Namibia over the last 19 years:

Population: Whilst Namibia is still one of the most sparsely populated countries in the world (second only to Mongolia) its population has seen a steady increase since 1990 and is predicted to grow at a much faster rate in the future as the country continues to develop. In 1991 the population was estimated to be 1.4 million and by 2011 it is predicted to be approximately 2.3 million, indicating a growth of almost 1 million people in twenty years.

Economy: Perhaps the most significant economic change is the transformation of the tourist industry. Within the last 19 years tourism has experienced a boom as more and more people become aware of what Namibia has to offer. Although tourism currently makes up a relatively small percentage of the countries economy it is likely to see a huge increase in the future as the countries infrastructure continues to improve and international travel becomes easier.

Mentality: The most obvious change in mentality that Namibians have made is the attitude towards race. The country is now almost two decades on from the end of apartheid and for much of the population life is drastically different. Black people have more opportunities, be it social or economic, than ever before and the income gap between black, white and coloured people has been significantly reduced. However, Namibia is still a very young country and it is likely to take more than 19 years for the oppression that apartheid brought to be forgotten and for all members of Namibia’s population to consider themselves equals.

Namibia is still a young country and for much of the population the countries independence is something that happened within their lifetime.

Sales: Following the credit crunch the diamond industry saw a rapid fall in sales; between August and December the prices of diamonds fell by 13% due to a total lack of demand for polished and uncut diamonds. The slide is reported to be the largest in 4 years and has cost the jewellery industry thousands of dollars.

Polishing: As a result of the lack of demand for diamonds and other jewellery, gem production and polishing industries across the globe have also taken a tumble. In India over 100,000 people have been laid off following the global slowdown causing a voluntary ban on importing rough diamonds from overseas to be polished. As the majority of roughs come from Africa this ban has led directly to a slump in diamond exports from the dark continent.

Mining: Across Africa diamond mining has been impacted by the credit crunch- from Botswana to South Africa, but it is here in Namibia that we are feeling the shockwaves; since December Namdeb has begun to retrench, first closing Elizabeth Bay Mine over the holiday period and then reducing the number of workers in each of its mines. Several people right here in Lüderitz have lost their jobs and many more are still waiting to find out if they will remain in employment.

As the global recession continues it becomes more and more apparent how dependent countries like Namibia are on overseas investors. Is this economic link beneficial to the country by giving it the opportunity to further develop or is it a damaging relationship which  can lead to an entire market collapse?

It is believed that the financial crisis has been building since early August of this year when the USA market suffered a loss of confidence in investors causing a substantial amount of credit to be injected into the economy causing the market to become volatile. However it could also be argued that the crisis has been in the making for much longer than this; today’s global society has the most expendable income in history and, as mass production becomes more widespread, prices are forced downwards to accommodate the consumerdriven lifestyle which in turn makes the global market very vulnerable. In other words the pressure for cheaper goods has put a strain on the world economy which has now resulted in a complete breakdown.

What are the global impacts?

As the main reasons for the credit crunch are founded in developing countries, particularly the UK and the USA, these are the countries that have been the most badly damaged, which seems only fair. However, because of the developing world’s dependency on richer western countries, there are inevitably going to be impacts in less economically developed countries as well. The crisis has: triggered the bankruptcy of several huge financial players, resulted in several less wealthy countries, including the Ukraine and Hungry, becoming dependant on loans from the IMF, caused the entire country of Iceland to declare itself bankrupt, left over 1 million people unemployed in North America and instigated huge losses in the financial market. The Bank of England has reported that nearly $1 trillion, 12% of the entire global economy, has been spent bailing out the financial industry.

What are the African impacts?

In Africa experts have predicted that the credit crunch may do more good than bad; the IMF (International Monetary Fund) has predicted that the Sub Saharan African economy will grow by 6.5% which is far higher than expected due to the credit crunch. Furthermore the World Bank says that whilst the crunch will ‘hurt developing countries’ (‘Herald Tribune’) as it will curb rapid growth, particularly in countries like India and China, Sub Saharan Africa’s economy is likely to pick up to the highest growth rate in 38 years. And why? Because countries like Botswana and Namibia are sitting on a wealth of natural resources!

And the implications of this in Namibia?

Thankfully damage to Namibia’s economy is likely to be kept to a minimum, particularly because of the strong links the country has with South Africa. However there may be subtle changes to be aware of; firstly, whilst Namibia itself is largely predicted to remain unscathed, many of the countries that feed the tourist industry, for example Germany and England, have suffered vast financial losses making people less likely to spend large sums of money on holidays. The result could be a drop in the Namibian tourist industry. In addition De Beers diamond company, which is a 50% shareholder in Namdeb, has said that they expect a slump in the diamond industry, again due to the reduction of disposable income in the western world. This may pose a problem as diamond and other mineral mining makes up approximately 20% of Namibia’s total Gross Domestic Product, although for the time being it is unlikely that this will create any major financial problems.

What about Lüderitzbucht?

Because Lüderitz is one of the fastest growing areas in Namibia, with a healthy shipping port and open mine, the negative impacts of the credit crunch will be fairly minimal. However the falling price of diamonds may have some negative impact and it is reasonable to expect small increases in food prices as import values may go up but other than that it’s business as usual for the Buchters.