According to Krugmann, those are land, water, and fish stock. Higher rates in FDI are often attached to an increasing consumption of resources. This especially holds true for investments in already high resource-consuming sectors, e.g., fishery [28].

Therefore, the Namibian government has to diversify its economy, in order to achieve sustainable development. Krugmann mentions that it is necessary to find the balance between economic, environmental, and social objectives [28].

Hence, plenty of challenges are arising. For instance, almost all of these factors are interlinked with each other. Isolating and influencing single ones are almost impossible.

The increasing number of Namibian citizens, which is equivalent to higher participation in their economy, is resulting in an upward trend in air and water pollution. This is leading to either exploitation of scarce resources or land contamination [28].

Krugmann emphasizes that access to limited resources should be efficient, as well as restricted. In terms of water, it would result in higher import rates of water-intensive goods, e.g., tomatoes. Regarding efficient usage, recycling, reusing, and waste reduction are viable solutions to tackle this issue. Namibia is in need of a governmental strategy toward reinvesting into natural resources [28].

Unemployment and inequalities, as indicated above under Section 8, are also obstacles for sustainable development. Sylvain describes that white settlers owned 65% of Namibia’s land during colonial rule, while they have been only 8% of the nation’s total population [30].

Even though governmental resettlement took place in post-independent times, the UNESCO describes that currently the unequal distribution of land still holds true to a certain degree [50]. The difficulty arising from such is the necessity of owning land in order to have access to resources and participate in agriculture.

As Krugmann states, achieving economic diversity and sustainable development in Namibia is possible if directly supporting the poor population. This includes the promotion of education, the entrepreneurial drive, the nation’s employment options, and the agricultural sector. Additional governmental efforts in renewable resources and the creation of a dynamic industry and service sectors would boost this process [28].

6. Conclusion

Historic events are large-scale contributors in shaping the fragmented society and the slightly growing economy that Namibian is currently facing. Poor conditions majorly emerged out of former occurrences, as, e.g., colonization, genocide, apartheid, and foreign administration. Domestic residents have to deal with tremendous trust issues among different cultures and societies as well as with one of the highest inequalities worldwide.

The Namibian government evolved effective ways in order to tackle the appearing social and economic objectives. One of them is the repetitive process of designing a National Development Plan that gets replaced every 4–6 years. Thus, it is able to ensure performing flexible in their combat of occurring challenges.

According to the economic situation of Namibia, the country exhibits a minor degree of industrialization that leads to huge opportunities for multinational enterprises to stimulate the domestic economy. Simultaneously it causes threats in terms of exploitation through external interests.

Special attention needs to be paid toward the nation’s already scarce natural resources, which are mainly represented in land, water, and fish stock. Finding the balance between the sustainable economic growth and the right degree of using natural resources will remain as a national objective.

Furthermore, Namibia is supposed to develop its own socioeconomic actions on a regional and international basis, in order to strengthen their self-esteem and the Namibian identity.

Notes

  • Rich economies usually combine appropriate policies, sound and stable institutions, and favorable geography. Many poor countries are poorly endowed with all three factors.

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Vito Bobek, Jellenz Moritz and Tatjana Horvat (August 22nd 2019). Namibia’s Triple Challenge and Its Economic Development [Online First], IntechOpen, DOI: 10.5772/intechopen.88638. Available from:

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