Namfisa levels the consumer credit playing field

Martin Endjala

The Namibia Financial Institutions Supervisory Authority has resolved to level the playing field following its announcement yesterday that it will be consulting stakeholders on proposed amendments to the Consumer Credit Bill.

This means that money lenders will now be under the scrutiny of Namfisa and those who do not fall in line will face the repercussions should the draft bill be endorsed after it undergoes a makeover.

Namfisa has been tasked by the Minister of Finance and Public Enterprises to spearhead the drafting of the Consumer Credit Bill to enhance the regulatory and supervisory oversight of all consumer credit transactions.

Namfisa is requesting all interested and affected members of the industry which include associations, consumer groups, credit providers, credit bureaus and debt collectors, consumers of credit and the public at large to provide input and comments to the proposed draft Consumer Credit Bill.

According to Namfisa Corporate Communications and Consumer Education Manger Victoria Muranda, the purpose of the public consultation on the proposed draft consumer credit Bill is to ensure that adequate information is provided and that sufficient opportunity is provided to interested and affected members of the industry, consumers of credit and the entire affected public, to voice their concerns and opinions.

The proposed draft Consumer Credit Bill aims to promote fair, transparent and responsible market conduct in the consumer credit market where consumers of credit are protected.

The Bill further aims to consolidate, harmonise and reform the laws regulating the provision of credit and credit agreements by establishing the Consumer Credit Regulators by providing for the regulation of credit providers, credit bureaus and debt collectors, providing for the regulation of credit agreements in terms of which movable and immovable goods are purchased on credit and services rendered on credit and the borrowing of money.

Due to the far-reaching nature of the envisaged consumer credit legislation, she said that Namfisa has been collaborating with its key project stakeholders such as the Ministry of Finance and Public Enterprises, the Bank of Namibia, the Ministry of Industrialisation, Trade and SME Development, the Financial Literacy Initiative and the Deutsche Gesellschaft für Internationale Zusammenarbeit.

The project has thus far developed and formulated a Consumer Credit Bill Policy Paper that addressed the current regulatory framework’s shortcomings and highlighted the principles to be covered in the envisaged regulatory framework.

In May 2020, the finance ministry approved the principles contained in the policy paper and simultaneously allowed Namifisa to proceed with the public consultations on the policy paper, which formally closed, in July 2022.

The drafting of the consumer credit bill commenced in July 2020, and thus far, the 3rd draft of the bill was submitted in November 2022 and considered and approved for public consultations in January 2023 by the Ministry of Finance Iipumbu Shiimi.

The industry and public are invited and encouraged to submit their comments in the format of the Comments Template, on or before 31 December 2023. The proposed draft Consumer Credit Bill and Comments Template may be downloaded from the NAMFISA website.

Face-to-face consultation meetings will be conducted in all 14 regions from June to September 2023, details about specific towns, and dates will be communicated in due course.

Meanwhile, Josef Sheehma an Independent Business Researcher and Economist says that the Consumer Credit Act is an important law that covers most commercial lending in Namibia. It sets out what creditors must do when they lend money and when they collect it.

“We need also to understand the requirements which might affect businesses such as SMEs. If you are running a business in an open market you will require to provide more information which the informal sector is not in possession of”, said Sheehama.

He emphasises that the proposal is welcome since it will promote and advance the social and economic welfare of Namibians, promote a fair, transparent, competitive, sustainable, responsible, efficient, effective and accessible credit market and industry, and protect Consumers.

However, he is of the view that Credit bureaus need also to be reformed and that listing someone on ITC does not kill the potential to get a credit facility but will also affect employment opportunities. This proposal he said, is twofold.

This is particularly likely when there has been some serious upheaval in the person’s life, like serious illness or injury which has made it difficult to manage their affairs, or where there has been a debt incurred in the context of a relationship which has since ended and the other partner took the asset or was otherwise taking responsibility for a loan.

In some cases, the first the debtor knows about the debt being unpaid is when their wages are garnisheed or the sheriff arrives to seize their goods.

Currently in such circumstances, if the person has a defence, it can be argued as part of an application to set but in many cases, people are too disadvantaged.

In addition, it is therefore critical that this proposal should protect both stakeholders and avoid the punishment which will eventually cripple the economy.

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