Industry warns loan sharks will win if microlenders squeezed

Namibia's microlending industry has warned lawmakers against overregulating the sector saying excessive restrictions will drive desperate borrowers into the hands of loan sharks and unregulated lenders.Speaking during a public hearing before the parliamentary standing committee on economy and industry, public administration and planning in Windhoek on Friday, Microlenders Association of Namibia representative Charles Visser said attempts to squeeze the industry out of the formal financial system could have unintended consequences."There is ostensibly a large demand for microlending services,” he noted.“If we don't appreciate that and try to overregulate microlending out of our financing system, we're going to drive people directly to loan sharks and unregulated lenders.”He cautioned that this will create an unregulated industry “where people will still seek and consume credit, but the government will lose the ability to regulate it”.Visser stressed that understanding the needs of consumers is key."Why are people, individuals and civil servants borrowing excessively? Why is there a borrowing problem? Unless we answer that question, we will not be able to find solutions," he said."Our economy grew by 1.7% in 2025. When economic growth is low, less income is generated," he said."Salaries cannot increase at the same rate as expenses. Inflationary and economic pressures continue to rise while salaries and incomes stagnate."Many consumers who are unable to qualify for conventional bank loans depend on microlenders to meet emergency expenses and other financial obligations."A person facing an emergency expense or educational cost, and who needs money immediately, can access a microlender and obtain credit. Someone who needs a larger loan and qualifies for it can approach a bank. Therefore, it is about access to credit," he said.Taxed industryVisser defended registered microlenders as legitimate businesses operating within strict legal requirements."Remember, these microlenders pay taxes. They are fully responsible corporate citizens. They employ people, pay taxes and have social responsibilities."He further argued that licensed microlenders are among the most heavily regulated participants in the credit market."Microlenders are highly regulated. They must comply with the law or face severe consequences. It is as simple as that," he said.However, Visser acknowledged the devastating impact excessive debt can have on individuals and families."It is a travesty and a tragedy of epic proportions that people are taking their own lives because of over-indebtedness," he said.Spiralling out of controlHis remarks come amid growing concerns about rising household debt and the role payroll-based lending plays in encouraging excessive borrowing among civil servants.Namibian Sun recently reported that some civil servants are taking home as little as N$500 a month after loan repayments and other deductions are processed through the government payroll system.Addressing the same parliamentary committee, executive director in the private office of the prime minister, Shivute Indongo, said previous safeguards designed to prevent excessive deductions no longer appear to be functioning effectively."The ministry of finance had systems in place that prevented deductions exceeding one-third of an employee's salary from being processed," Indongo said."We found that virtually any deduction submitted now goes through," he said, adding: "Imagine earning a salary but taking home only N$500. Transport costs alone can exceed that amount, without even considering household expenses."Billions in debtIn 2009, the Bank of Namibia reported that bank loans had increased by nearly 18% to N$2.1 billion within six months, while non-performing loans approached N$1 billion as consumers struggled to meet their repayment obligations.A decade later, the Namibia Financial Institutions Supervisory Authority (Namfisa) reported that 238 640 borrowers owed microlenders N$6.5 billion, with the sector's loan book growing by 18%.Namfisa recently revealed that total household debt reached N$78 billion by December 2025, with approximately N$7.5 billion linked to the microlending sector.Speaking before the parliamentary committee a few weeks ago, Namfisa general manager for market conduct, Hilka Alberto, said the payroll deduction system has become a significant driver of indebtedness."The structure of the system makes it easier for lenders to extend credit because repayment is effectively guaranteed at source," Alberto said.nikanor@nmh-hub.com.na

Industry warns loan sharks will win if microlenders squeezed

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Namibian Sun 2026-06-23

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Industry warns loan sharks will win if microlenders squeezed

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Namibian Sun 2026-06-23

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