NOT FOR QUOTATION

This paper studies the changes in the distribution of incomes in Namibia since Independence in 1990 and the effects on poverty. We first use micro-econometric techniques to improve comparability between the expenditure data in two household surveys conducted in 1993/1994 and 2003/2004. We then go on to compute a series of measures for poverty, inequality and polarisation. Our findings show that Namibia is among the most unequal and polarised societies in the world. The results also point to a small yet statistically significant decrease in the incidence of poverty over the period and to small but insignificant increases in inequality and polarisation. The analysis further shows that partition by educational attainment has become the key determinant of income inequality in Namibia, which we explain by the improvements in access to education after Independence and increasing returns to education. The high but falling importance of between-group inequality by linguistic grouping is indicative of some progress in closing the welfare gaps between the country’s different ethnic groups. In a dynamic decomposition analysis we attribute this progress to demographic changes rather than changes in relative mean incomes. We find no evidence of regional convergence (nor divergence) but show that income growth has tended to be more ‘pro-poor ’ in urban areas than in rural areas. Income growth in households reliant on state pensions has been more than outweighed by redistribution of incomes away from these households contributing to a significant increase in poverty levels