The Namibia Financial Institutions Supervisory Authority (Namfisa) in its Annual Report for the year ended March 2022 has revealed that Namibians are drowning in debt with loan sharks amounting to N$4.5 billion, a 10% increase from 2021.
The authority states that the risk appetite due to the negative impact of COVID-19 in the market could have contributed to this trajectory as the perception at the end of 2021 had relatively improved.
The value of the micro-lending loan book continued to register an increase during the period under review.
‘’This growth was mainly reflected in total disbursements, which were relatively higher due to a corresponding increase in the number of both the borrowers and new loans issued. In addition, on average, the values of the amounts disbursed during the year under review were higher, year-on-year, consequently contributing to an increase in the value of the stock,’’ the report states.
Meanwhile, the value of the loan book (outstanding value) rose year-on-year by 20.8 percent at the end of 2021 to reach N$7.3 billion.
This growth was reflected in the value of the stock for both term lenders and payday lenders.
As in the preceding years, the value of the loan book continued to be dominated mainly by the term lenders, which stood at N$7.1 billion, consequently accounting for almost 97 percent of the total share of the value of the loan book.
The credit extended during the year under review by both term lenders and payday lenders rose, year-on-year, by three and 40 percent, respectively.
Furthermore, the total value of the loans disbursed is attributed the increase emanated from the value of the transactions between lenders and borrowers of both categories.
Namfisa notes this increase may well be attributed to a higher risk appetite arising from improved perceptions going forward regarding the effects of COVID-19 in the economy in general.
However, regarding the legislative requirement that loan disbursements should not exceed N$ 100,000, the industry continued to operate below the maximum limit.
Additionally, the total number of new loans issued in 2021 rose by 11.7 percent, compared with the previous year, to reach 577 529. ‘’The increase in the total number of issued loans is consistent with that issued by payday lenders. As a result, payday lenders accounted for 82 percent of the total number of new loans that were issued,’’ says Namfisa.
In respect of the cumulative number of household borrowers that benefited from micro-lending transactions, an increase was recorded at the end of 2021. ‘’This increase in the number of household borrowers was reflected in both categories of borrowers. As a result, the total number of borrowers rose by 23.4 percent on a yearly basis to reach 233,793,’’ the authority observes.