Political sketch
Formerly German South West Africa and South West Africa. Independent from South Africa on 21 March 1990.
Walvis Bay: Part of the (South African) Cape Colony from 8 August 1884-30 May 1910 and part of South Africa from 31 May 1910-28 February 1994; used Cape Colony and later South African currency.
In the late 1480s Portuguese navigators explored the coast of Namibia, followed in subsequent centuries by the Dutch and English. In the 1840s German missionaries arrived. In the 1860s tribal wars prompted missionaries, settlers, and the German government to offer the British territorial sovereignty in exchange for protection. The British denied all requests. The British annexed Walvis Bay and some adjacent territory following treaties of 1876 between the neighboring Cape Colony (now western South Africa) and tribal chiefs. In 1884, Germany somewhat reluctantly offered protection, which developed into annexation. The territory was known as South West Africa. The first German farmers settled in South West Africa in 1892. Trouble developed with the Khoikhoi people, leading to uprisings by them (1903) and the Herero (1904). The Germans brutally suppressed the uprisings, starving many of the Herero. Diamonds were discovered in 1908. During the First World War, troops from South Africa defeated the small German army and occupied South West Africa in 1915. Following the war the territory became a mandate of the League of Nations. Initially, the mandate was administered as a South African colony. In 1926 a legislative assembly was established with limited domestic authority. With the demise of the League of Nations, South Africa denied any obligation to relinquish the mandate to the newly established United Nations. In 1946 South Africa requested permission from the United Nations to incorporate South West Africa, but the request was denied. In 1964 the United Nations voted to end South Africa's mandate, and in 1968 it voted to recognize the name Namibia. In the mid 1970s South Africa proposed to partition Namibia, but it proposal was rejected by the South West Africa People's Organization (SWAPO), an organization of black Namibians that since the 1960s had waged a guerrilla war against South African rule in an effort to gain independence.
In 1988, South Africa agreed to grant independence. In 1989 SWAPO won a majority of seats in a new Constituent Assembly that drew up a new constitution, and on 21 March 1990, Namibia gained full independence under a government dominated by SWAPO. South Africa transferred Walvis Bay and some nearby islands to Namibia on 1 March 1994. Namibia continues to have close economic ties with post-apartheid South Africa. Its only president from independence to the present (2005), elected three times, has been SWAPO leader Sam Nujoma. The main exports are minerals, especially diamonds. Most of the people are farmers or herders.
Wars since 1500
Hottentot and Herero War, 1904-1908 (against Germany); First World War in Southern Africa, 1914-1915 (Germany against United Kingdom, France, Belgium, Portugal, etc.); Namibian War of Independence, 1966-1990 (against South Africa).
Convertibility
German colonies:
During the First World War, Germany was cut off from its colonies. Germany's African colonies, surrounded as they were by the colonies of Allied countries, were cut off from one another. Therefore convertibility among them in effect ceased in August 1914. All German colonies were conquered during the war; those in Africa were annexed by Belgium, France, South Africa, or the United Kingdom.
The sterling area:
On 2 August 1914, soon after the First World War began, the United Kingdom issued a proclamation imposing a one-month moratorium of payment for bills of exchange accepted before 4 August; an act of 3 August 1914 gave legislative sanction to the proclamation. The moratorium was subsequently extended for a month and ended on 4 November 1914. Legally the pound sterling remained convertible into gold and could be exported, but the risk to shipping from German submarines made the cost of shipment prohibitive, so the United Kingdom was in effect off the gold standard. The British government refused to include private shipments of gold in its war-risk insurance scheme. After the war, the export of gold was prohibited from 1 April 1919 under regulations that were given statutory form in 1920. On 28 April 1925 the government announced that the act would not be renewed when it expired on 31 December 1925. On 13 May 1925 the United Kingdom resumed the gold standard.
The United Kingdom abandoned the gold standard on 21 September 1931. The currencies of British colonies were almost all linked to the pound sterling through currency boards; being on a sterling-exchange standard rather than a gold-exchange standard, they followed the pound sterling off gold. Over the next few years, some former British colonies (Australia, New Zealand, South Africa) and other countries that had important trade links with the United Kingdom switched from gold to the pound sterling as their official or actual anchor. The result was termed the sterling area. The United Kingdom imposed exchange controls on 4 September 1939, the day after entering the Second World War. Most countries that were not current or former British colonies soon left the sterling area. Among the remaining countries, both current- and capital-account transactions were free of restrictions within the sterling area, but were restricted in dealings with outside countries. After the Second World War, the United Kingdom returned to the gold standard under the Bretton Woods system. It removed exchange controls on 15 August 1947, but reimposed them on 20 August 1947 after suffering a large loss of foreign reserves. Sterling had a dual exchange rate from 1961 until the United Kingdom abolished exchange controls. The sterling area remained in existence because sterling was not fully convertible. It began to crumble after the United Kingdom again abandoned the gold standard on 23 June 1972. On that date, Botswana, Lesotho, South Africa, and Swaziland ceased being members of the sterling area; so did Namibia (then South West Africa), since it was subject to South African exchange controls. By January 1973 the sterling area had shrunk to the British Isles and a few small British colonies; even Hong Kong had abandoned sterling as its anchor currency. The United Kingdom abolished exchange controls on 24 October 1979, ending the sterling area.
