Establishing a Namibian Savings and Credit Cooperative

Introduction

The consistently increasing living cost has brought a big burden to Namibian as they never seem to earn enough to cover their daily needs. Many people tend to deal with this problem through the moneylenders such as banks and cash loans who charge them very high interest rates. By so doing their indebtedness is increased even more and the situation becomes more serious to them.

However, this money problem can be reduced if they join together under the cooperative principles of self-help and mutual help.

A cooperative is a business owned by its members for their mutual social economic and cultural benefit. There are two types of cooperatives namely,

1.       consumer or service  cooperative – owned and managed by the people who use its services; and

2.       workers’ cooperative – owned and managed by people who work in the business.

Namibia created an enabling environment for cooperatives through the Co-operatives Act 1996. In this Act, it defines various types of service cooperatives. These include Marketing & Supply cooperatives, Consumer cooperatives, Housing cooperatives and Savings & Credit cooperatives. The Act further stipulates that a service cooperative must also enter into at least 51 per cent of its transactions with its members.

The Namibia Consumer Protection Group is proposing the establishment of the Namibian Savings and Credit  Cooperative. The S&C Cooperative will act as a financial institution, and have the specific objectives to encourage savings and provide loan services.

About Namibia Consumer Protection Group (NCPG)

NCPG is a non-profit Namibian organisation that campaigns for customer rights. It focuses on illegal and unethical behaviour by Namibian companies. It also promotes the voluntary acceptance of the Namibian Consumer Charter by businesses and government entities.

Objectives of the Namibian Savings & Credit Cooperative

The Namibian S&C Cooperative shall:

a)      promote the economic and social interest of its members by providing effective services to its members according to sound business principles;

b)      have non-discriminatory voluntary membership;

c)       be democratic and controlled by its members;

d)      entitle every member to have one vote – regardless of the number of shares owned;

e)      provide services be primarily to members;

f)       limit the dividends so most profits are kept for the functioning of the cooperative; and

g)      provide ongoing membership education.

Establishing a Cooperative

Members must be

• ·         at least 18
• ·         a citizen of Namibia, or ordinarily resident of Namibia

A primary savings and credit service cooperative shall be formed by at least a seven members. The cooperative shall be governed by its by-laws. These by-laws include information regarding the name, address, type of cooperative, objectives, nature of business and place of business and other information as stipulated by the Act.

In addition the by-laws will include information on the liability of its members – in the case of the proposed Savings and Credit Cooperative the liability shall be limited.

Upon establishment of a cooperative, a “Cooperative Formation Committee” (minimum seven members) shall be present at a meeting to elect a Chairperson, Secretary and Treasurer. The Formation Committee shall be responsible for convening meetings with prospective members, draft the by-laws, and submit the application for registration as a cooperative. Within one year, a Cooperative Founders meeting shall be convened where a register of members must be completed to be submitted with the application.

Objectives of the Namibian Savings and Credit Cooperative

The Namibia Consumer Protection Group is proposing the establishment of the Namibian Savings & Credit cooperative (S&C Cooperative). The primary purpose of the Cooperative is to reduce banks costs and use discounts, loyalty rewards or any other form of remuneration normally received by a banking institution for the lessening of members costs.

The S&C Cooperative will be managed as a financial institution, and have the specific objectives to:

1.       Encourage thrift among members. To encourage a saving habit, the cooperative currently offers two types of savings:-

a.       Shares: All members are required to pay monthly shares at rates agreed by the members.

b.      Deposits: Both current and fixed deposits are generally offered to cooperative members.

2.       Provide loan services to members. Members' shares and deposits comprise significant part the loan funds made available to members with interest charged usually at rates lower than that of the prevailing market rates. The general three types of loans provided by this cooperative type are:

a.       Emergency loans: In crisis or emergency cases, a member may borrow up to half of his/her monthly income, depending on the cooperative financial status, without collateral. Repayment is normally made in two instalments.

b.      Ordinary loans: The cooperative can provide an ordinary loan, again, depending on its financial status. This can be between 4 to 15 times, of member monthly income.

c.       Special loans: When the cooperative extends its services to housing and investment purposes, a member may borrow the actual amount required for constructing or purchasing houses, land and other permanent investments

Legislation and Regulation vis-à-vis Financial Services

The Namibian Savings & Credit Cooperative is not a bank in the traditional sense of the word and as stated in the Cooperatives Act, “no provision of the Banks Act shall apply in relation to a cooperative”. The Banking Institutions Act, 1998, further states “This Act shall not shall not apply to … any co-operative society registered under the Co-operative Societies Act, 1996”.

Practical Application

It is proposed that the Cooperative shall work with a sponsor bank (preferably NamPost) and manage the accounts of its members as a virtual banking wallet. A technical management contract will be negotiated with a software development team to use a account management system via a cellular device. The software will be based on the technical USSD or similar standard.

The money in a members virtual wallet may be used for purchases at participating retail outlets. In addition, certain outlets will partner the Cooperative to provide cash disbursement at their business.

Additional Services

The Cooperative will also provide a personal data management system for its members. This will allow members to securely store a data about themselves and set permissions for others (government, legislative processes, private sector – for example potential employers, individuals, etc.) to access the information in a controlled way.

