Won’t someone listen to the regulators?
Consult
As an economics graduate observing Namibia’s financial policy debates, I have been fascinated by the clash between the Ministry of Finance and the country’s top regulators over the Payroll deduction management system (PDMS). Recently, the Bank of Namibia (BoN) and the Namibia Financial Institutions Supervisory Authority (Namfisa) have confirmed their opposition to the ministry’s directive to abolish PDMS. This revelation, contained in position papers filed in the Entrepo Finance v Minister of Finance High Court case, highlights a troubling contradiction: the Ministry’s policy direction runs directly against the recommendations of its own regulators.
Namfisa's position paper on payroll deduction codes concludes that payroll deduction codes should continue without restriction, arguing for “Option 3 – Unrestricted access to voluntary payroll deductions.” Their reasoning is compelling. By allowing all parties equal access to the payroll system, competition is enhanced, driving down costs for employees. This creates a level playing field, ensuring that civil servants can access affordable financial products. For Namfisa, PDMS is not a relic of the past, but a mechanism that promotes financial inclusion, efficiency, and consumer protection.
The Bank of Namibia’s (BoN) consultation paper from November 2021 reaches a similar conclusion. It identifies “Option 4 – Introduce a Framework allowing selected products issued under payroll deduction codes” as the most balanced approach. BoN argues that this option preserves the concept of payroll deduction codes while ensuring that employees’ remaining income flows into the interbank system.
By contrast, the Bank warns that the ministry’s chosen path—Option 1, the phase-out of payroll deduction codes; poses serious risks. These include but are not limited to: encroachment on employees’ freedom to contract, potential constitutional challenges, financial exposure for the State, and the removal of access to affordable financial products. From an economist’s perspective, these risks are not abstract; they directly threaten household welfare and macroeconomic stability. You would think the ministry would listen to the regulators.
Economic policy must ultimately serve the people, and the evidence is clear. The recent Fin Fit Investment Survey of government employees shows overwhelming support for PDMS:
79% oppose its removal.
72% believe PDMS helps them avoid excessive debt.
70% say it simplifies their monthly financial management.
These figures reveal that PDMS are not seen as a privilege but as a safeguard. In a country where disposable income is limited and financial shocks can destabilize households. PDMS provides a structured mechanism to help workers remain financially stable.
Despite this consensus, the ministry of finance issued a directive in August 2025 to terminate PDMS by 30 November 2025. This decision contradicts not only the regulators’ recommendations but also the lived experiences of thousands of employees. It’s a fascinating sequence of events to witness.
The ministry’s failure to engage stakeholders raises questions about its motives. Was it avoiding the risk of reaching the same conclusion as its regulators? Whatever the reason, the decision undermines trust in policymaking and exposes the government to potential financial and legal challenges.
No one disputes that PDMS can be improved. Both regulators call for reform, not destruction. They propose integrating PDMS into a strengthened regulatory framework that enhances transparency and competition while retaining the protections that keep civil servants financially secure.
Dismantling PDMS undoes two decades of progress in consumer protection and financial inclusion. For Namibia, a country striving to expand access to finance and build resilience in its economy, this would be an unwelcome step backward.
As an economics graduate, I find it difficult to reconcile the ministry’s position with the overwhelming evidence against it. Does common sense not prevail, or are we all missing something that the Ministry is seeing? When both financial regulators, the banking sector, and nearly 80% of public servants align in support of PDMS, common sense dictates that policymakers should listen.
The ministry still has an opportunity to correct its course; it should strengthen PDMS for the future. In Namibia’s fragile economic environment, that would be the sensible thing to do. As would listening to the regulators.
For more information contact: Email: [email protected]
Namfisa's position paper on payroll deduction codes concludes that payroll deduction codes should continue without restriction, arguing for “Option 3 – Unrestricted access to voluntary payroll deductions.” Their reasoning is compelling. By allowing all parties equal access to the payroll system, competition is enhanced, driving down costs for employees. This creates a level playing field, ensuring that civil servants can access affordable financial products. For Namfisa, PDMS is not a relic of the past, but a mechanism that promotes financial inclusion, efficiency, and consumer protection.
The Bank of Namibia’s (BoN) consultation paper from November 2021 reaches a similar conclusion. It identifies “Option 4 – Introduce a Framework allowing selected products issued under payroll deduction codes” as the most balanced approach. BoN argues that this option preserves the concept of payroll deduction codes while ensuring that employees’ remaining income flows into the interbank system.
By contrast, the Bank warns that the ministry’s chosen path—Option 1, the phase-out of payroll deduction codes; poses serious risks. These include but are not limited to: encroachment on employees’ freedom to contract, potential constitutional challenges, financial exposure for the State, and the removal of access to affordable financial products. From an economist’s perspective, these risks are not abstract; they directly threaten household welfare and macroeconomic stability. You would think the ministry would listen to the regulators.
Economic policy must ultimately serve the people, and the evidence is clear. The recent Fin Fit Investment Survey of government employees shows overwhelming support for PDMS:
79% oppose its removal.
72% believe PDMS helps them avoid excessive debt.
70% say it simplifies their monthly financial management.
These figures reveal that PDMS are not seen as a privilege but as a safeguard. In a country where disposable income is limited and financial shocks can destabilize households. PDMS provides a structured mechanism to help workers remain financially stable.
Despite this consensus, the ministry of finance issued a directive in August 2025 to terminate PDMS by 30 November 2025. This decision contradicts not only the regulators’ recommendations but also the lived experiences of thousands of employees. It’s a fascinating sequence of events to witness.
The ministry’s failure to engage stakeholders raises questions about its motives. Was it avoiding the risk of reaching the same conclusion as its regulators? Whatever the reason, the decision undermines trust in policymaking and exposes the government to potential financial and legal challenges.
No one disputes that PDMS can be improved. Both regulators call for reform, not destruction. They propose integrating PDMS into a strengthened regulatory framework that enhances transparency and competition while retaining the protections that keep civil servants financially secure.
Dismantling PDMS undoes two decades of progress in consumer protection and financial inclusion. For Namibia, a country striving to expand access to finance and build resilience in its economy, this would be an unwelcome step backward.
As an economics graduate, I find it difficult to reconcile the ministry’s position with the overwhelming evidence against it. Does common sense not prevail, or are we all missing something that the Ministry is seeing? When both financial regulators, the banking sector, and nearly 80% of public servants align in support of PDMS, common sense dictates that policymakers should listen.
The ministry still has an opportunity to correct its course; it should strengthen PDMS for the future. In Namibia’s fragile economic environment, that would be the sensible thing to do. As would listening to the regulators.
For more information contact: Email: [email protected]
Comments
Namibian Sun
No comments have been left on this article