‘Namfisa must step up’

Otjozondjupa governor John ǁKhamuseb has called on the Namibia Financial Institutions Supervisory Authority (Namfisa) to implement stronger regulation and intervention measures to protect people caught in the micro-lending trap.

Speaking during a public hearing on micro-lending in the Otjozondjupa region on Friday, the governor said excessive borrowing had become a growing social problem, with some people taking multiple loans and struggling to meet their basic needs.

“Namfisa must also step up and come up with amicable solutions,” ǁKhamuseb said, arguing that people who find themselves trapped by micro-lenders and cash loans should be assisted through regulatory processes.

He further warned against debt-consolidation arrangements, saying some borrowers could end up in long-term repayment arrangements that leave them indebted for years.

ǁKhamuseb said clear regulations and rules could help create a balance between the interests of lenders and borrowers, while ensuring that the micro-lending sector does not become a wider social crisis.

ǁKhamuseb said having one cash loan was not necessarily a concern, but taking two, three or four loans could leave borrowers with little or nothing at the end of the month.

The governor warned that the consequences extended beyond financial hardship, saying excessive debt had contributed to problems such as gambling, alcoholism and family breakdown.

In some cases, he said, the situation had become so unbearable that people had contemplated or died by suicide. Some neglected work and other responsibilities due to the burden of debt, he added.

He also raised concerns about repayment practices, including cases in which lenders had access to borrowers' salaries and could deduct money on payday. He said some illegal cash loans carried interest rates ranging from 30% to as much as 100%.

The hearing is part of parliament’s investigation into a motion to explore whether existing laws protect Namibians from exploitation by lending institutions and informal money lenders.

The committee has visited several regions so far.

Senior officials in the Oshana region last week also raised alarm over exploitative lending practices that are pushing Namibians, especially civil servants, into financial ruin.

Speaking during a public hearing of the National Assembly standing committee on economy and industry, public administration and planning in Oshakati on Monday, leaders painted a grim picture of households surviving on a fraction of their salaries due to multiple loans.

Abel Mazila, chief development planner at the Oshana Regional Council, directly called for Namfisa to be held accountable.

He argued that while laws exist to protect consumers, enforcement has been neglected.

“If my payslip reaches maximum capacity, I think regulatory institutions should be able to say ‘here, we can’t’, regardless of profit or business," he said.

"It is sad when you see a person earning a net of N$16 000 and what lands in their account is N$500. Who do we blame here? It should be the regulator,” Mazila said.

Mazila also raised concern over the profitability of the micro-lending sector.

“Looking at the loan book of micro-lenders, it’s in the billions. It is one of the most lucrative industries, yet the borrower remains in debt," he added.

Mazila proposed that a study be done to identify which professions and regions borrow the most and why.

“If the study is made, then financial literacy should be provided to those who lack understanding to reduce borrowing. I know a lot of people borrow to solve problems, but it affects their cash flow,” he said.

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