Entrépo sues government over payroll deduction halt

Financial services firm Entrépo Finance has taken the finance ministry to the Windhoek High Court in an urgent bid to stop government from discontinuing the long-standing Payroll Deduction Management System (PDMS), which enables salary-linked loan repayments for civil servants.The finance ministry recently announced plans to phase out the two-decade-old system, sparking outrage and panic within the microlending industry, which relies heavily on payroll deductions to secure repayments and manage credit risk.Entrépo argues that the ministry’s decision will disrupt access to affordable loans for thousands of government employees, while potentially collapsing its own operations that depend on the PDMS mechanism.N$300 million investment at riskIn court papers, Entrépo director Jan Louw said the company’s business model — which allows it to offer lower interest rates and fast access to loans for emergencies such as medical or educational needs — depends entirely on the PDMS.He warned that the move could jeopardise a N$300 million investment, as financiers have raised concerns about Entrépo’s viability if the system is scrapped.Government fights backThe finance ministry, however, maintains that it cannot be forced to retain a system it deems unlawful. In his affidavit, deputy executive director for public administration Michael Humavindu said the company operating the PDMS — Avril Payroll Deduction Management (Pty) Ltd — is not licensed as a payment service provider under the Payment System Management Act, 14 of 2023.“Avril Payroll Deduction Management is not registered or licensed by the Bank of Namibia,” Humavindu stated, arguing that continuing to use it would violate the law.He also said the system unfairly favours a select few. “There are 969 registered microlenders in Namibia, yet only 31 deduction codes have been issued — about eight of which belong to microlenders,” he said.According to Humavindu, this arrangement unlawfully prioritises code holders by securing deductions for them for up to 45 days, contrary to section 20(3) of the Act. Only statutory deductions, such as income tax or pension contributions, may legally receive such preferential treatment, he added.The ministry said the current PDMS contract will expire on 30 November 2025.“Entrepo’s claims lack legal foundation”In a supporting affidavit, director of expenditure and financial management Martinus Nakale said Entrépo had failed to reapply for its deduction code every 36 months as required, causing its authorisation to lapse.He said the government therefore could not legally continue processing transactions under an expired code. Nakale further argued that earlier ministry directives — including a March 2016 memo and 2003 exemptions — carry no legal weight and cannot justify Entrépo’s continued reliance on the system.The High Court is yet to set a date for the hearing of the urgent application. - rita@nmh-hub.com.na

Entrépo sues government over payroll deduction halt

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Namibian Sun 2025-12-08

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Entrépo sues government over payroll deduction halt

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Namibian Sun 2025-12-08

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