The Rand Monetary Area (later Common Monetary Area):
Initially, Bechuanaland (now Botswana), Basutoland (now Lesotho), and Swaziland used South African currency and had no separate domestic units of account. Until 13 February 1961, South Africa's currency was called the pound; since 14 February 1961 it has been called the rand. In Namibia, then called South West Africa, three South African commercial bank issued notes from 1915 to 1961, but the unit of account was the South African pound; the other countries used notes issued by the South African Reserve Bank after it began issuing notes in 1922. These countries had a customs union and, by informal agreement, common exchange controls. Initially, South Africa paid no seigniorage to the other countries for using the rand. The Rand Monetary Area, established in 1974 (and renamed the Common Monetary Area from 1986) joined South Africa, Lesotho, Namibia, and Swaziland in a formal agreement. Botswana decided not to join, though it remained a member of the rand zone for purposes of exchange control until 1976. All the other countries now have their own currencies, equal to the South African rand, but South Africa still makes seigniorage payments to the other members of the zone based on estimated circulation of rand notes and coins within their territory.
See the entry on South Africa concerning South Africa's dual exchange rates in the 1970s and 1980s, which applied also to Namibia. Namibia became part of the Common Monetary Area on 1 April 1992.
Other
Defaults on or restructurings of debt to the private sector (mainly from Purcell and Kaufman 1993 and Standard & Poor's 2004): None.
Reinhart and Tokatlidis (2000: 33) dating of recent financial liberalization: Domestic (notably interest rates) 1991, external (notably foreign-exchange market and participation by foreign financial institutions) 1995.
Frankel and Rose (1996) list of currency crashes: Namibia not included. Since being introduced on 15 September 1993, the Namibian dollar has been pegged at a constant rate to the South African rand, so Namibia's exchange-rate history is the same as that of South Africa.
No exchange rate data in Reinhart and Rogoff (2003).
References
Primary sources:
--Laws and decrees:
Germany. Overseas gazette. 1890-1921. Deutsches Kolonialblatt. Issued by Kolonial-Abtheilung des Auswärtigen Amts (1890-1907); Reichs-Kolonialamt (1907-1919); Reichskolonialministerium (1919-1920); Kolonialzentralverwaltung, Reichsministerium für Wiederaufbau (1920-1921). Berlin: Ernst Siegfried Mittler und Sohn.
Germany. 1892-1910. Die deutsche Kolonialgesetzgebung. Sammlung der auf die deutschen Schutzgebiete bezüüglichen Gesetze, Verordnungen, Erlasse, und internationale Vereinbarungen mit Anmerkungen und Sachregister. Edited by various persons. Berlin: D. Reimer, later Ernst Siegfried Mittler und Sohn, later Alfred Zimmermann. (The first volume was published in 1898 but covers the period starting in 1892.)
Namibia. Gazette. 1990-present. Government Gazette of the Republic of Namibia. Windhoek: Windhoek Printers and Publishers. (Successor to South West Africa gazette.)
Namlex. 2004. Legal Assistance Centre, Namibia, "Index to the Laws of Namibia" 2004 update, <http://www.lac.org.na/namlex>.
South Africa. Gazette. 1914-1990. Gazette (Afrikaans version Staatskoerant, from 1961). Pretoria: Government Printer.
South West Africa (German). Gazette. 1910-1914? Amtsblatt für das Schutzgebiet Deutsch-Südwestafrika. Windhoek [in German, Windhuk]: Windhuker Druckerei.
South West Africa. Gazette. 1915-1990. Official Gazette of the Protectorate of South-West Africa in Military Occupaton of the Union Forces (1915-1920); Official Gazette of the Protectorate of South-West Africa in Military Occupatons of the Union Forces (1920-1921); Official Gazette of South-West Africa (1921-1990). Windhuk (later spelling Windhoek): John Meinart, etc. (These also had titles in Afrikaans. Successor to South West Africa [German] gazette; succeeded by Namibia gazette.)
