Debt counselling can assist indebted consumers

(First appeared in New Era 9 September 2015)

One of the biggest problems is starting a family is that most of the things I want such as furniture, motor vehicle, etc. costs more money than what I earn in a month. The only option for purchasing these high cost items is to either save or to take it on credit. For myself, I have learned the hard way that it is better to save and buy later, rather than purchase on credit and not be able to afford the monthly payments later. Unfortunately, most consumers still prefer to buy on credit and can find themselves lending recklessly and then becoming “over-indebted”.
In many countries of the world, a law has been enacted as a National Credit Act that promotes an effective, fair and accessible credit market and to help protect consumers from "reckless lending" and "over-indebtedness". Unfortunately, Namibia has not yet enacted many such consumer laws yet.
Under such a credit environment, debt counselling is included as a tool to help consumers get out from under debt. These debt counsellors must be trained and certified so that they can assist consumers with debt problems, help to design debt repayment plans and negotiate on behalf of the consumer with creditors to enable the consumer to afford their monthly debt payments. (This process is called Debt Review). The idea behind Debt Counselling is to help clients reduce their overall debt with creditors in the most cost effective way.
At present, with no legal framework in place for debt counselling, the consumer only has two remedies when they cannot pay their debt: administration and sequestration. There are however severe disadvantages to both of these and disempower you as a consumer.
If your debt is lower than N$ 50,000 you may apply to have your debt placed in administration. Under administration order a large part of your disposable income can forcibly be taken to repay your debts and comes with an administration charge of up to 12,5% of each instalment you pay. This would mean that for every N$ 100.00 you pay in debt, N$12.50 would go to cover the cost of the administrator.
Under sequestration you lose all your assets as they are sold to cover as much of your debt as possible and you will need permission from a court-appointed trustee if you want to borrow any money.
This disempowering of the consumer needs to be addressed and this is the core reason for introducing debt counselling under a Credit Act. The biggest attraction is that under a credit law is that the process is regulated and is designed to prevent your creditors from harassing you and prevent the loss of crucial assets. In addition, unlike with an administration order, as much as 95% of your monthly payment will go to pay your debts under a debt counselling plan.
There is a cost to debt counselling – after all the service is being provided by a trained and certified professional. In the regulations of the law, the Credit Regulator will be able to determine fees for an application fee, rejection fee – if you are not found to be indebted, the debt counsellor fee as well as after-care fees.
One of the further benefits is that such a law will enforce more rigidly the “in duplum” rule which under common law limits the interest that a creditor may charge on any debt you incur. (This common law rule holds that the creditor may not charge more interest once the unpaid interest equals the outstanding debt. – See previous column in this regard)
I hope the Ministry of Finance will look urgently into the matter of over-indebtedness – which I believe affects more than 15,000 households in the country.

Phishing for airtime

(First appeared in New Era 2 September 2015)

“Phishing is the attempt to acquire sensitive information such as usernames, passwords, and credit card details (and sometimes, indirectly, money), often for malicious reasons, by masquerading as a trustworthy entity in an electronic communication.”

“Hi, I need some airtime urgently. Please send and I will refund you. This is Milton Shaanika-Louw.” A few hours later, the same cellular number sends another similar message but claims to be from someone else. Really, is this scam not easy to see through? After all, surely a famous and rich person would not need telephone credit. Perhaps our free calling now allows people to send this kind of phishing scam at little or no cost?
This week I was very angry that people are still so gullible, but had to stop myself thinking like that because the confidence artists (con man) is making use of the good inside people to steal their money from them. Thus I should not be angry at the good intentions of people, but rather help to educate consumers about the tricks used by these con men. Many people want to make a quick buck and will use dubious or even illegal methods to separate the victim, known as the mark, from their hard-earned money.
This week in Consumer Court, I look at some of the most common confidence tricks and scams out in the world today that can be found here in Namibia as well.
Get-rich-quick schemes: The main theme in this type of scam is that you can make money very quickly, IF you invest a certain amount now. These include fake franchises, sure investments in property, get-rich-quick books, wealth-building seminars, self-help gurus, chain letters, fortune tellers, witch doctors, miracle cures, Nigerian money scams and donations to churches. These often include you participating to make other people give you their money in a pyramid type scheme.
Persuasion tricks: These type of tricks is one of the oldest scams known. There are several variations including Grandparent scam, romance scam and fortune-telling fraud. In the grandparent scam, the target is convinced that someone they know needs money urgently and will pay them back as soon as they can. The phishing airtime scenario mentioned above is this kind of scam. The romance scam involves getting the person to feel loved, or promised sexual favours in exchange for money. In Namibia there has been rumours of people (especially men) being sent an SMS from someone they don’t know and when they enquire the sender claims to be a young women still at school. You can imagine that once money is sent, the victim will surely not tell another person of what their intention was with an underage girl! Fortune-telling scams (or witch doctor scams in the African context) involve informing the victim that they or their money is cursed and needs to be “cured, prayed for, or blessed”. Of course the money that is cursed then gets in to the pocket of the con artists rather than being cured.
Gold brick scams: Many people hope to buy something for cheaper than its normal retail selling price. In the gold brick scam the item being sold looks like gold put turns out to be only gold coated lead. The most common scam of this type in Namibia is the white-van speaker scam. In this scam the buyer is left with a product worth less than they thought (and more than it actually costs) but is scared to inform the police because they have to admit they were doing something illegal.
Extortion tricks: In the extortion trick the victim is already in a comprised position and then they are forced to pay non-existent claims. These tricks include the badger game where married men are targeted and forced into a supposed affair and then threatened with public exposure unless they pay the blackmail money. It can also involve consumers requesting a cash loan which means they must give up a lot of personal information. This information is then used to harass the customer while pretending to be a real debt collector. The “fake collector” often threatens the victim with calls to their workplace, threats about listing at the credit bureau or even arrest. This underlying debt either does not exist, or is not valid due to a statute of limitations (prescribed debt over three years old). Nevertheless, the victim pays out of fear and the con man has once again made his “mark”.

