PDM slams lenders as Namibians drown in debt
The Popular Democratic Movement (PDM) is calling for urgent intervention on the issue of Namibians drowning in debt, while lending institutions continue to rake in millions, highlighting the growing gap between the financial struggles of citizens and the profits made by lenders.
PDM member of parliament Inna Hengari, during a recent National Assembly parliamentary session, said recent reports indicate that nearly half of Namibians, particularly civil servants, are overwhelmed by debt.
“This is a serious issue that needs urgent attention. Meanwhile, lending institutions, like the infamous Letshego made a profit of N$199 million in just six months, which highlights the big gap between the financial success of lending institutions and the struggles of ordinary people. “Many Namibians are turning to backyard loan sharks who charge very high interest rates, making their situation worse. There is therefore a need to have a real discussion about whether our current laws truly protect our people from exploitation,” she said.
A debate on the matter is scheduled for 11 June.
In 2009, media reports indicated that bank loans in Namibia had ballooned by nearly 18% to N$2.1 billion in just six months, as the economic crisis continued to cripple consumers’ ability to repay their debts.
Of this amount, more than N$989 million comprised non-performing loans (NPLs), loans that had been in arrears for three or more months. The figures, covering December 2008 to June 2009, were contained in the Bank of Namibia’s Financial Stability Report.
According to the report, home loans made up the largest portion, nearly 54%, of NPLs, while 22% were attributed to overdrafts. Consumers also struggled to repay leases, credit cards, and personal loans. As a result, banking profits declined significantly in the first half of 2009.
A decade later, in 2019, media reports again flagged rising debt levels, with 238,640 borrowers owing an astonishing N$6.5 billion to micro-lending institutions. These figures were published in the Namibia Financial Institutions Supervisory Authority (Namfisa) annual report.
According to the report, 90.4% of these borrowers had term loans, while 9.6% held payday loans. A payday loan refers to short-term borrowing at a higher interest rate, repayable on the next pay date, whereas a term loan extends over a longer period and typically attracts lower interest rates.
The value of the micro-lending loan book increased by 18% to N$6.5 billion, a growth attributed to increased credit issued to term borrowers. The report further revealed that the total value of loans disbursed in 2018 rose by 12.4% to N$4 billion compared to the previous financial year.
Namfisa’s latest quarterly report, which regulates the non-banking financial sector, showed that by the end of 2024, cash loan businesses in Namibia were owed N$8.1 billion.
The report indicated that the loan book value for microlenders stood at N$8.1 billion, spread across 796 institutions, a 12.8% increase. “Term lender loans, which constituted 94% of the total loan book, grew by 10.7% quarterly to N$7.6 billion,” the report reads. Of this amount, N$1.3 billion was in arrears, suggesting a high rate of default among borrowers.
Simultaneously, the Namibia Water Corporation Ltd (NamWater) revealed that it is owed N$2.4 billion by local authorities, municipalities, town councils, individuals, village councils, and rural water communities. This represents a 16% increase from the N$2.1 billion recorded in June 2024 and poses a significant threat to the long-term sustainability of water supply in the country.
Meanwhile, financial lender Letshego Holdings Namibia recently released its reviewed consolidated financial results for the year ending 31 December 2024, showing continued strong performance despite the evolving economic landscape.
Letshego recorded a 15% year-on-year increase in profit after tax, reaching N$418.8 million. Its cost-to-income ratio remained stable at 47%, while return on average equity increased to 15%, and return on average assets held steady at 6%.
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PDM member of parliament Inna Hengari, during a recent National Assembly parliamentary session, said recent reports indicate that nearly half of Namibians, particularly civil servants, are overwhelmed by debt.
“This is a serious issue that needs urgent attention. Meanwhile, lending institutions, like the infamous Letshego made a profit of N$199 million in just six months, which highlights the big gap between the financial success of lending institutions and the struggles of ordinary people. “Many Namibians are turning to backyard loan sharks who charge very high interest rates, making their situation worse. There is therefore a need to have a real discussion about whether our current laws truly protect our people from exploitation,” she said.
A debate on the matter is scheduled for 11 June.
In 2009, media reports indicated that bank loans in Namibia had ballooned by nearly 18% to N$2.1 billion in just six months, as the economic crisis continued to cripple consumers’ ability to repay their debts.
Of this amount, more than N$989 million comprised non-performing loans (NPLs), loans that had been in arrears for three or more months. The figures, covering December 2008 to June 2009, were contained in the Bank of Namibia’s Financial Stability Report.
According to the report, home loans made up the largest portion, nearly 54%, of NPLs, while 22% were attributed to overdrafts. Consumers also struggled to repay leases, credit cards, and personal loans. As a result, banking profits declined significantly in the first half of 2009.
A decade later, in 2019, media reports again flagged rising debt levels, with 238,640 borrowers owing an astonishing N$6.5 billion to micro-lending institutions. These figures were published in the Namibia Financial Institutions Supervisory Authority (Namfisa) annual report.
According to the report, 90.4% of these borrowers had term loans, while 9.6% held payday loans. A payday loan refers to short-term borrowing at a higher interest rate, repayable on the next pay date, whereas a term loan extends over a longer period and typically attracts lower interest rates.
The value of the micro-lending loan book increased by 18% to N$6.5 billion, a growth attributed to increased credit issued to term borrowers. The report further revealed that the total value of loans disbursed in 2018 rose by 12.4% to N$4 billion compared to the previous financial year.
Namfisa’s latest quarterly report, which regulates the non-banking financial sector, showed that by the end of 2024, cash loan businesses in Namibia were owed N$8.1 billion.
The report indicated that the loan book value for microlenders stood at N$8.1 billion, spread across 796 institutions, a 12.8% increase. “Term lender loans, which constituted 94% of the total loan book, grew by 10.7% quarterly to N$7.6 billion,” the report reads. Of this amount, N$1.3 billion was in arrears, suggesting a high rate of default among borrowers.
Simultaneously, the Namibia Water Corporation Ltd (NamWater) revealed that it is owed N$2.4 billion by local authorities, municipalities, town councils, individuals, village councils, and rural water communities. This represents a 16% increase from the N$2.1 billion recorded in June 2024 and poses a significant threat to the long-term sustainability of water supply in the country.
Meanwhile, financial lender Letshego Holdings Namibia recently released its reviewed consolidated financial results for the year ending 31 December 2024, showing continued strong performance despite the evolving economic landscape.
Letshego recorded a 15% year-on-year increase in profit after tax, reaching N$418.8 million. Its cost-to-income ratio remained stable at 47%, while return on average equity increased to 15%, and return on average assets held steady at 6%.
[email protected]
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