For many Namibians, home ownership remains more of a dream than a reality. The numbers are sobering: a housing backlog of 300,000 units, more than 200,000 shacks in Windhoek alone, and an average three-bedroom house in the capital costing around N$1.2 million. Against this backdrop, the Government Institutions Pension Fund (GIPF) has launched its Pension-Backed Home Loan Scheme (PBHLS), which will take effect next January.
The scheme allows civil servants and other GIPF members to use up to one-third of their pension savings as collateral for a home loan. On paper, it promises cheaper financing, easier access, and the dignity of owning a home. But beneath the optimism lies a complex balance between solving today’s housing crisis and safeguarding tomorrow’s retirement security.
The case for optimism
The most immediate benefit of the PBHLS is affordability. The interest rate, repo plus 2.5%, undercuts the commercial banks, which typically offer repo plus 3.5% or more. For a borrower with a million-dollar mortgage, that one percentage point difference translates into hundreds of dollars saved each month, and tens of thousands over the life of the loan.
Flexibility is another attraction. GIPF members can use the funds not only to purchase homes, but also to buy land, build from scratch, or renovate existing houses. This is important in rural areas, where formal housing finance is scarce and most erven are unproclaimed. For once, people outside the urban middle class are being given a mechanism to finance shelter that fits their lives.
Then there is the matter of dignity. For many public servants, teachers, nurses, police officers, home ownership has remained frustratingly out of reach. Rental markets in urban areas are tight and exploitative. Informal settlements expand year after year. To have a scheme that says, “your years of service can also mean a roof over your head,” is more than just policy. It is psychological relief and social recognition.
As Cabinet secretary Emilia Mkusa put it, the PBHLS is designed to give families “peace of mind,” knowing they are securing homes for themselves and their children. The symbolism of this cannot be overstated. A civil servant who retires with both a pension and a house retires with dignity.
The shadows of concern
But no scheme comes without risks. The biggest lies in the very design of the PBHLS: the use of pension savings as collateral. Retirement funds are meant to provide income security when one can no longer work. By tying them to housing debt, we risk exposing future pensioners to hardship.
The assumption is that all loans will be fully repaid before
retirement age. But life is rarely so neat. Divorce, illness, retrenchment, or mismanagement can interrupt repayment schedules. If members default, the pension fund can deduct from their retirement benefit. In practice, that means tomorrow’s pensioner could wake up to a reduced monthly income, or none at all.
Moreover, housing markets themselves carry volatility. What happens if a member borrows heavily against their pension, only to see property values stagnate or decline? Unlike commercial banks, which spread risk across diversified assets, the pension fund is effectively betting members’ retirement on one sector: housing.
There is also an issue of equity. The scheme is only available to active GIPF members, mainly civil servants. Namibia’s vast informal workforce, who make up the majority of the housing backlog, are excluded. While the PBHLS may help thousands of teachers and nurses, it does little for domestic workers, street vendors, or small-scale farmers. One could argue it deepens the divide between those with formal employment and those without.
Finally, questions of sustainability remain. GIPF has initially set aside N$900 million. In a country where the government has pledged to build 50 000 houses in five years, a bill of N$76 billion, that figure is a drop in the bucket. Demand may quickly outstrip supply, forcing GIPF to choose between tightening eligibility or expanding exposure to risk.
Stories behind the numbers
Consider the case of a young teacher in Rundu. She earns a modest salary but has diligently contributed to her pension for five years. With the PBHLS, she could finally build a small brick house for her family instead of renting a shack. Her pension contributions, once abstract, suddenly feel tangible.
Contrast that with an older nurse in Oshakati, fifteen years from retirement. She takes out a large loan to buy land and build. But midway through construction, she falls ill and is forced to stop working. The loan repayments continue. At retirement, her pension is docked to cover the shortfall. What was meant to secure her future becomes a burden.
These examples illustrate the delicate balance the PBHLS is attempting to strike: present relief versus future security.
Proceeding with Caution
The PBHLS deserves recognition as a bold attempt to address Namibia’s housing crisis. It leverages the country’s largest pool of domestic capital, the pension fund, for a social good that is urgently needed. It challenges the dominance of commercial banks and their high lending margins. It brings hope to thousands of families.
Yet, it also demands careful oversight. Policymakers must ensure that members are fully educated about the risks. Administrators like Kuleni and First Capital must act not as loan salesmen but as financial counsellors. Safeguards, such as strict affordability tests, insurance against disability, and caps on loan sizes, must be enforced to protect retirement security.
Most importantly, government cannot see the PBHLS as a substitute for broader housing policy. Public-private partnerships, land servicing, affordable rental stock, and mass housing projects remain essential. If the PBHLS becomes the only game in town, it will buckle under the weight of expectations it was never designed to carry.
The Verdict
The pension-backed home loan scheme is not inherently good or bad. It is a tool, one that can either uplift or undermine, depending on how it is used. For some, it will mean the long-awaited key to their first front door. For others, it could one day mean a smaller pension cheque than they counted on.
The challenge for Namibia is to celebrate the promise of the PBHLS without losing sight of its pitfalls. Hope must be balanced with prudence. Shelter must not come at the cost of old-age security.
In short: proceed with optimism, yes, but proceed with caution.
