Chamwe Kaira
Former minister of finance, Iipumbu Shiimi, says the country’s high household debt, especially among public servants, is fuelled by gaps in the law and weaknesses in the deduction code system.
Shiimi explained that the payroll deduction management system (PDMS), meant to improve access to credit, has instead encouraged excessive borrowing as microlenders face little risk when repayments are automatically taken from salaries.
“Consequently, many civil servants are left with little to no disposable income and increasing financial distress,” he said.
Shiimi called for the speedy adoption of the consumer protection bill to place all microlenders under the Namibia Financial Institutions Supervisory Authority’s (Namfisa) supervision and curb exploitative practices.
He also urged a review of the deduction code system to close loopholes and promote fair, transparent lending that protects workers’ financial wellbeing.
According to Namfisa, the completed consumer credit bill was submitted to the Ministry of Finance for approval on 17 December 2024.
The bill aims to reform Namibia’s credit laws, establish a consumer credit regulator, and ensure oversight of credit providers, bureaus, and debt collectors. It also seeks to regulate credit agreements involving both movable and immovable goods and to set limits on interest, fees, and other charges.
The bill will also improve consumer protection standards, promote responsible lending and borrowing, and repeal the Usury Act of 1968, the Credit Agreements Act of 1980, and the Microlending Act of 2018.
The Ministry of Finance’s decision to suspend the deduction code system has raised concerns among microlenders.
Analyst Kara van den Heever from Simonis Storm Securities said the suspension, effective 30 November, threatens the sustainability of microfinance institutions like Letshego Namibia, whose deduction-at-source model relies heavily on the system.
In response, Letshego Holdings Namibia and its subsidiaries, Letshego Bank Namibia and Letshego Micro Financial Services, have suspended all new deduction-at-source loans for government employees.
Simonis Storm also noted that reforms to the PDMS could reshape the earnings profile of Entrepo Finance, a Capricorn Group subsidiary.
Entrepo has been one of the group’s strongest performers, with high margins and returns on equity.
Entrepo Finance has since taken legal action against the government in the High Court to block the discontinuation of the payroll deduction system.
Namfisa’s 2025 annual report shows that Namibia’s microlending loan book grew by 12.8% year-on-year to N$8.1 billion by the end of 2024.
Term lenders made up N$7.6 billion, or 94% of the total. The total value of loans disbursed rose by 44.9% to N$5.2 billion, while the number of new loans issued increased by 54.8% to 700,393. Household borrowers grew by 8.4% to 240,475 by the end of 2024.
