Household debt casts shadow over public servants

Namibia faces persistently high household debt, particularly among public servants, prompting calls for stronger consumer credit laws and tighter oversight of lenders.

Former finance minister and Swapo member of parliament (MP) Iipumbu Shiimi had previously said if the issue is left unaddressed, it could evolve into a broader socio-economic crisis.

“It is, therefore, imperative that the matter is comprehensively investigated to identify its root causes and to formulate effective and sustainable solutions.

In this statement, I wish to highlight the key contributing factors to household over-indebtedness and provide an overview of the measures currently under consideration to mitigate the problem,” he said.

Shiimi said the rising household debt, especially within the public sector, presents a growing socio-economic threat.

He said it does not only affect individuals’ financial well-being but also has implications on productivity, morale, and national economic stability.

Shiimi also called for the revision of the deduction code (payroll deduction management system).

The system was introduced in 2003, designed to facilitate easier access to credit for civil servants by allowing approved microlenders to deduct loan repayments directly from salaries.

It reduces the risk of default for lenders as the employer guarantees repayment at source.

“However, despite safeguards such as the Labour Act’s provision that stipulate that no more than one-third of a salary may be deducted, several loopholes have led to abuse and over-indebtedness,” Shiimi noted.

“Further, I propose that a relevant parliamentary standing committee be tasked with a full investigation into the issue of over-indebtedness and report back to this house with findings and recommendations.”

He added that another critical factor driving over-indebtedness is the practice of over-lending by credit providers, enabled by the guaranteed recovery of loan repayments at source via the deduction code.

Works and transport minister Veikko Nekundi on Wednesday debated a motion examining whether existing laws are truly shielding Namibians from informal moneylenders and financial lenders.

He urged the National Assembly to “grow some teeth” and hold financial institutions accountable for oppressing the public.

Nekundi said this is the time to hold financial institutions accountable and make parliament a house that passes laws that protect its citizens and does not oppress them.

“We have financial institutions that are lending out money to the general public of our country.

It seems that including this very August house, we fear to make laws that are biting against those multinational institutions. Despite them threatening the lives of our people,” he said.

Independent Patriots for Change MP Michael Mwashindange is the mover of the motion.

Swapo member of parliament James Uerikua this week raised the issue of pensioners being targeted by loan sharks.
He said informal moneylenders often keep pensioners’ bank cards because of their unsettled debts.

“The extension of the motion is especially important because it includes informal moneylenders.

We have pensioners who are being followed by multiple cars wherever they go, and those are the people who have taken their cards . . . saying they owe us,” he said.

Uerikua said it pains him to see public servants who, despite working hard to make ends meet, are living in poverty because they are trapped in debt.

They are often forced to take out new loans to pay off old ones, he said.

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