Some stakeholders at recent Namibia Financial Institutions Supervisory Authority (Namfisa) consultative meeting on the consumer credit bill say it may promote irresponsible borrowing.
The draft bill has been going through consultation rounds for the past three months or so, with the most recent October gathering marked as the final one.
One stakeholder said: “One of the key provisions in the bill stipulates that a creditor cannot compel an individual to repay a debt that has exceeded the legally defined time limit, as outlined in the prescription act.”
According to the prescription act, debts typically expire after a three-year period following the debt’s due date.
“This clause may encourage irresponsible borrowing, as it restricts creditors from pursuing the collection or reactivation of aged debts under a credit agreement,” said a stakeholder.
Another concerned stakeholder pointed out that the bill does not extend its protections to consumers who secure loans from foreign creditors that operate outside Namibia.
“There are institutions that offer loans online, without having an office in Namibia, this means that individuals obtaining loans from these offshore institutions have no legal safeguards, as the bill’s jurisdiction is limited to domestic institutions.”
Namfisa deputy chief executive Johannes Smit says the draft bill will promote responsible lending and avenues for recourse in cases of disputes.
“The consumer credit bill, in essence, aims to protect the interests of consumers, promote responsible lending and provide avenues for recourse in cases of disputes.”
Smit adds that consumer credit is a vital component of economic growth and stability but it should be done correctly.
“Irresponsible or reckless lending practices can lead to devastating consequences for consumers and the broader economy, however, when managed responsibly, it empowers individuals and families to realise their dreams, whether it be owning a home, starting a business or pursuing education,” Smit says.
“The consumer credit bill is, therefore, a piece of legislation that will have far-reaching implications for all of us, from consumers to financial institutions, as well as regulatory bodies. It will touch upon our daily lives, our financial well-being and our aspirations,” he adds.
The draft bill will be presented to the finance minister after the consultations and all stakeholders are encouraged to send in their recommendations before 31 December 2023.
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