Josef Kefas Sheehama
There is a strong conviction that key stakeholders have the will and the capabilities to
develop a robust credit market that will deliver on consumer's rights inclusion.
Therefore, there is a need for legislative reform of consumer credit to deal with the
complex consumer market. These changes will make it easier for most Namibians and
small businesses to access credit and ensure that the strongest consumer protections
are enhanced.

The Proposed Consumer Credit Draft Bill should revisit the modus operandi of
TransUnion Namibia which used to trade as Information Trust Corporation (ITC).
The Credit Bureau is currently regulated by the Bank of Namibia. Credit bureaus can be
defined as agencies that research and collect individual credit information that is useful
for an assessment to make informed decisions.

However, it can also contribute to the unemployment statistics since people are listed
on ITC, and as a result, active and skillful Namibians will not be employed.
Approximately 760,000 Namibians live on credit and 152,000 of this number have been
blacklisted for failing to service their debts, according to TransUnion Namibia.
TransUnion Namibia country manager, Marcha Erni, says, the negative defaulters could
be the unemployed, students who get study loans and fail to repay before getting a job,
the retrenched, or those that retired, but it remains difficult to classify because
Namibians have different reasons for being negative defaulters.

This is a serious profile and has stayed on the profile for about five years. The key
issues here are the enforcement and protection of rights and the vexatious.
The importance of the legal framework regulation in Namibia cannot be
overemphasised. An unregulated economy leaves the economically disadvantaged at
the mercy of the rich and the powerful. Namibia faces a range of challenges as it
emerges from the crisis.

The government needs to put the economy back on the path to sustainable growth, find
ways to handle complex and interrelated policy areas, anticipate and manage risks
more effectively, and regain the trust of Namibians.
Effective regulation can provide strong support for meeting these challenges. Ineffective
regulation, conversely, will slow recovery, inhibit growth, undermine efforts to address
complex issues, and reinforce citizens' scepticism of government.

The Namibian economy is currently on the low and we cannot continue to do the same
thing year in, year out. We need tactical innovation to help leapfrog the economy from
where it is now to where it ought to be.
It addresses virtually all societal issues. Therefore, a sound consumer credit legal
framework can be an effective tool for fostering access to credit in an economy,
especially for individuals and SMEs. And enhancing access to credit improves stability
and opportunities for families, businesses, and the economy as a whole.
Moreover, the Proposed Consumer Credit Draft Bill will further repeal outdated
legislation such as the Usury Act, 1968, the Credit Agreements Act, 1980, and the
Microlending Act, 2018.

It is generally accepted that Namibia needs to reform its consumer credit legislation and
remove the contradictions. The current position in Namibia is that both the Credit
Agreements Act and the Usury Act provide only punishment for non-compliance with
legislation.
The Reform proposed a solution based on the creation of an enforcement department,
emphasising the effectiveness of authorised persons as opposed to individual consumer
actions.

This means that the delegated department can develop specialist expertise in the legal
complexities of the relevant legislation, it has the power and resources to investigate
and assess breaches of legislation, it can act on behalf of a number of debtors, where
individual action would be inappropriate, and it redresses the power imbalance between
parties to the contracts.
The Proposed Consumer Credit Draft Bill should offer a solution to these problems by
providing various types of enforcement authorizations. A modernising nation's economic
prosperity requires at least an inclusive legal system centred on the protection of
business and the economy.

The essential legal reform required to create that frame is an adoption of a system of
relatively precise legal rules, as distinct from more open-ended standards or heavy
investment in upgrading the nation's economy.
A virtuous cycle can arise in which initially modest expenditures on law reform increase
the rate of economic growth, in turn generating resources that will enable more
ambitious legal reforms to be undertaken in the future.
Therefore, the Proposed Consumer Credit Draft Bill should bring out a high-level,
activities-based law that is intended to apply equally to all financial-service providers.
This includes financial services, credit unions, microfinance institutions, money lenders,
and digital financial service providers. The Proposed Consumer Credit Draft Bill is to
ensure an equal level of protection for all consumers and a level playing field.

The consumers concerned may be individual or SME businesses, and so the law should
apply equally to consumption and small-business facilities. Many of the provisions are
framed in terms of principles.

Why do we need to reform consumer credit in Namibia?

We need to understand that a strong consumer credit protection framework helps
protect consumers from possible market abuse and helps consumers benefit from well-
informed decisions about how best to manage and use financial services.
Consumer protection is especially important in an environment where financial products
are increasingly complex and are being delivered through new distribution channels and
where there is an increasing range of new non-bank service providers.
Consumer Credit policy frameworks, if properly designed, implemented, and
supervised, instil trust in consumer products and services of the financial services
providers. Such frameworks can thus be important enablers for the uptake of financial
products and services.

Additionally, there is no doubt that the policy will require adjustments to reflect the
country's context, including supervisory resources, the affair of consumer credit
markets, constant innovations in products, delivery channels and providers, and existing
institutions and legal frameworks.
Moreover, consumer credit will still require careful consideration of the subordinate
legislation to deal with such details as the specific features of different types of financial
products and services.

As a high-level diagnostic tool, it could be the basis for industry codes of conduct. I think
the Proposed Consumer Credit Draft Bill is a potentially useful tool for recognising the
importance of consumer credit protection and meeting financial inclusion targets.
In conclusion, better consumer credit is an indicator of a better economy. Every country
strives to achieve this and maintain it in the long run. At the same time, consumers need
easy platforms. A good Consumer Credit Policy is the gateway to wealth.