Namibia Financial Institutions Supervisory Authority (Namfisa) consumer education practitioner Uaatjo Kaurimuje (UK) sits down with The Namibian (TN) to look at some of the most frequently asked questions about non registered microlenders in Namibia.
TN: We have seen an increase in unregulated microlenders across the country.
How did they evade regulatory oversight?
UK: The regulator depends on the information received from the public and complaints lodged as the regulator is not aware of what is happening on the ground.
TN: What are the consequences that one may face if caught operating a microlending business without proper registration?
UK: Section 3 (2) of the Microlending Act, on the prohibition to conduct microlending business without being registered, is a punitive measure in this regard.
2) Any person who conducts the business of a microlender without being registered in terms of this act or in terms of the Exemption Notice commits an offence and is liable on conviction to a fine not exceeding N$500 000 or to imprisonment for a period not exceeding five years, or to both such fine and such imprisonment.
TN: Suppose I lend small amounts of money to friends and colleagues despite not being registered. Am I engaging in an illegal activity?
UK: Unregistered lenders are not allowed to charge microlending rates.
If you are charging microlending rates which are 30% once-off until repaid, it will be regarded as an illegal activity.
Any charges that are beyond 30% are already seen as illegal charges.
TN: It is important to be able to identify unregistered cash loans.
Can you explain how to do so in simple terms?
UK: An unregistered cash loan can be easily identified from the following:
A registered microlender has a Namfisa registration licence which should be put up in a conspicuous place at the registered premises.
Anyone conducting microlending business without this licence is illegal.
Registered microlenders are allowed to charge 30% once-off until the loan is repaid, anyone charging loans above 30% is regarded illegal.
Registered microlenders are not allowed to threaten, harass or take possession of the borrowers’ property, anyone doing this is regarded as illegal.
Registered microlenders are not allowed to retain bank cards and personal identification numbers (PINs). Anyone doing this is regarded as illegal.
TN: What should you do if someone complains about unregistered cash loans?
UK: Namfisa will investigate and issue a cease-and-desist letter to the unregistered lender and failing to do that will result in the above punitive measures being taken.
TN: Some microlenders are granting larger loans to individuals whose income cannot support repayment.
What are the legal limits for borrowing without facing financial distress?
UK: Microlenders are compelled by the Microlending Act to conduct an affordability assessment on a borrower before granting a loan.
This measure is for the microlender to protect themselves against non-payment from borrowers, as well as protection for borrowers not to over-indebt themselves.
TN: How many microlenders are currently registered in Namibia? What is the estimated number of unregistered lenders?
UK: As of 30 March 2023, a total of 433 microlenders were registered, however, from the complaints received and questions received from our roadshows, we would say unregistered lenders are more than the registered number.
TN: There is still a public debate on whether microlenders are by law allowed to confiscate documents of borrowers such as identification documents (IDs) and other relevant documents. As the regulator, what is your take on this?
UK: The Microlending Act is clear on the retention of cards and PINs, as well as the IDs. It is a prohibited conduct.
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