Economist supports amendments to Usury and Micro Lending Acts

By: Hertha Eknadjo

Economist Erastus Nghinomenwa has applauded the discussions by parliament on the need to amend the Usury Act, Bank of Namibia Act and the Microlending Act.

Nghinomenwa emphasized the importance of lawmakers discussing amendments, stating that there is often a misunderstanding of what needs to be done to drive economic growth.

“When we talk about economic development, we tend to discuss it in isolation. However, it is crucial to ensure that consumers are protected while also enabling greater access to capital,” Nghinomenwa stated.

He highlighted that the laws in question regulate transaction, credit, and lending costs, which directly impact access to capital.
“If we can amend these laws in line with our economic aspirations, we will make significant progress. The conversation isn’t just about small entrepreneurs and startups, it’s about the overall cost of capital in the country,” he explained.

Nghinomenwa pointed out that many large Namibian companies, especially in the mining sector, secure funding from external sources due to high domestic borrowing costs. He stressed the need for intentional and well-researched reforms that reflect the realities of local businesses and entrepreneurs.

“These amendments should not be made solely by lawmakers who may not have firsthand experience with entrepreneurship or borrowing. We need thorough research, public input, and policies that align with our economic goals,” he urged.

Addressing the Usury Act specifically, Nghinomenwa noted that the law, dating back to 1968, was established during the colonial era and needs to be revised to reflect Namibia’s current economic landscape.

“If we amend it under the influence of external interests, it could become even more costly for us. The law should be updated to serve Namibians, ensuring financial regulations support rather than hinder economic participation.”

Regarding stricter financial regulations and their impact on economic growth and unemployment, Nghinomenwa cautioned against excessive restrictions.

“When we talk about stricter regulations, we must clearly define what we mean. Are we simply adding more barriers to access capital, or are we implementing smart risk management strategies?” he asked.

He pointed out that many Namibians struggle to secure loans due to a lack of collateral, restricting access to capital and stifling economic growth.

“If we continue to rely on collateral as the only measure of creditworthiness, we will keep limiting opportunities for our people.”

Instead of imposing rigid regulations, Nghinomenwa advocated for alternative measures to mitigate financial risk while ensuring capital remains accessible to those with viable business ideas. “We need smarter solutions—ways to protect financial institutions while still allowing money to flow to those with strong, bankable ideas,” he said.

He concluded by emphasizing that excessive strictness in lending policies has contributed to the current economic challenges.

“Flexibility, combined with effective risk management, is the key to unlocking economic opportunities for Namibians. If we continue down the path of restrictive lending, we will only hinder our own progress,” he concluded.