--Publications of monetary authorities:
Bank of Namibia. Annual report. 1990-present. Annual Report. Windhoek: Bank of Nambia.
Bank of Namibia. Bulletin. 1993-present. Quarterly Bulletin. Windhoek: Bank of Nambia.
South African Reserve Bank. Annual report. 1920/1921-present. Report of the First [etc.] Ordinary General Meeting (1920/1921-1981/1982); Report of the Sixty-Second [etc.] Ordinary General Meeting of Stockholders (1982/1983-1986/1987); Report of the Sixty-Eighth [etc.] Ordinary General Meeting of Shareholders (1987/1988-present). Pretoria: South African Reserve Bank. (Some years also in Afrikaans.)
South African Reserve Bank. Bulletin. 1946-present. Quarterly Bulletin of Statistics / Statistiese Kwartaalblad (1946-1965); Quarterly Bulletin / Kwartaalblad (1966-1999); Quarterly Bulletin (no Afrikaans text) (1999-pressent). Pretoria: South African Reserve Bank.
South African Reserve Bank. Economic report. 1960/1961-present (annual). Annual Economic Report. Pretoria: South African Reserve Bank.
--Web site of the current monetary authority (viewed 20 September 2005):
<http://www.bon.com.na>
--Other publications or Web sites:
South Africa. Official yearbook. 1917-1960, 1974-present. Union Office of Census and Statistics (1917-1949); Bureau of Census and Statistics (1950-1960): Department of Information (1974-1993); South African Communication Service (1994-present). Official Year Book of the Union (1917-1918); Official Year Book of the Union and of Basutoland, Bechuanaland Protectorate and Swaziland (1919-1960); South Africa 1974 [etc.]: Official Yearbook of the Republic of South Africa (1974-1993); South Africa Yearbook (1994-present). Pretoria: Government Printing and Stationery Office (1917-1960); South African State Department of Information (1974-1993); South African Communication Service (1994-present).
Main secondary sources:
Crossley, [Sir] Julian [Stanley], and John Blandford. 1975. The DCO Story: A History of Banking in Many Countries 1925-71. London: Barclays Bank International. (Concerns Barclays Bank Dominion, Colonial and Overseas.)
Deeken, Matthias. 1913. Das Geldwesen der deutschen Kolonien. Münster in Westfalen, Germany: Druck der Westfälischen Vereinsdruckerei.
Henry, J[ames] A., and H. A. Siepmann. 1963. The First Hundred Years of the Standard Bank. London: Oxford University Press. (The Standard Bank operated widely in Africa.)
Ikhide, S[ylvanus], and Sandie Fitchat, editors. 2002. The Financial System in Namibia: In Commemoration of the First Decade of the Bank of Namibia. Windhoek: Gamsberg Macmillan.
IMF ARER. 1950-present. International Monetary Fund. Annual Report on Exchange Restrictions (1950-1978), Annual Report on Exchange Arrangements and Exchange Restrictions (1979-1988), Exchange Arrangements and Exchange Restrictions: Annual Report (1989-present). Washington: International Monetary Fund. (Contains information on IMF member countries and some of their dependencies.)
Terry, Carolyn [Mary]. 1978. The Desert Bankers: The Story of the Standard Bank in South West Africa. Cape Town: W. J. Flesch and Partners.
