By: Dwight Links
Namfisa’s general manager for legal services, Nolan Swartz, explained that they have led a coalition of organisations and ministries to develop the Consumer Credit policy a couple of years ago.
These included the Ministry of Finance, the defunct Ministry of Industrialisation & Trade, Bank of Namibia (BoN), the Financial Literacy Initiative, and the GIZ. This led to the development of the Consumer Credit Bill.
The purpose of the bill is to promote fair and responsible market conduct in consumer lending.
This connects to the Microlending Act, which tries to incorporate those elements into other credit providers, Swartz explained.
Noting that the current Microlending Act is to be replaced by the Consumer Credit Bill, if the latter is passed and gazetted.
“This led to the development of the Consumer Credit Bill. The purpose of the bill is to promote fair and responsible market conduct in consumer lending. This connects to the good in the Microlending Act, which tries to incorporate those elements into other credit providers,” Swartz explained.
The presentation by NAMFISA highlighted that the current Microlending Act is to be replaced by the Consumer Credit Bill, should the latter be passed and gazetted.
“The microlenders will fall under the Consumer Credit bill, and in terms of the Credit Agreements Act, all the retailers who operate under this law are not properly regulated by any supervisory body,” Swartz mentioned.
The Act in question, though, is a law from 1980 that Namibia inherited at independence as several South African franchises dispense credit in order to sell consumer products alongside cash purchases and hire purchase agreements.
Swartz also outlined the impact of relevant legislation that provides consumerist functions to retailers and other non-banking businesses.
“If you walked down Independence Avenue, and you entered any shop, 10 minutes later you could be walking out of that establishment with the ability to buy products on credit to the tune of N$ 10 000,” shared Swartz on the legislation providing for direct retail proliferation in the Namibian market.
He added, however, that there is a lack of an affordability test on the consumer applying for the mechanism to purchase goods in an establishment or its partner outlets across the country.
The products falling under this range can include clothing, household furniture and other consumer durables like home electronics and more.
“We know banks also play their part in providing credit, and that the Microlending Act has gaps in it regarding other forms of credit being provided to a consumer,” Swartz noted.
The legal presentation also highlighted the claim that credit agreements conducted between a retailer and a consumer repeals the Usury Act of 1968. This means that one law supersedes another or takes the place of another law as functionary in an agreement or guiding principle.
SUPERVISION OF THE CREDIT SECTOR
According to Swartz, the Consumer Credit Bill aims for the supervision and registration of all credit providers.
“It also aims to regulate the role of debt collectors. We increasingly see the unscrupulous behaviours of debt collectors from reports. Debt collectors are also not regulated anywhere in the country,” shared Swartz, adding that they are not required to be registered under any framework either.
The bill will also seek to cover credit reviews, which BoN regulates.
“Oftentimes we hear of the listing of a consumer on the ITC listing. Consumers struggle to get their names off of the blacklisting category in order to access credit again,” added Swartz.
The goal would be to include the TransUnion function of blacklisting a client in the new bill and the disputes arising from this.
A blacklisting negatively impacts a consumer, as their access to products and services around the country becomes limited.
TransUnion is a South African company which has operated the credit listing service since 1901.
According to them, they serve consumers and businesses through several operating divisions: Credit Bureau, Analytic & Decisioning Services, and Auto Information Solutions, as well as their network of local subsidiaries throughout Africa.
While their national headquarters are located in Johannesburg, TransUnion provides local services and support throughout South Africa, Botswana, Namibia, Swaziland, Kenya, Rwanda and Zambia.
NAMFISA’S ROLE
Johannes Smit, deputy chief executive for market conduct and operations, noted that the market conduct aspect speaks to the over-indebtedness of the motion tabled by the Standing Committee on Economy and Industry, Public Administration and Planning during a recent public hearing.
Smit pointed that this specifically speaks to consumer protection, the supervision of microlenders in the Namibian financial industry, and the assurance of fair treatment of customers.
Another branch of the authority is the prudential supervision, which Smit indicated is responsible for the financial soundness of Namibian institutions.
“Together, this structure ensures that both the conduct risks affecting the consumers as well as the stability of financial institutions are addressed in a coordinated manner,” explained Smit.