Land of Milk and Honey

(First appeared in New Era 19 August 2015)

During the 1980s I was told that Namibia (and specifically Rehoboth), is the land of milk and honey. I did not know at the time that the name “Rehoboth” had biblical significance. In the Bible, the story is told of Isaac that had dug two wells and the people of the communal area had argued both times on who had rights to use the water. When Isaac dug a third well there were no quarrels and he thus called it Rehoboth and said, "Now the Lord has given us room and we will flourish in the land".
The Rehoboth Gebiet had a medium-sized dairy industry and its own supply of milk from the Swartmodder dairy farm that had been set up with funding from the Rehoboth Development Corporation. Both these businesses flourished and was able to supply their immediate local market with enough dairy products at an affordable price. Shortly after Independence, the market forces were such that the largest dairy producer could apply economy of scales and provide milk products to the Rehoboth area at prices well below the production cost of the local producer. Unfortunately, this “price war” and other local factors led to the closing of the dairy farm and eventually the dairy as well.
There was considerable personal interest in this development as the grandfather of my youngest daughter was the founder of the Rehoboth Dairy. I took time to evaluate the impact of low cost imports to the area, high cost of imported inputs, the local labour situation as well as the long-term effects on the local economy after the closure of the local dairy industry.
The findings were clear: a) local jobs were lost; b) the price of the imports shot up immediately after the closure of the dairy; c) the local consumers only benefited for a short time; and d) the cows that were milk producers were slaughtered for meat.
Last week I was invited by the dairy farmers and industry to attend a meeting lamenting the over-supply of milk on the international market and how this has led to low cost imports flooding the Namibian market. This “dumping” has led to a “price war” where foreign producers sending dairy products to Namibia at a much cheaper price that what our local producers can manufacture at.
The meeting ended with a tour of the storage facilities where we found more than seven months of long life milk standing on the shelfs. Obviously, as consumers we welcome the extra few dollars in our pocket when buying cheap alien milk, but must also be cognisant of the fact that a local industry is in dire straits and needs saving.
Bluntly put: A Namibia cow, let us call her Daisy, is spending her life on a Namibian farm, being looked after by Namibian employees and producing milk for our Namibian homes. Daisy has been part of our lives and would quite willingly continue to share her milk with us but it would mean we as Namibian consumers would have to dig deeper in our pockets for the privilege of keeping Daisy alive, keeping Namibian jobs, and, in the long-term, ensuring we have a Namibian industry that can supply us with this staple product.
As the writer for Consumer Court, I pledge to purchase Namibian milk at around the N$ 17.00 price even while price of alien milk is cheaper. In the short term it will cost me more, but from experience we had better put Namibia first or face the same losses of the Rehoboth area when the dairy industry closed there.


(The words “dumping” and “price war” are in inverted commas as they might not meet the criteria as applied under World Trade Organisation rules.)

Put Namibia first

(First appeared in New Era 11 August 2015)

