Namibia’s lending crisis is really a cost-of-living crisis

In recent weeks, our Committee has travelled across Namibia to hear directly from citizens and stakeholders about whether our current laws adequately protect people from harmful lending practices.

As Parliament has travelled across Namibia to hold public hearings on consumer credit and lending, one observation has become impossible to ignore.

The stories change, the pattern does not. One person tells us that after paying rent there isn’t enough left for food. Another explains that school fees or transport force them to borrow before month-end.

Others speak of water, electricity, groceries, things that should be routine, becoming insurmountable on a single salary.

Initially, it is tempting to conclude that Namibia has a lending problem. But after listening carefully, a different conclusion begins to emerge.

Perhaps Namibia does not primarily have a lending problem. Perhaps it’s an economy that requires borrowing simply to function.

That distinction matters. It changes the question from "How do we regulate lenders?" to "Why has borrowing become an ordinary part of everyday life?" Credit is not inherently harmful.

Throughout history, credit has financed farms, homes, education, and enterprise. Healthy economies use credit to build tomorrow’s prosperity. But when credit starts paying for yesterday’s groceries, it stops being a development tool.

That’s why legislation must be approached with systems thinking. Policy often behaves like a water balloon. Pressure doesn’t vanish; it moves. Consider Namibia’s decision to stop many payroll deductions before salaries reached employees.

Riskier options

The intention, to protect workers’ incomes, is understandable. But systems thinking asks the next question. If underlying demand for credit remains because of low wages and rising costs, where will that demand go?

Some may reduce borrowing. Some may find formal alternatives. But others may look elsewhere, including less regulated or riskier options. That is not a conclusion, but it is a risk that policymakers must track carefully.

The same applies to financial literacy. Financial education is essential. It should be strengthened. But literacy alone cannot solve every problem. It is like pouring water into a bucket with a hole in the bottom. Pouring helps, but unless the hole is repaired, the bucket will never stay full.

Likewise, teaching people to manage money better is important, but if many households consistently earn less than what is required for basics, education alone cannot close that gap.

It is part of the solution. It is not the whole solution. This brings us back to the Consumer Credit Bill. The bill plays an important role. Stronger consumer protections, clearer affordability assessments, better enforcement. These are all worthwhile objectives. But we should not overpromise. No lending law, on its own, can solve an economy in which many working households depend on debt simply to make it to month-end. In many ways, the lending market is a mirror.

It reflects the health of the wider economy. If we regulate only the reflection without examining what it reflects, we risk treating symptoms while overlooking causes.

That is the conversation Namibia deserves. Perhaps then the most important question before us is not simply whether we need stronger lending laws, but what borrowing is telling us about the condition of our economy.

If we answer only the legal question, we may improve an act of parliament. If we answer the economic question as well, we stand a far better chance of improving the lives that law is meant to protect.

*Rodney Cloete MP, Member of the Parliamentary Standing Committee on Economics and Public Administration.