Micro-lending business booming in NamibiaBy: JO-MARÉ DUDDY
CASH-STRAPPED Namibians last year borrowed N$847 000 from micro-lenders, nearly 24 per cent more than in 2008, the latest annual report of the Namibia Financial Institutions Supervisory Authority (Namfisa) shows.
This is a staggering 120 per cent more than five years ago.
“This amongst others is a reflection of a continued interest in this sector and demand for credit,” Namfisa said in its 2010 report, recently tabled in Parliament.
A total of 146 000 Namibians ran to micro-lenders in 2009, borrowing on average N$1 634 at a time – 31 per cent more than they did the previous year.
The 329 registered micro-lenders disbursed 518 000 loans last year.
Namfisa said it was concerned about the industry as inspections showed that a lot of “reckless lending”, where clients are allowed to borrow more than half their take-home salary, or qualify for more loans without having paid off a previous loan.
The watchdog said some micro-lenders still take original identification documents from their borrowers and still don’t require a bank statement or pay slip to verify the take-home salary before granting loans. The practice of roll-over loans is also continuing, Namfisa said.
A roll-over loan is an unlawful practice which allows the borrower the option to renew a loan on the date when it is due, without actually paying the loan.
When borrowers enter into new loan agreements without having settled the previous ones, micro-lenders charge them an annual interest rate instead of charging them the default interest rate of maximum five per cent Namfisa prescribes.
The authority said it “will tighten controls to improve compliance and market conduct”.
Namfisa also said micro-lenders return inaccurate financial and statistical information. This tendency to “under-report” is possibly because micro-lenders want to “lower the size of payable levies”.
“Inspection procedures will be improved and data verification checks will be performed in the future,” Namfisa said.