Monetary authorities: Namibia
| Dates | Type | Name | Source | Remarks |
| 1906
-7 August 1914 |
dollarization | German mark (issued by central bank Deutsche Reichsbank [headquarters Berlin, Germany]) | Ikhide and Fitchat (2002: 13-14) | The first bank was the Deutsche-Afrikabank (headquarters Lüderitz, German South West Africa?) in Lüderitz, in 1906. The second bank was the Bodenkreditbank für Deutsch-Südwestafrika, also known as the Südwestafrikasche Bodenkredit Gesellschaft (headquarters Lüderitz, German South West Africa?), in Lüderitz, on 3 December 1912 Ikhide and Fitchat (2002: 22). |
| 8 August 1914
-9 July 1915 |
government issue alongside dollarization | German colonial government [headquarters Windhoek, German South West Africa) alongside German mark (issued by central bank Deutsche Reichsbank [headquarters Berlin, Germany]) | Ikhide and Fitchat (2002: 15-16) | The colonial government issued notes as an emergency measure during the First World War as a means of finance and because wartime conditions had cut of supplies of German notes. The notes were called "Seitz notes" after the German governor of the time, Theodor Seitz (Terry 1978: 58). |
| 10 July 1915
-18 August 1915 |
dollarization | South African pound (notes issued by multiple free banks) | implied by South Africa, official yearbook 1925: 969 | Switched to the South African pound following the South African army's capture of Namibia during the First World War on 9 July 1915. |
| 19 August 1915
-18 April 1922 |
free banking | multiple (2) note-issuing banks | United Kingdom, Standard Bank of British South Africa (later Standard Bank of South Africa) Memorandum of Association, 13 October 1862, cited in Henry and Siepmann (1963: 5); other bank incorporations | The Standard Bank (headquarters London, England) opened a branch in Lüderitzbucht on 19 August 1915 (Henry and Siepmann 1963: 330). It was the first bank to issue its own notes, which were those it issued in South Africa. The second bank was the National Bank of South Africa (headquarters Johannesburg, South Africa), in Windhoek, later in 1915 (Crossley and Blandford 1975: 321). First World War emergency issues of small-denomination notes were outlawed by South West Africa, proclamation of 1 January 1919 (cited in Ikhide and Fitchat 2002: 16). In 1920 the Cape of Good Hope Bills of Exchange Act was applied to South West Africa. Notes from Rhodesia (now Zimbabwe) were also accepted as legal tender until stripped of the privilege in 1930 (by South West Africa, South West Africa Banks Proclamation, No. 29 of 1930, cited in Ikhide and Fitchat 2002: 16-18). |
| 19 April 1922
-31 December 1961 |
free banking alongside dollarization | multiple (3) note-issuing banks alongside some use of South African Reserve Bank currency (pound to 13 February 1961, rand from 14 February 1961) (issued by central bank South African Reserve Bank [headquarters Pretoria, South Africa]) | South West Africa, South West Africa Banks Proclamation, No. 29 of 1930, cited in cited in Ikhide and Fitchat (2002: 16-18); Terry (1978: 77) | The Standard Bank of South Africa (headquarters London, England), the National Bank of South Africa (headquarters Johannesburg, South Africa) (from February 1926 absorbed by Barclays Bank [Dominion, Colonial and Overseas] [headquarters London, England]), and the Volkskas (headquarters Pretoria, South Africa) were the private note-issuing banks. With advent of central banking in South Africa, currency issued by the South African central bank also became legal tender. The South West Africa Banks Proclamation allowed banks to continue issuing notes in Namibia even though they had to cease doing so in South Africa. It also required them to issue notes from a local branch, rather than using the notes of their Rhodesian offices as the Standard Bank and Barclays Bank had hitherto done. Unusually for a territory influenced by British law, banks were allowed to issued notes for less than £1: they issued notes of 10 shillings (£0.50). |
| 1 January 1962
-31 July 1990 |
dollarization | South African rand (issued by central bank South African Reserve Bank [headquarters Pretoria, South Africa]) | South Africa, South African Reserve Bank Amendment Act, 1961, cited in South African Reserve Bank annual report, 15 August 1962 (for year ending 31 March 1962): 15; possibly South West Africa, Proclamation No. 130 of 1961 | Banks lost the right to issue notes in Namibia, ending the last episode of free banking in the world at the time. Crossley and Blandford (1962: Illustrations, p. xv) says bank notes ceased being legal tender in March 1962. |
| 1 August 1990
-14 September 1993 |
central banking alongside dollarization | Bank of Namibia (headquarters Windhoek, Namibia) alongside South African rand (issued by central bank South African Reserve Bank [headquarters Pretoria, South Africa]) | Namibia, Bank of Namibia Act, No. 8, June 1990, cited in Bank of Namibia annual report 1990: 16; see also the same source, pp. 9, 31 | Namibia established a central bank as a sign of its recent independence. The central bank began financial operations at the start of this period, but did not issue notes. According to its annual reports, the central bank did not really consider itself to have extensive central banking powers until Namibia had a separate national curency. I view the matter differently, reasoning that the central bank could have undertaken sterilized intervention and other discretionary policies had it been so inclined, and according to data from the IMF's International Financial Statistics it did so. Namibia joined the IMF on 25 September 1990. |
