More articles in this category
Top Stories

Namibia will be hosting Kenya for the final match of the Rugby Africa Gold CUP in Windhoek this weekend, as the Cup concludes. With 17 points o...

The High Court today sentenced Zenobia Seas (34), charged with the murder of her three-year-old daughter Ava Owoses, to 25 years in prison. Seas a...

Urban and rural development minister, Peya Mushelenga and the Shambyu Traditional Authority have suffered defeat in court when the minister’...

Two of the dozens of Angolan nationals arraigned before the court for defrauding the finance ministry out of millions of dollars via a Value Added...

The Minister of Environment and Tourism Pohamba Shifeta says that communal conservancies must be accountable for funds they generate from tourism ...

Former chief executive officer for the Namibia Chamber of Commerce and Industry (NCCI) Tarah Shaanika has accused the chamber’s Walvis Bay b...

Other Articles from The Villager

Decision pending on Credit Agreement Act

Mon, 22 February 2016 21:48
by Charmaine Ngatjiheue
News Flash

 

Bank of Namibia Governor, Ipumbu Shiimi has said Government is still deciding on whether to put the Credit Agreement Act, which will regulate credit extentions to individuals, under the Ministry of Trade or Ministry of Finance.

Currently the Private Sector Credit Extended (PSCE), which is the level of credit extended to businesses and private individuals stands at N$78.4 billion. PSCE as a percentage of Gross Domestic Product (GDP) stood at 48.9%. Shiimi said the Central Bank was first in discussion with the Ministry of Industrialisation, Trade and SME Development regarding the regulation but then it was decided that it be handed to the Ministry of Finance.

“The regulation has been drafted and it is has been finalised but it was decided that the Credit Agreement Act should be handed over to the MOF for that Ministry to be the one to present it to Parliament,” Shiimi said.

He added that the Credit Agreement’s Act emanates from the South African law when at the time the Namibia did not have Ministries but instead it had departments. This regulation may also assist with the Bank’s efforts to curb the widening trade deficit whereby the increase is also due to locals purchasing unnecessary. A high appetite for luxurious and nonproductive imported commodities by Namibians across the country is pulling the economy down.

Shiimi said Namibians are still importing a lot compared to the number of exports. Currently the trade deficit stands at about N$30 billion. “We need to work on increasing the number of items we export and slowdown the on import to help the 2015 situation recover. The situation in 2015 was not comforting as the import bill was higher and people buying more cars is none of the factors that affects imports,” he said. The Credit Agreements Act 45 of 1980 needed revision as its been out dated for almost 30 years, the governing laws are old and are not relevant to the evolved markets.

The current Act does protect consumers and the regulations do not stipulate to what extent a client can be charged for an item bought using a long-period payment method. This includes how much a client can pay for a vehicle that has to be paid over a period of 60 months with monthly instalments.

The regulations do not represent the interests of the consumers for repayment methods. Certain banking institutions failed to also adhere to the requirements and, in the same process, changed the stance from restrictive credit to accommodative credit terms because of the clear loopholes in the current credit agreements acts. Meanwhile, Shiimi said the stock of international reserves remains sufficient to one-to-one link of the Namibia Dollar to the South African Rand which is 5.8 times the currency in circulation.

The level of international reserves stood at N$27.4 billion early this year, compared to the N$23 billion reported last year at the MPC meeting. “The level is now at 3.5 months of import cover, higher than the international benchmark of three months. This increase in the level of reserves was primarily due to Southern African Customs Union (SACU) inflows and the depreciation of the domestic currency,” Shiimi said.

Shiimi noted that the Bank is working towards increasing the level of international reserves to 4.5 months of import cover. “Of course to decide how much of international reserves we want is not up to us, it is up to those who are spending to ensure that the reserves are intact. We want to work on improving the levels of months covered but we will see how that works out,” Shiimi noted. business@thevillager. com.na