After years of colonial rule and a long struggle to end external administration, Namibia became Independent in 1990. The realization of political reform within a modern democratic framework has called for wide-ranging reforms in all sectors of the economy to which the water sector is not an exception. Institutional reforms in the water sector were undertaken with an overall aim of introducing integrated water resources management as a durable solution to the water challenges of the arid environment prevailing in Namibia. The reforms included the development of a new national water policy, the preparation of draft legislation, and new organizational changes to develop, manage and regulate activities in the water sector. Although institutional reforms in the water sector are necessary to meet the demands of a new nation, they cannot succeed without the required level of skill and capacity both within and outside water administration. While it is relatively easier to formulate new policies, promulgate legislation and create new organizations, it is very difficult for an emerging country to develop quickly the human capacity necessary to handle the reforms, especially when inadequate funding constraints create a conflict between resource development and capacity building. Keywords: Water sector, Institutional reforms, Water policy, Water legislation, Capacity building, Decentralization, Commercialization, Community participation, Cost recovery, Namibia.