This work examines the impact of German sources of capital on the Namibian
economy. Two sets of equations are tested. The first set tests the effect that German development
assistance and German capital goods have had on domestic GDP. The second set tests the effect
of German development assistance on the Namibian government’s capital formation outlays. The
German independent variables are subsequently compared to global sources of capital in order
to determine whether the German sources demonstrate a comparatively higher significance.
Furthermore, the effects of official development assistance are disaggregated by type to test for
aid’s fungibility. This analysis enables us not only to determine the direct impact of German
sources of capital on the Namibian economy but also the extent to which official development
assistance impacts the government’s investment behavior. We find that German development
assistance has practically no effect on Namibian GDP. However, German development aid does
have a statistically significant effect on the Namibian government’s level of annual expenditure
on capital formation. Our results lead to the conclusion that German development aid has the
potential, through public investment, to exert a positive influence over the Namibian economy.
Further research will need to explore the conditions under which this potential can be fulfilled.