Iuze Mukube

A local microlending company has dragged the government through the finance ministry to court over the decision to cease payroll deductions on its Payroll Deduction Management System (PDMS) by 30 November. 

Entrépo Finance instituted an urgent application in the Windhoek High Court claiming that the decision to discontinue deduction codes from being loaded onto the government’s payroll deduction management system is “irrational, irregular and unreasonable.”

The Ministry of Finance issued a directive on 28 August, informing government employees and financial institutions that all discretionary payroll deductions through the PDMS, which is operated by Avril Payment Solutions, will be discontinued from 30 November 2025. 

The phasing out of the PDMS will mean that lenders will now be required to conduct proper affordability valuations and carry more risk themselves. 

The ministry’s directive indicated that after 30 November, no new discretionary payroll deductions may be loaded onto the PDMS and that only existing loans already linked to the system will continue to be serviced until they are fully repaid. However, statutory deductions such as employee tax payments, pension and social security contributions will remain uninterrupted on the system. 

Urgent application

In its court documents, Entrepo’s chief executive officer Jan Leonardus Louw, argued that the discontinuation is irregular for several reasons, including being substantively and procedurally irrational, disproportionate and usurping the powers of Parliament and other officials.

He also added that it violates the right to fair labour practices, trade and property, and that it also infringes on the separation of powers.

Additionally, Louw claims the PDMS ensures that government employees are protected in terms of micro-finance services and functions as an affordability analysis to prevent over-indebtedness.

He added that the ministry omitted any analysis of the concerns that the shift from direct deductions to electronic funds transfers (EFT) will be “catastrophic”, especially when converting customers to debit orders.

This, he said, overlooks material considerations, arguing the decision is irrational for this reason alone.

Therefore, the company is requesting the court to keep the codes active until it reviews the ministry’s decision in its entirety.

It is seeking an order to direct the minister, Ericah Shafudah, to desist from interfering in the loading of the new deductions on the system and issuing instructions that no deductions may be loaded.

Counter argument

The finance ministry, represented by its Director of Expenditure and Financial Management in the Department of State Accounts, Martinus Nakale, argued that payments made through the PDMS to microlenders do not qualify as payments permitted under the Labour Act.

He stated that, according to the Act, employers are not permitted to make such deductions directly from an employee’s paycheck monthly without permission.

He claimed the payments can only be permitted in situations such as a court order, an arbitration award, or an agreement made in writing.

The matter was postponed on Friday for hearing to 18 November 2025.

-mukubeiuze@gmail.com