Alvine Kapitako and Selma Ikela
WINDHOEK – “Business is doing very well. A lot of clients are borrowing in January,” Johannes Sheya, the owner of micro-lender Ondeya Financial Services, roared last week.
His view corroborated observations by New Era during random visits to similar entities where many of them had long queues of desperate borrowers looking for financial assistance.
A random survey at various micro-lending businesses in Windhoek showed scores of people trying to get their hands on quick bucks to get through the month of January, often dubbed the 45-day month.
The month is called so by some in reference to the fact that many workers receive their December salaries around the 15th day of that month, before receiving their next pay end of January the next year.
Other institutions such as Cash Converters had a few people queuing to exchange various items such as household goods for cash.
But those who spoke to New Era said this is the situation throughout the year and not just in January when many run around to get money for school fees, stationaries and even rent.
Financially undisciplined Namibians are said to be the regular customers at micro-lending institutions, industry insiders say.
“It [borrowing] started already towards Christmas because some people were paid by the 15th of December,” said Sheya.
He observed that many people lack financial management skills and that often lands them in cash flow problems.
“Some people come borrow money just to drink (alcohol) or to go to Swakopmund,” explained Sheya, who insisted that his company does not just lend money without giving financial advice to clients.
Sheya explained that Ondeya Financial Services does not lend money to clients with risky banking behaviours.
“People really need to plan properly. People have that excuse of saying ‘it’s January I’m broke’ but if they plan already in December for January, they will have no financial trouble,” explained Sheya.
“Some people don’t plan. They get a bonus and go on a spending spree,” said Sheya, adding that they are careful who they lend their money to. “We know our existing clients always return to us,” he added.
An employee of Cash Converters who anonymously spoke to New Era commented that business is not doing very well compared to previous years.
“We didn’t reach our targets of N$5000 per day,” said the employee, adding that their client base has declined due to the struggling economy.
“A number of shops in this area have closed down so clients have not been noticing our existence,” explained the employee.
“Some people loan their items such as cellphones and we keep them for 30 days when they return the cash with interest,” said the employee.
“We get our stock from people. If they fail to pay out their items, we sell their goods to get back our money,” explained the source.
New Era contacted the Manager for Corporate Communications at the Namibia Financial Institutions Supervisory Authority (Namfisa), Victoria Muranda who confirmed reports of abuse by micro-lenders to their clients. She made reference to the Microlending Act, 2018 (Act No. 7 of 2018) which came into force in October, last year.
“The main purpose of the Act is to regulate and supervise microlending business in Namibia, to establish an effective and consistent enforcement framework relating to micro lending and to promote responsible borrowing and lending,” said Muranda.
She said the Act to a great extent focus on promoting and protecting the rights of borrowers. “It does this by, among others, seeking to limit malpractices that have been prevalent within the micro lending industry, and their effects on borrowers,” said Muranda.
She further said the Act thus prohibits practices that are detrimental to borrowers.
“These include the retention of the bank cards and PINs of borrowers, signing of blank or incomplete documents inclusive of acknowledgments of debt, consents to judgment, waivers of borrowers’ legal rights and agreements to consent to the attachment of borrowers’ property without a court order,” said Muranda.
2019-01-15 09:22:43 7 months ago