During the past week I attended a consultative workshop by the Ministry of Industrialization, Trade and SME Development in Windhoek on the National Policy for micro-, small- and medium-sized enterprises. I was glad that the Ministry is revisiting the previous policy which is at least 18 years outdated. During the discussions I brought up the issue of whether this policy will clearly stipulate that it is to support Namibian owned businesses. This brought out differing viewpoints, with one side arguing that we cannot discriminate against foreign owned business while the other side argued that a policy should be put in place that specifically assists Namibian entrepreneurs to increase the size and scope of their business.
As consumers we are often requested by (mostly) big businesses to support Namibian products and services through the “Buy Namiban”, Team Namibia and other promotions. This is often at a cost that we as the consumers have to carry as these same businesses promoting these efforts are in fact asking us to do so at the expense of cheaper products from elsewhere. This type of infant industry protection is apparently aimed at creating local jobs and making it more profitable for a foreign investor to set up such a facility within the country.
Thus I must question not whether the Government should develop policies that allow more Namibian ownership, or perhaps even promote our own method of broad based economic empowerment, but rather; what affect would promoting Namibian owned businesses through preferential treatment have on a consumer?
First, we all as consumers would benefit as more Namibian ownership getting more benefits would allow for more jobs to be created. Secondly, it would mean that the profits of these enterprises would remain in Namibia and be available to uplift our own economy. Third, it would put a stop to unfair competition from foreign companies as they are already benefiting from export policies of their own country. We need only to look at what occurred in the construction industry when cut-throat competition was allowed in the construction industry. Economists argue that competition increases a consumer’s choice and lowers prices. Not so. The prices of houses have not gone down and neither has the quality for consumers. If we use this industry as an example, we also see how a local skill base has been reduced to sub-contracting or even closing down as even the lowest level of construction opportunities have been opened up to foreign owned companies.
We have seen xenophobic attacks happening in many African countries as consumers (citizens) become enraged by the number of foreign owned companies being allowed in all sectors without creating more jobs, or lower prices, but only an increase in the profits being syphoned out of their communities.
As a consumer activist and business owner, I cannot ignore that Namibia has one of the most liberal Constitutions that guarantee no discrimination. However, I must also point out that part of the preamble to this constitutions states: ‘whereas we the people of Namibia are determined to adopt a Constitution which expresses for ourselves and our children our resolve to cherish and to protect the gains of our long struggle…” Surely this means that we must ensure that our children remain the owners of our not only our land but also of our economy.
At the present rate we have already sold our birth right on the land issue where there is no control on foreign ownership. Is it not about time we take control of our economy and ensure that we the people also benefit from the profits of ownership?
I encourage you as a consumer to think twice before buying a product that you could source locally. Why buy that fake wallet when you can invest in a better product when you buy from the Namibian leatherworks businesses.

There is a ringing in my ears

(First appeared in New Era 5 August 2015)

On March 10, 1876, Alexander Graham Bell got the first telephone to work and uttered the words “Mr. Watson—Come here—I want to see you”. He as the inventor realised early on the intrusion a telephone could be and refused to have a telephone in his own study. The past few weeks I have been getting very frustrated with this invention and the intrusion it is having on my privacy. It all started when MTC started sending me SMSs about a competition that I could participate in to win if I first gave them three of my hard earned dollars.
Come on. That is gambling. If I, and all the other entrants must pay a participation fee, but only one of us actually wins a share of the money we all contributed, then this means that not only is it a gamble, but also a money earner for MTC. Upon enquiry with MTC, I was informed that I should send an SMS to request them to not send me any further SMSs about the competition. Yep, that’s right. I have to spend three dollars to get off the list of people who receive the message. This whole process by MTC is wrong and I consider it an invasion of my privacy. Further, as a company they are making use of my data for a purpose that I did not agree to.
Let us look first at the invasion of my privacy. The Constitution of Namibia clearly states that “No person shall be subject to interference with the privacy of their homes, correspondence or communications save as in accordance with law and as necessary in a democratic society….” Sending me an unsolicited message on my cellular phone is a clear interference with my communications. As an aggrieved person you and I are allowed under the constitution to approach the Ombudsman to provide us with legal assistance or advice as we require. I am approaching the Ombudsman in this regard and will keep you updated in later columns.
Secondly, let us look at the fact that MTC is using the fact that they know my number, as I am a client of their service, and now using it for a purpose for which I have not granted them the right. This is considered unsolicited advertising or SPAM. The most widely recognised form of spam is email spam, the term is also applied to similar abuses in other media: instant messaging spam, Usenet newsgroup spam, Web search engine spam, spam in blogs, wiki spam, online classified ads spam, mobile phone messaging spam, Internet forum spam, junk fax transmissions, social spam, television advertising and file sharing spam.
In the United States, a law called the “Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003” was passed. Under this law, (and similar laws elsewhere), companies are required to be provide a clear and free method of unsubscribing from such messages. It further allows for the establishment of national do not call/ sms / email list that allows consumers to register their details and be protected from unsolicited advertising. Of course, the law also allows for fines and penalties for companies that do not adhere to these regulations.
Some readers might feel that I am making a mountain out of a molehill by insisting that companies like MTC and others should be prevented from sending us junk mail via our telephones. I would however remind you that our telephones are a communication method that not only allows outward communication, but also is often used for inward communication relating to families and friends. Take an example of the grandmother who cannot read at night getting an unsolicited advert in the middle of the night. She will have to wait till morning to know what is in the message and meanwhile she fears the worse news until then.