• July 18th, 2019
Login / Register

Cash loans tight-lipped on new microlending law

WINDHOEK – Cash loan businesses in the country have thus far been silent on the new Microlending Act, 2018 (Act No. 7 of 2018) which came into force on 15 October 2018. The main purpose of the new legislation is to regulate and supervise microlending business in Namibia, to establish an effective and consistent enforcement framework relating to microlending and to promote responsible borrowing and lending. Thus, the new Act is the principle legislation governing microlending transactions and the affairs of microlending businesses in the country. 

A number of microlenders approached by New Era refused to comment on the recently promulgated legislation, with a number of them emphasising that they are yet to feel the full effects of the Act which has been implemented by the Namibia Financial Institutions Supervisory Authority (Namfisa). 

Namfisa was involved in the drafting of the Act because it is mandated to exercise supervision over non-banking financial institutions (which includes microlenders) and the services of such institutions. In addition, Namfisa is also mandated to advise the Minister of Finance on matters related to the aforementioned institutions and their services.

Namfisa’s initial involvement with the Act, while it was in its drafting phase, was that of advisor to the minister. Now that the Act is law, the aurthority’s role is to ensure the implementation and enforcement of the provisions of the Act. 

In addition, Namfisa is tasked with regulating and supervising microlenders in accordance with the provisions of the Act. Namfisa must also ensure that microlenders are duly registered in terms of the provisions of the Act and must ensure that registered microlenders comply with their conditions of registration. 

Namfisa’s Manager for Corporate Communications, Victoria Muranda explained that the authority is also tasked with overseeing the business of microlending in Namibia and to make sure that there is fairness, efficiency, transparency and orderliness in the microlending industry. Furthermore, the institution also sets down rules for conducting business as a microlender and ensures that the playing field is level for all microlenders. 

“The Act is to a great extent focused on promoting and protecting the rights of borrowers. It does this by, amongst others, seeking to limit malpractices that have been prevalent within the microlending industry, and their effects on borrowers. 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).

Therefore, the Act imposes specific obligations on microlenders to ensure that they practice responsible lending. At the same time, it also seeks to promote responsible borrowing. In addition, the Act seeks to foster financial inclusion, which is one of the key focus areas of the Namibia Financial Sector Strategy,” Muranda explained. 

Staff Reporter
2019-01-23 09:57:54 5 months ago

Be the first to post a comment...