Workers buckle under debt as incomes flatline

Namibia's household debt burden is coming under renewed scrutiny as workers and communities warn that borrowing has increasingly become a means of survival rather than a way to finance assets or improve livelihoods.

Mounting debt has also taken a severe toll on workers' mental health, affecting overall productivity and forcing some to resign or take extended leave.

The concerns were raised during public hearings on household debt and lending practices in Keetmanshoop, where civil servants, borrowers, trade unions, lenders and community members shared experiences of salary deductions, high interest rates and aggressive lending practices.

The parliamentary standing committee on economy and industry, public administration and planning held a hearing in Keetmanshoop on Monday as part of its consultations on whether Namibia's existing laws adequately protect consumers from exploitation by formal lending institutions and informal money lenders.

Deputy chairperson of the committee, Hilma Iita, said the hearings were intended to give affected communities an opportunity to speak directly about how debt and salary deductions were affecting their lives.

Iita said the information gathered would assist the committee in formulating recommendations to parliament, including on the pending Consumer Credit Bill. The hearings come amid growing concern over the scale of household indebtedness.

According to Iita, micro-lending loans reached about N$5.2 billion between 2020 and 2024, while total household debt has risen to an estimated N$78 billion.

She said the country was witnessing a household debt crisis in which people are increasingly borrowing not to invest or acquire assets, but to meet everyday living expenses.

Crippled by debt

Police officers and other civil servants told the committee that financial pressures had left some workers vulnerable to predatory lending, despite having received financial literacy training.

Some participants called for salaries to be adjusted in line with the rising cost of living, arguing that stagnant incomes were making it increasingly difficult for households to meet basic expenses without turning to lenders.

The consequences of excessive debt, they said, went beyond financial hardship.

Participants reported that some employees had resigned, absconded from work or experienced severe emotional distress as a result of mounting debt.

Concerns were also raised about housing loans linked to the Government Institutions Pension Fund (GIPF). Participants questioned the impact of high interest rates and third-party involvement on pension savings, particularly for workers who have spent decades contributing to their retirement funds.

One participant argued that workers who had saved for 20 or 30 years should not have a substantial portion of their pension savings eroded by interest when they borrow against those savings.

Inescapable cycle of debt

Another concern centred on the length of housing loan repayment periods. Participants questioned why people could be expected to repay housing loans over decades, while loans for vehicles and other assets are generally settled over considerably shorter periods.

They argued that housing is a basic necessity and that prolonged repayment periods, combined with high interest rates, could leave borrowers paying predominantly towards interest during the early years of a loan. Participants also called for stricter limits on how much workers can borrow in relation to their salaries and retirement benefits.

One contributor questioned the cycle in which employees who become permanent after probation can quickly obtain loans from micro-lenders, potentially leaving them heavily indebted early in their careers.

The participant said the absence of clear limits could allow workers to repeatedly borrow after making repayments, creating a cycle from which many struggle to escape.