Staff Writer
The Bank of Namibia (BoN) has finally declared WhatsApp Stokvel illegal following an investigation into their operations.
The announcement by the central bank comes amid growing popularity of WhatsApp Stokvel as a means of making additional income.
According to the central bank, the operations of the WhatsApp Stokvel are similar to that of a pyramid scheme and thus violating the country’s banking laws.
“The outcome of the investigation carried out has revealed that the business activities of the N$200 WhatsApp Stokvel constitute a pyramid scheme, and therefore, N$200 WhatsApp Stokvel is in contravention of section 55 (A) of the Act,” Emma Haiyambo, Director Department of Strategic Communications and Financial Sector Development at the Bank of Namibia said.
“The business activities of R200 WhatsApp Stokvel which requires promoters to recruit members of the public in order to make an income of N$1,200 contravene section 55A of the Act. Therefore, the promoters of N$200 WhatsApp Stokvel are hereby directed to cease the operations and promotion of this pyramid scheme immediately. Failure to do so, the Bank will take further appropriate actions as stipulated in the Act.”
Haiyambo warned that those who will continue to participate in a WhatsApp Stokvel, “Those who choose to continue to participate would be liable to a fine not exceeding N$1 million or imprisonment for a period not exceeding ten years or to both such fine and such imprisonment, if found guilty.”
“Members of the public are hereby directed to stop participating in the business activities of N$200 WhatsApp Stokvel with immediate effect.”
The Bank of Namibia previously said the current laws of the country do not outlaw Stokvels provided that their membership do not exceed 20 persons, or the amount collected from members does not exceed N$500,000 and those running them do not solicit or advertise for deposits.
“One needs to distinguish cooperative saving schemes (Stokvel) which are not illegal, and an illegal financial scheme such as a pyramid scheme. Stokvels are typically more like clubs, where a group of friends or a group of people come together with a common objective and decide informally to pool their money to the benefit for all members of the said club. Quite often members would go to a bank and open up a banking account, if they are able to, or use the money to buy groceries, or just collect it, and each month they would take out the money.”
According to Sanlam, South Africa’s stokvel economy, where each month or week, members will contribute an agreed amount and at the end of the year then share the savings with their members or collectively buy items that will be shared by the members, is worth about N$50 billion annually with more than 800 stokvels operating across the country.
Namibia due to the increasing harsh economic environment has witnessed a surge in quick rich schemes, with the apex bank last year having declared Longrich Bioscience illegal after an conducting an investigation into the operations of the business, after finding that the core activities of the business involved the recruitment of members at a fee.
The central bank last year also declared Karatbars International, an online company that claimed to specialize in the sale of small gold bars, an illegal pyramid scheme.
BoN also still does not recognize Bitcoin.
