Microlending in Namibia lacks enabling legislative

The Micro lenders Association of Namibia (MLA) says enabling legislation is one of the major challenges facing the region. MLA administrator Rachelle Metzler told The Namibian the association’s members cannot currently enter into electronic loan agreements, because the Microlending Act requires a standard written loan agreement to be signed with borrowers.

“Also, the current legislation does not make provision for electronic signatures. These are real impediments to our members serving their clients in a quick, effective and efficient manner,” said Metzler.

Another challenge facing the industry is the private sector’s lack of access to the National Population Register, held by the Ministry of Home Affairs, Immigration, Safety and Security.

Metzler emphasised that microlenders are an essential part of the Namibian financial services landscape, playing a significant role in providing access to finance for the underserved.

“In this regard, microlenders often serve borrowers who do not have access to traditional banking channels, for a variety of reasons, such as the relatively small size of financing required, lack of security and immediate access to money to cover cash-flow shortages,” she said.

According to Metzler, micro-lenders can quickly attend to borrowers, without going through a long and cumbersome application process.

Metzler called on the public to do away with the derogatory term, ‘loan sharks’, to refer to microlenders, because it creates the impression that the association’s members charge excessive interest rates and lack compassion for borrowers.

“The statement is untrue, as our members are subject to regulation and supervision by the Namibia Financial Supervisory Authority (Namfisa),” she said.

Non-adherence to Namfisa’s rules and regulations may lead to a microlender’s licence being revoked, she added.

According to Metzler, the microlending industry has come a long way.

“Our members are registered with Namfisa and are subject to regular compliance checks and inspections both off-site and onsite,” she said.

The MLA is part of various financial sector bodies and contributes to addressing the social inequalities, she noted.

The MLA is a voluntary association not for gain, established on 4 July 1998, to act as representative for the microlending industry in Namibia, and promotes responsible lending between its members.