Answer to Question #250908 in Economics for margie

Question

the growth at home strategy in namibia 's execution strategy for industrialization, what are the main hindrances to the full realization of this strategy

Answer 1

Namibia's economy is highly dependent on the outside world. The German and then South African authorities viewed Namibia as a settlement colony, which used the cheap forced labor of African peasants herded into reserves and to serve the white-owned commodity sector of the economy, focused on the export of raw materials. Throughout the 1990s, the national economy remained generally unbalanced: the overwhelming majority of manufactured goods were exported, and most of the consumer goods needed by the population were imported from abroad. Only the poorer northern regions of the country, specializing in diversified agricultural production on consumer-type farms, met their basic needs. Lack of agricultural land and high unemployment are complicating long-overdue economic reforms. In 1997, GDP (excluding the production of subsistence farming and the shadow economy) exceeded the US $ 3 billion. The share of mining production, which in the late 1980s was 41% of GDP, had dropped to 20% by 1998. The share of agricultural and fishery products accounted for 12%, and the manufacturing industry (including fish processing) - 13%, the public sector - 25%, trade, and services - 15%. In an economy traditionally dominated by the mining industry, the role of the manufacturing industry, mainly represented by agricultural processing enterprises, was insignificant. From the 1940s to the late 1970s, the Namibian economy developed rapidly and steadily but began to decline in the early 1980s, driven by drought, hostilities in the country, and falling world prices for Namibian export crops. In the late 1980s, there was some economic recovery, which continued into the 1990s. The economic growth rate was 1.4% in 1997 (2.5% in 1996, 3.3% in 1995).

In 1990, the mining industry in Namibia was dominated by three international corporations: Consolidated Diamond Mines (KDM), wholly owned by South African De Beers, which controls the global diamond trade, British Rio Tinto Zink, which owns a majority stake and manages the company. Rossing Uranium Limited, and South African Gold Fields South Africa, which controls Tsumeb Limited (base metals mining). In the late 1990s, the Namibian government entered into negotiations to jointly own the Rossing corporation and to create a diamond mining joint venture with De Beers called Namdeb. Tsumeb Limited filed for bankruptcy. The discovery of diamond deposits at the bottom of the ocean has become a new impetus for the diamond mining industry. The rise in demand and world prices for uranium had a beneficial effect on its production in Namibia. The strong prospects for the mining industry, the development of industrial zones that produce export products, and the discovery of natural gas offshore near Walvis Bay make it possible to look with optimism towards the future of the Namibian economy.

In the service sector, dominant positions belong to the leading banks in South Africa, the South African retail system, and the distribution network of South Africa. On very rare occasions, Namibians own small businesses. The government is pursuing a “namibization” policy aimed at supporting local businesses and expanding its own control over the economy. Although the Walvis Bay and Luderitsa marine fish and other seafood processing facilities are in the hands of South African and other foreign companies, most fishing licenses are granted to Namibian fishing organizations. Most of the large commercial agricultural farms are whites. The purchase and redistribution of land are constrained by constitutional conditions for acquiring land at market prices and by the government's intention to retain large commodity farms as the backbone of the agricultural sector. The government announced its intention to buy out 49 large agricultural farms and resettle the landless Namibians there. An additional obstacle to a more equitable distribution of land is the actions of owners of large collective farms, who fence off public land and thereby prevent the seasonal movement of livestock to new pastures.

The main factors determining the location of industry and agricultural land in Namibia are natural features and the colonial policy of organizing settlements. Only in some areas of the far north of the country is the amount of atmospheric precipitation sufficient for the cultivation of some of the least moisture-demanding agricultural crops (in the valleys of the Ovambo and Okavango rivers and in the Caprivi strip). Livestock raising is most developed on the plateaus - in the central regions and in the north, cattle are raised, in the south and along the Great Ledge - sheep and goats. Only Windhoek and the coastal Swakopmund and Walvis Bay have large urban markets. Mining is carried out in many parts of the country, fish processing enterprises are concentrated in the port cities of Walvis Bay and Luderitz. In all geographical areas, agricultural production is divided into commodity and consumer sectors. The bulk of the most fertile land in the plateau region during the colonial period was given to white farmers, and African peasant farms, long deprived of the opportunity to receive loans, use technical services, and enter the market with their products, only in recent years have received government subsidies.