Geometría de la matriz de estirado o hilera

The non-deposit-taking MFIs mainly comprise legally supervised credit-only microlenders that include units and/or branches of commercial banks. Regulated and supervised by the non-bank regulator, NAMFISA under the Usury Act, Act No. 73 of 1968, microlenders have grown in number, reaching 289 institutions by 2014 from 275 in 2012 (NAMFISA, 2015), and are scattered in urban centres all over the country. Two of these institutions belong to two commercial banks (namely Bank Windhoek and Nedbank Namibia), which created separately run entities (BW Finance and Nedloans, respectively, although the latter has been deregistered recently). Although commercial banks are registered under the BIA and regulated by the BoN, these separate entities fall under the supervision of the NBFI supervisory authority (i.e. NAMFISA) and not the BoN, as is the case with all other microlending institutions. There is an established association for microlenders in Namibia (called the Namibia Microlenders Association), which looks after the interest of its members.

According to NAMFISA, microlenders are further classified into pay-day lenders (i.e. those lenders whose loans are repayable over a 30-day period) and term lenders (i.e. whose loans are repayable in equal monthly instalments over a period of up to 60 months) (NAMFISA, 2015a). Pay-day lending institutions are set up by private individuals who provide cash loans out of their retained earnings to help salaried individuals to smooth their consumption needs (Adongo & Stork, 2005). At the time of writing this thesis, NAMFISA revealed that the 289 microlenders referred to above include a total of eight term lenders that also mostly lend to salaried individuals [UP/P/2/1]. Therefore, the difference between the two categories lies in the repayment period, as lending by both of these categories is salary-backed. According to NAMFISA (2015a), approximately 209 402 borrowers made use of the services offered by microlenders for the period ending 31 December 2012, of which 46 per cent were civil servants. Microlending actually constitutes the bulk of lending activity in Namibia in terms of volume.

The increased microlending activity has caused considerable controversy in the country. The institutions involved are considered exploitative because they are viewed as charging exorbitant interest rates78 _{and mainly lend for consumption purposes. They have been}

referred to as ‘loan sharks’ at times despite the fact that those licensed under the Usury Act have to comply with the applicable interest rate caps imposed by that act. In fact, information collected through the interviews (as will also be evident later in sections 5.3.5.3 of this chapter) revealed that policy makers viewed consumption lending as not being in line with the type of lending that would assist the country in its developmental efforts.79 _{There has}

however also been counterarguments to this from other corners of the country that consumption lending too is a necessity that is complementing the income of low-income people in times of need, thereby contributing to the Namibian economy in that sense. This argument is supported by CGAP (2012), which states that while microcredit clients engage in productive activities, their loans are not used only for business purposes, but also for non- business purposes, such as consumption smoothing and financing of social, medical and educational expenses. This notwithstanding, the expressed objective of the NFSS 2011– 2021 is on building MFIs that can lend for entrepreneurial (productive) purposes.

The fact that this type of microlending only caters for salaried individuals has also been viewed as not auguring well with the country’s goal of microlending for poverty reduction and employment creation through financing micro and small-scale entrepreneurs advocated by the Financial Sector Strategy. In terms of the strategy, this goal would be achieved through the country developing a solid base of ‘real’ MFIs, as these would better serve the poor and small-scale enterprises.

Non-deposit-taking public finance institutions such as the DBN and AgriBank have also been providing loans to small businesses, as discussed in Chapter 2, which provided detailed activities of these institutions. The government of Namibia, however, took a decision in 2015 to streamline the public finance activities so that the DBN can move out of that space and concentrate on big-scale projects going forward, and so that the recently established SME Bank can be the only state-owned financial institution serving the general SME sector,80

78 _{Most pay-day loans are offered at a benchmark rate of 30 per cent per month in accordance with the Exemption Notice}

requirements (UP/P/1/1).

79 _{The Financial Inclusion Council (which comprises of ministers whose ministries are economic-issues related and chaired by}

the prime minister), a committee that oversees the implementation of the NFSS, has expressed this view at several meetings, at which the researcher has been serving as secretary.

80 _{This is insightful information, as at the time of this research, the researcher was a board member of the DBN, which was}

while AgriBank continues to serve those in the agricultural sector. Work on investigating the best way of implementing this decision was ongoing at the time of preparing this research report. However, the impact of the recently established SME Bank on the SME sector remains to be observed going forward.