THE Namibian Post Office has borrowed N$235 million at below market rate from the French Development Bank to extend loans to the elderly.
The funds will be advanced to NamPost subsidiary PostFin, chief executive officer Festus Hangula said yesterday.
He said the N$235 million would be concessional – meaning the funds will be loaned out either through interest rates below those available on the market, or by grace periods, or a combination of the two.
The loan will be repaid within 10 years and is denominated in local currency to keep currency exchange fluctuations at a minimum.
Hangula said NamPost did not ask for a government guarantee as is the norm for state-owned enterprises, but used their N$6 billion balance sheet to ensure PostFin gets funding to assist the elderly.
However, the N$6 billion balance sheet, or the bigger part of it, is guaranteed by the government.
The Namibian reported in 2018 that the post office’s dependency on the government to guarantee deposits was one of the risks to the country’s financial stability identified by the International Monetary Fund.
“NamPost has utilised its balance sheet to borrow N$235 million to lend to PostFin, its subsidiary, for targeted microfinance purposes,” said Hangula.
This will be aimed at pensioners, he said.
He said through the French Development Bank loan NamPost is able to make credit facilities available in areas where it does not have a presence, and in market segments that are often neglected.
The loan is intended to reach 20% to 30% of pensioners in the next five years.
According to NamPost and PostFin, around 150 000 pensioners are financially excluded by banks and microfinance institutions.
He said internal assessments revealed that pensioners have the lowest default rate in the market.
Hangula said although microlending does not require the provision of collateral, they would do thorough credit risk assessments before extending the loans.
The CEO said they are in talks with the French banker to also provide technical assistance to a maximum of N$3,8 million to increase PostFin’s practices in terms of client protection and to support the diversification of its products.
PostFin chief executive officer Patrick Gardiner said 50% of the N$235 million will be extended to pensioners who want to start small businesses, improve their housing conditions or pay their grandchildren’s school fees.
He said they will use credit references of the elders’ accounts at NamPost to assess their credit worthiness.
Gardiner said the loans would only be extended to pensioners if their total loans do not exceed a third of their income.
He said the maximum loan the elders can access is N$13 000 to be repaid within five years.
At least 100 000 pensioners have insurance cover through NamPost and 100 000 receive their social grants via post offices.
Email: erastus@namibian.com.na
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