Almost 30 years after other African countries, Namibia finally became free of colonial rule in March 1990. The attainment of formal independence was a momentous occasion, particularly for those who had suffered from the harshness of first German then South African control and who had taken part in the bitter struggle for liberation. For a time, Namibia's independence regenerated the momentum stalled after the liberation of Angola and Mozambique in 1975 and of Zimbabwe in 1980 and gave hope to black South Africans struggling with the same intransigent regime. However, a series of formidable problems have limited the options open to the new SWAPO government. Indeed, at independence Namibia's future was so tightly constrained that its room for manoeuvre, real independence and development was minimal. Few countries have started in such a heavily determined context. The legacy of South African rule included a severe fiscal crisis, a dependent economy, uneven development, and inadequate social services for the black population. While negotiations are underway over the status of Walvis Bay, Namibia's main port, remains under formal South African control. Not surprisingly, the new government has moved cautiously at first, emphasizing national reconciliation and adopting conservative economic policies. This study explores the contradictions posed by the internal and international context within which the Namibian state must operate. Specifically it examines the difficulties posed by the lack of resources available for the present government which must nevertheless demonstrate that it is serious about its promises to transform the legacy of South African rule. It will argue that, barring rapid change in the region, the discovery and rapid exploitation of new natural resources or major Western assistance, the government's inability to meet mass expectations will pose major problems for the unity and stability of Namibia, not to mention its growth and development. While South Africa's role has been crucial, other external factors also place severe constraints on the autonomy of the new Namibian government. The second part of the study assesses the limits on state policy posed by the structure of the Namibian economy - especially its dependence on international capital in the mineral sector. Finally, the paper examines the effect of these cross pressures on Namibian politics. While the government's policy of racial and ethnic reconciliation has provided Namibia with a peaceful start as an independent state, it has not been achieved without cost and compromises that may eventually create problems for the preservation of SWAPO's political base. At the moment, the state lacks both the resources to engineer a rapid transformation of the economy of its people in Ovamboland and the bargaining power to win a major change in the working conditions of migrant labour in the mines and industries of the south. Yet these two groups, particularly the people of Ovamboland, were responsible for bringing SWAPO to power. The question remains as to how long S WAPO will retain their support and tolerance, especially given the expectations which independence has aroused.