"Credit buying is much like being drunk. The buzz happens immediately and gives you a lift.... The hangover comes the day after." - Joyce Brothers
This timeless observation by psychologist Joyce Brothers perfectly encapsulates the debt crisis facing many Namibian consumers today. As we navigate through 2025, the financial hangover from easy credit access has become a harsh reality for countless households across the country.
The Debt Crisis Reality
The statistics paint a sobering picture of consumer debt in Namibia. Many consumers are dedicating as much as 70% of their income to debt repayment, creating a vicious cycle of financial stress and limited economic mobility. Young people, in particular, are increasingly financing lifestyles they cannot afford through credit, setting themselves up for long-term financial difficulties.
This debt burden isn't just about poor financial decisions. Multiple factors contribute to consumer over-indebtedness, including income volatility, rising medical costs, legalized gambling, and a cultural shift that has gradually de-stigmatized bankruptcy and bad debts. These combined pressures have created an environment where many consumers require professional assistance to restructure their debts and regain financial stability.
NAMFISA's Consumer Credit Bill: What It Actually Contains
The Namibia Financial Institutions Supervisory Authority (NAMFISA) is currently developing a Consumer Credit Bill that represents a significant step forward in consumer protection, though it doesn't address the debt counselling gap that many consumers desperately need.
The Consumer Credit Bill seeks to safeguard and regulate borrowers, placing consumer protection at the forefront. NAMFISA aims to establish comprehensive regulation and supervision of services provided by credit providers, credit bureaus and debt collectors, ultimately ensuring a more equitable and accountable consumer credit landscape.
The bill will regulate debt collectors, who currently do not fall under NAMFISA's mandate, but will become regulated institutions under the new legislation. The bill has been undergoing public consultation and is expected to be submitted to the Minister of Finance and Public Enterprises by year-end 2025.
However, notably absent from the current Consumer Credit Bill is any provision for debt counselling services - a critical gap given the scale of consumer over-indebtedness in Namibia.
The Missing Piece: Why Debt Counselling Matters
While NAMFISA's Consumer Credit Bill will provide important regulatory oversight of credit providers and debt collectors, it doesn't address what happens when consumers become over-indebted and need professional assistance to restructure their obligations.
Currently, over-indebted consumers in Namibia have limited options, primarily the administration order system, which has significant drawbacks:
The Administration Order Problem:
- High administrative costs that consume a large portion of disposable income
- Infrequent distributions to creditors (typically every three months)
- Lengthy delays, with some creditors waiting over a year for payments
- Limited effectiveness in achieving sustainable debt resolution
What Debt Counselling Could Offer
A proper debt counselling system, as successfully implemented in South Africa, would provide over-indebted consumers with a more efficient alternative to administration orders. The benefits would include:
Efficiency in Debt Resolution: Under a debt counselling plan, 95% of monthly payments would go directly to creditors, with distribution managed by a central agency on a monthly basis. This represents a dramatic improvement in both speed and efficiency compared to the current administration order system.
Comprehensive Consumer Protection: Once a debt counsellor accepts an application, they would notify all creditors that the consumer has entered debt counselling. This would trigger important protections: the consumer cannot access any further credit until their debts are fully repaid, and all existing credit and store cards must be surrendered.
Professional Standards: Debt counsellors would need to meet specific professional criteria:
- Be over 23 years of age
- Have minimum two years' experience in accounting, finance, legal, para-legal, or credit fields
- Maintain a clean credit record with no debt-related judgments
- Complete comprehensive training covering communication skills, budgeting, and debt counselling processes
The Training and Implementation Challenge
Currently, there are no accredited debt counsellors in Namibia. Establishing this service would require:
Legislative Framework: While the Consumer Credit Bill doesn't include debt counselling provisions, separate legislation would be needed to establish this service.
Professional Training: A comprehensive training program covering five days of intensive instruction, including listening and communication skills, interviewing techniques, budgeting, and personal financial management.
Regulatory Oversight: Government approval and support for debt counsellors to ensure consumer protection and service quality.
The Broader Consumer Protection Context
The debt counselling gap becomes more significant when viewed against the broader evolution of consumer protection in Namibia. Over the past decade, significant progress has been made in safeguarding consumer rights through the National Consumer Protection Policy of 2020, which established consumers' rights to accurate information while prohibiting misleading advertising and deceptive practices.
The elimination of unfair "voetstoots" clauses and the establishment of courts' power to redraft unfair contract terms represent important advances. However, these protections primarily address the point of sale rather than assisting consumers who have already become over-indebted.
The Economic Impact of Consumer Over-Indebtedness
Over the last five years, NAMFISA has enabled the return of over N$30 million to financial services consumers, demonstrating both the scale of consumer protection issues and the authority's commitment to addressing them. However, this reactive approach, while valuable, doesn't address the systemic issue of consumers becoming over-indebted in the first place.
With some 350 microlenders operating in Namibia as of December 2021, the potential for consumer over-indebtedness remains high without proper debt restructuring mechanisms.
A Call for Comprehensive Reform
While NAMFISA's Consumer Credit Bill represents important progress in regulating credit providers and protecting consumers at the point of credit origination, it doesn't address what happens when consumers become over-indebted despite these protections.
The introduction of professional debt counselling services would complement the Consumer Credit Bill by providing:
- A cost-effective alternative to administration orders
- Professional assistance for debt restructuring
- Consumer education on financial management
- A structured path to debt recovery
The Way Forward
For Namibia to truly address its consumer debt crisis, policymakers should consider:
Expanding the Consumer Credit Bill to include debt counselling provisions, or developing separate legislation to establish this service.
Professional Development programs to train qualified debt counsellors who can provide ethical, effective assistance to over-indebted consumers.
Consumer Education initiatives to help consumers recognize when they need professional debt assistance and understand their options.
Integration with Existing Systems to ensure debt counselling works effectively alongside the regulatory improvements in the Consumer Credit Bill.
Conclusion
Joyce Brothers' observation about the "hangover" following the "buzz" of easy credit remains painfully relevant for many Namibian consumers. While NAMFISA's Consumer Credit Bill will provide important new protections and regulatory oversight, it doesn't offer a cure for the hangover of over-indebtedness.
The absence of debt counselling provisions in the Consumer Credit Bill represents a missed opportunity to provide comprehensive consumer protection. Until Namibia establishes professional debt counselling services, over-indebted consumers will continue to rely on the costly and inefficient administration order system.
The success of debt counselling systems in other countries demonstrates that there is a viable solution to help consumers recover from over-indebtedness. The question for Namibian policymakers is whether they will seize the opportunity to provide this crucial service to consumers who desperately need it.
As the Consumer Credit Bill moves through the legislative process, there's still time to consider how debt counselling could complement the proposed regulatory framework. For the sake of the many Namibian consumers struggling with debt, this opportunity shouldn't be overlooked.
