The effects of spiking food prices and utility bills, has manifested itself in the Namibians borrowing over half-a-billion dollars just in three months, for the 3rd quarter of 2015.
According to a Namfisa report, Micro lenders have disbursed N$697.8 million worth of new loans countrywide, in the 3rd quarter of 2015. Last year, the Bank of Namibia reported that the economy experienced a dent, because of the high demand in heavy imports from Namibians who were showing trends of living beyond their means.
This including imports luxurious and non-productive commodities such as vehicles, contributed to the challenge. The Bank had said Namibia was spending more on imports than is being spend in the country. Citizens were also borrowing more than they could pay back, with over drafting putting a further straining on the performance of the markets. In response to the high household credit, the BoN tightened its monetary police with a raise by 50 basis points to 5.0 during 2014.
Namibians are borrowing to buy unnecessary luxuries which has promoted the Bank to start working on an import right bill. This then had to force for drastic measures to assure that he country remains economically stable to sustain itself. Similarly, the middle to low income earners have developed a habit of importing cheap second hand cars from Botswana and the United Kingdom, which has been believed to be crippling the automobile industry.
This is an increase by 22.2% as the previous quarter only, N$127.2 million worth of loans country wide were given quarter on quarter. However year on year, the amount of new loans rose although at a lower rate from N$640.8 million at 8.9%. Namfisa also ordered financial institutions to reimburse N$1.8 million to consumers due to wrongful deductions, repudiation of benefits, unpaid benefits and non-cancellation of contracts.
The institution received 197 complaints in the third quarter especially relating to micro lending and credit granting institutions, of which 92% were resolved. “A number of penalties were issued in the current quarter for non-compliance in line with various sections of the Pension Funds Act 1956 (Act no.24 of 1956). These penalties amounting to N$785,000 were issued to 20 non-complying companies. These penalties were mostly issued to funds that failed to comply with the investment limits as per Regulation 28”, the report said. Namfisa also issued three directives and circulars to the insurance industry, with directives on underinsurance and over insurance while the circulars related to the issuance on fraudulent insurance policies and regulation 15 of the LTI Act.
Gross policy holder benefits paid during the third quarter of 2015 also rose by 45.3%, to N$1.36 billion from N$934 million in the second quarter of the same year. In 2014 only N$972 million was paid out for gross policy holder benefits, an increase by 40%. Profit before tax in the third quarter last year decreased to N$212 million from N$225 million in the second quarter of 2015. “The decrease in proﬁt before tax is attributable to the increase in policyholder beneﬁts paid and the decrease in investment income. Proﬁt before tax decreased in comparison to the same quarter of 2014 that recorded N$ 473 million”, the report read.
The third quarter of 2015, experienced a decrease in the number of new policies for individual business recorded as only 72 802 were recorded a 27.7% from 100 773 in the previous quarter of that year. However the number of new policies for group and fund insurance business for the third quarter increased by 47.7% to 3 558 policies from 1 914 policies reported in the second quarter of 2015.
N$43.7 billion was recorded in total assets for the third quarter, which is a slight increase from N$43.0 billion reported in the second quarter of 2015. “This increase was attributable to an increase in ‘current investments held’ as well as the reinsurer’s debtors and intangible assets. In comparison to the same quarter of 2014, assets increased by 12% from N$ 39.1 billion”, the report read.