MICROLENDING INTEREST RATES

In terms of the Usury Act, 1968 (Act No. 73 of 1968) a moneylender is defined as any person who is granting or has granted a loan or a sum of money to a prospective borrower in terms of a money lending transaction. The Minister issued Exemption Notice No. 189 of 25 August 2004 under section 15A of the Usury Act, 1968 defining a microlender as a person registered with the Registrar and whose business includes the carrying on of micro loan transactions.

A micro loan transaction is defined as a money lending transaction in respect of which the loan amount:

1. Does not exceed N$50,000;

2. Together with the finance charges, which is owed by the borrower, must be paid to the microlender, whether in installments or otherwise, within a period of 60 months after the date on which the sum of money has been advanced to the borrower; and

3. Is not paid in terms of a credit card scheme or withdrawn from a cheque account with a bank so as to leave that cheque account with a debit balance.

Moneylenders, except microlenders, are not obliged to register with NAMFISA. In terms of Exemption Notice No. 196 of 25 August 2004, moneylenders are only allowed to charge maximum annual finance charges at an average prime rate times 1.6. It is currently 9.25% times 1.6 equaling 14.8% per annum.

Moneylenders are also not allowed to keep the Bank Cards/PINs of borrowers.

Where borrowers find that moneylenders charge in excess of the maximum allowable finance charge rate, they should report this anomaly immediately to NAMFISA.

For clarity or more information, kindly contact the Microlending and Credit Agreements Department

at: (061) 290 5000 (main), Ms. Lucrecia Lombardt at (061) 290 5120 or e-mail: llombardt@namfisa. com.na, or Mr. Alfred van Rooi at (061) 290 5127 or e-mail: avanrooi@namfisa.com.na

Example:

If a borrower borrows N$1,000 in respect of a 30-day loan, the annual finance charge will be calculated as follows:

Annual finance charge = (Loan amount x (average prime rate x 1.6)) ÷ 12

= (N$1,000 x (9.25% x 1.6)) ÷ 12

= (N$1,000 x 14.8%) ÷ 12

= N$148 ÷ 12

= N$12.33

Total amount payable in respect of a 30-day loan = Loan amount + annual finance charge =N$1,000 + N$12.33

=N$1,012.33

If a borrower borrows N$1,000 in respect of a 6-month loan, the annual finance charge will be calculat-ed as follows:

Annual finance charge = Loan amount x (average prime rate x 1.6) x (6 ÷ 12)

= N$1,000 x (9.25% x 1.6 x (6 ÷ 12))

= N$1,000 x 14.8% x (6 ÷ 12)

= N$148 x 0.5

= N$74

Total amount payable in respect of a 6-month loan = Loan amount + annual finance charge =N$1,000 + N$78

=N$1,078

If a borrower borrows N$1,000 in respect of a 12-month loan, the annual finance charge will be calcu-lated as follows:

Annual finance charge = Loan amount x (average prime rate x 1.6)

= N$1,000 x (9.25% x 1.6)

= N$1,000 x 14.8%

= N$148

Total amount payable in respect of a 12-month loan = Loan amount + annual finance charge

=N$1,000 + N$148 =N$1,148

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