Registration

The Ministry responsible for cooperatives is the Ministry of Agriculture, Water and Forestry. Registration is submitted to the Deputy Director of Co-operatives in the Directorate of Planning.

Rights and Responsibilities

In its essence, a cooperative belongs to its members. Effective and efficient management of the cooperative is ensured when members exercise their rights and responsibilities properly. The most important responsibility of the individual member is attendance at the annual general Meeting (AGM). The AGA gives him/her the opportunity to protect their membership rights, a fair sharing of benefits and monitor the management of the operations. It provides also a forum to determine general policies, elect committee members and assign tasks to further benefit all the members.

Within the framework of cooperative principles, laws and regulations and procedures, members must discuss problems together, share ideas and exercise the right to vote on committees and meeting resolutions.

Stealing copyrighted pictures in Africa

Eish, I might not be a music artist - but copying must be some form of flattery?

The song below was created in remembrance of my comrades and I who were part of the internal struggle (and no my children, you cannot have demonstrations as the internal struggle kids!).

Now, the artists Kuku Niihana, has taken my song and the copyrighted pictures of John Arthur Liebenberg, and added video clips from Rhodesia army and Sam Nujoma and placed it on television.

Nee man, our artists must learn to be original, or ask permission when stealing!

Future Namibia - First edition

Future Namibia

The following was received from a member of the public

I hereby wish to lodge a formal complaint against Reliance Motors cc for poor after sales service delivered to us. I also want to put forward a serious vote of no confidence in this dealer.

Reliance Motors cc is not as trustworthy as their name implies, maybe their cars but definitely not their service. The truth is that they are very reluctant to deliver good after sales service. We had a mechanical breakdown with our car on the 3rd of November 2010 and took it to them on the 4th of November for repairs.

The staff of Reliance Motors is simply not concerned about time, the inconvenience and humiliation we suffered throughout this ordeal. Client service is not a priority for them. They did not even have the decency to inform us once about their progress. We were the ones to phone and enquire on daily basis and even offer our help to speed up things, but to no avail. They simply have no sense of urgency to get the work done or simply do not care.

We are commuting daily to work and need our car desperately and are tired of their excuses, unprofessional and incompetent behaviour. We write this letter out pure frustration, unhappiness and helplessness with our predicament.

Is there any regulation body out there where one can report these arrogant car dealers?

The argument for rent control in Namibia

The Namibian newspaper has requested that the Namibia Consumer Protection Group to express themselves on the escalating rental prices being charged in the country. The price increase in rentals of property have increased drastically and people cannot afford these prices as their salaries have not increased accordingly.

What is Rent Control?
Rent control refers to laws or regulations that set price controls on the renting of residential housing. It functions as a price ceiling. Rent control exists in approximately 40 countries around the world.

Generally the laws dictate the frequency and degree of rent increases and are limited to less than the rate of inflation.

Arguments for rent control
First, on the economic front, such a law gives the tenant the ability to insist on certain improvements being done a minimum standard, without allowing the landlord to retaliate with higher rental fees.

Secondly, the social dynamics of rent control, or to use the correct term, rent stabilisation, is an important one for consumer protection. Without rent stabilisation, landlords can demand any increase and tenants must either pay or move. These regulations provide some assurance that the consumer can maintain stability in their housing situation.

Third, the moral argument is that housing is a human right that is more important than the property rights of the landlord. With this argument, the landlord's income is restricted to a formula, for example no more than 20% higher than the monthly installment on a bond for a house of this value.

Arguments against rent control
The main argument against is the putting a cap (highets price) on rent reduces the quantity and quality of housing available.

Introducing rent control reduces the number of investors willing to purchase housing for the purpose of renting to receive an income. Thus rent control can lead to creation of less housing, raises prices and increases urban decay in certain areas of a town.

If rent control should be introduced in Namibia, this will reduce the resale value of affected properties. Thus, banks and other mortgage holders would find the values they estimated to be higher than the true resale value if they need to foreclose. In addition, municipal valuations would have to be reduced in line with the value reductions.

What is causing the problem?
Rather than just accept Rent Control as the only solution, we need to look closer at the problem and find the causes of rental increases.

In essence, a free market economy such as ours allows all interested would-be tenants equal opportunity to offer a rental amount for the space. In conditions of monetary inflation and housing shortages rents rise as landlords have tenants willing to meet their asking price. In other words, the landlords would reduce rents if no-one was willing to pay the rental fee.

Conclusion
 Rent Control can be used as an interim measure to attempt to keep rental affordable, but this is not a solution that will solve the problem of the housing shortage in urban areas. Municipalities have to increase the number of erven available for building of lower income housing and the prices should stabalise once the supply and demand equation is more balanced. The costs of land-use regulation are also extremely unfair to the development low cost housing units and this is something that can be changed fairly quickly by local authorities.


The increase of rent in Namibia has led to high-cost to income ratio. Thus the families affected by high or unaffordable rentals means they are now unable to afford non-housing necessities such as food and medicines. The Namibia Consumer Protection Group (NCPG) believes the answer to the problem of high cost to income ratio is to directly increase the income of low-income households. The Government should look at a policy programme that provides food stamps, health insurance, national pension plans, etc that make non-housing expenses more affordable.


Namibia needs to find sustainable solutions which improve health, safety and comfort for all its citizens, and more specifically reduce the costs incurred by low-income families for the use of water, energy and housing.