| 15 September 1993
-present (2005) |
central banking alongside dollarization (residual) | Bank of Namibia (headquarters Windhoek, Namibia) alongside South African rand (issued by central bank South African Reserve Bank [headquarters Pretoria, South Africa]) | Namibia, Bank of Namibia Act, No. 8, June 1990, cited in Bank of Namibia annual report 1990: 16; see also the same source, pp. 9, 31 | The central bank issued its first notes at the start of the period and its first coins on l 8 December 1993. South African currency continues to be accepted as legal tender, and South Africa makes seigniorage payments to Namibia based on the estimated circulation of South African currency in Namibia. |
Exchange rate arrangements: Namibia
| Dates | Official arrangement | Source | Unofficial arrangement, if different | Remarks |
| 7 August 1884
-31 January 1901 |
fixed; used South African currency and German mark (at 20 German marks = UK£1 = local South African £1) | (German) South West Africa, governor's decree (Verordnung) of 1 August 1893, in Deutsche Kolonialgesetzgebung, v. 2: 34, cited in Deeken (1913: 1); Ikhide and Fitchat (2002: 13) | Formal German occupation of Namibia began on 7 August 1884. Currencies other than the German mark were also legal tender. South African currency predominated for some years because of Namibia's trade links with South Africa. The German mark was a decimal currency; the South African pound was not. | |
| 1 February 1901
-7 August 1914 |
fixed; used German mark | (German) South West Africa, governor's decree (Verordnung) of 15 December 1900, in Deutsche Kolonialgesetzgebung, v. 5: 138, cited in Deeken (1913: 3) | The German mark was declared the only legal tender; other currencies ceased to be legal tender after 2 July 1901. However, British coins and South African notes seemingly continued to circulate until outlawed by Germany, Currency Decree (Münzverordnung) of 1 February 1905, promulgated locally by governor's announcement (Bekanntmachung) of 15 November 1905 and effective 1 January 1906 (Deutsche Kolonialgesetzgebung, v. 9: 271, cited in Deeken 1913: 24). | |
| 8 August 1914
-9 July 1915 |
pegged; 1 local mark = 1 German mark | Ikhide and Fitchat (2002: 15-16) | The colonial government issued notes as an emergency measure during the First World War as a means of finance and because wartime conditions had cut of supplies of German notes. | |
| 10 July 1915
-13 February 1961 |
fixed; used South African pound (as part of a currency union) | implied by South
Africa, official
yearbook 1925: 969;
also
(South African) South West Africa, governor's proclamation, 1 January 1919, cited in Ikhide and Fitchat (2002: 16) |
Namibia switched to the South African pound upon being captured by South African forces during the First World War. The 1919 proclamation enforced the pound and the currency of the territory. Present-day Lesotho, Namibia (from 1915), Swaziland, and, until 1976, Botswana all used currency accepted in the Cape of Good Hope province, and later South African currency. They all also had common exchange control regulations. Until the 1920s this meant they used British coins. South West Africa, Payment of Bank Notes Proclamation, No. 3 of 1933, provided that holders of notes were not entitled to be paid in gold (cited in Namlex 2004 online summary of major Namibian laws, viewed 17 November 2005). | |
| 14 February 1961
-14 September 1993 |
fixed; used South African rand (as part of a currency union to 20 March 1990) | South Africa, Decimal Coinage Act, No. 61 of 1959, cited in South Africa, official yearbook 1960: 388 | South Africa had a flexible second exchange rate from 2 February 1976-1 September 1985 and again from 2 September 1985-12 March 1995. | South Africa introduced a new currency at 2 South African rand = South African £1 as part of the decimalization of its currency. |
| 15 September 1993
-12 March 1995 |
pegged, dual rate; official rate Namibian $1 = 1 South African rand | Namibia, Bank of Namibia Act, No. 8, June 1990, cited in Bank of Namibia annual report 1990: 16; Lesotho, Namibia, South Africa, and Swaziland, Multilateral Monetary Agreement, 6 February 1992, cited in Bank of Namibia Act, No. 15, 5 December 1997, reprinted in Bank of Namibia Web site, viewed 16 November 2005 | The second rate was flexible. | Introduced a national currency equal to South African rand. The currency was named the dollar presumably after the US dollar, to emphasize Namibia's independence from South Africa, whose currency was the rand. Namibia remains a member of the Common Monetary Area, and South Africa continued to make seigniorage payments based on estimated circulation of rand notes and coins in Namibia, where the rand remained legal tender. The dual exchange rate continued the practice previously existing for the South African rand. The South African rand remained legal tender. |
| 13 March 1995
-present (2005) |
pegged; Namibian $1 = 1 South African rand | Bank of Namibia annual report 1995: 43; IMF ARER (1996: 340) | Namibia abolished its dual exchange rate when South Africa abolished the financial rand (its dual rate) the same day. The South African rand remained legal tender (Bank of Namibia Act, No. 15, 5 December 1997, reprinted in Bank of Namibia Web site, viewed 16 November 2005). |