Patience Makwele
A parliamentary probe into lending practices has put Namibia’s debt crisis under the spotlight, with lawmakers raising concerns that some workers are taking home only a fraction of their salaries after multiple loan deductions.
The National Assembly’s Parliamentary Standing Committee on Economy and Industry, Public Administration and Planning on Friday held a public hearing to examine whether existing laws adequately protect borrowers from exploitation by lending institutions and informal money lenders.
The hearing formed part of the committee’s investigation into the country’s growing indebtedness and follows a motion tabled in Parliament calling for a review of lending practices and consumer protection measures.
Committee chairperson Iipumbu Shiimi described household debt as a serious concern, particularly among civil servants who are often left with little disposable income after loan repayments are deducted from their salaries.
“There is a high level of indebtedness, especially among civil servants. Some of them take home very low net pay because of multiple loans. We want to understand what can be done to ensure that people still take home a decent income while having access to credit,” Shiimi said.
During the hearing, it was revealed that the committee is also scrutinising the salary deduction code system to determine whether it contributes to over-indebtedness by allowing lenders direct access to borrowers’ salaries before employees receive their wages.
Lawmakers have further questioned whether lenders benefiting from direct salary deductions should be charging lower interest rates, given the reduced risk of default associated with such arrangements.
The concerns raised in Parliament echo growing worries among labour representatives and consumer advocates, who have repeatedly warned that rising debt levels are placing severe financial pressure on households already grappling with the high cost of living.
Labour representatives say many workers are increasingly relying on loans to cover basic expenses, leaving them trapped in a cycle of borrowing and repayment that erodes their financial security and wellbeing.
Consumer advocates have also called for stronger affordability assessments and stricter oversight of lending practices, arguing that access to credit should not come at the expense of a borrower’s ability to meet essential needs such as food, housing and transport.
Representatives of the Micro Lending Association of Namibia told the committee that while debt levels in the country are indeed a cause for concern, registered micro-lenders should not shoulder the blame for the problem.
Association representative Charles Visser said household indebtedness in Namibia is complex and cannot be attributed to a single factor or lending institution.
“Household indebtedness in Namibia is multifaceted. It cannot necessarily be attributed to a single factor or for that matter, a single lender. Indebtedness cannot necessarily be attributed to micro-lenders alone,” he said.
Visser maintained that registered micro-lenders operate under strict regulations administered by the Namibia Financial Institutions Supervisory Authority and the Micro Lending Act, while illegal money lenders and loan sharks continue to operate outside the law.
He further argued that commercial banks account for the largest share of household debt in Namibia, with registered micro-lenders representing only a small portion of the country’s overall indebtedness.
The committee is expected to consult consumer groups, financial institutions and other stakeholders before compiling its recommendations to the National Assembly.
The outcome of the inquiry could pave the way for reforms aimed at strengthening consumer protection, addressing excessive debt and curbing unfair lending practices, while ensuring that workers retain enough of their earnings to meet their basic needs.
