A sure way of getting nothing for something

(First Published in New Era Newspaper - 2 July 2014)

At the end of every month I enjoy going to one of the big casinos in Windhoek and trying out my luck on the machines. Sometimes I win a little, but most of the time I lose. While sitting there though, I have noticed quite a few people who seem to lose every time that I am there. These gamblers are quite vocal when they lose and loudly claim that the casino management is purposefully preventing “their” machine from winning. They believe that after all the money they have spent, they should be getting a return on their investment.

The dictionary defines gambling as “takin a risky action in the hope of a desired result”. In the case of a gambling house, the owners are sure they will get their money as there is only a certain percentage that actually gets paid out in winnings. This percentage of winnings and other legal aspects are controlled by the Ministry of Environment and Tourism through the Casino and Gambling Houses Act 32 of 1994.  

Most consumers throughout the world are aware that giving a businesses a “free-hand” will lead to them maximising their profits while giving as little bit as possible back the client. Thus in the case of casino’s, governments must put in place legislation to ensure that the gambler has a least a certain percentage chance of winning. (Of interest in the Namibian law, is that the law states “The Minister may designate any person in the employment of the Public Service as an inspector for the purposes of this Act”. Thus, technically any government employee could act as an inspector?)

Now back to the role of government regulation.

If we take the definition of gambling and we look at various business models we will notice that very often a business idea is a “risky action in the hope of a desired result”. Take life insurance: The life insurance company is taking the risk that should you die, they must pay you a certain amount of money even if the amount you have paid in does not yet equal that amount. This means, the company is taking your money in the hope that you actually live long enough to pay them more that the amount that they pay out on your death. The insurance company is of course working with a profit motive to make money for the owners so the company must do everything in their power to reduce the risk to get their own desired result – namely you should stay alive as long as possible. If the company finds it difficult to reduce your chances of dying, they must find other methods of reducing their risk.

Insurance companies thus spend a lot of time in risk management and putting in place agreements that will be of maximum benefit to themselves without scaring away their customers. Therefore most insurance companies have mechanisms in place to reduce the amount they have to pay out in the case the “desired result” in not in their favour.

Here too governments have to play their role an regulate the market to ensure the customer on the street is being benefitted in the manner they expected – especially as that customer is now no longer among the living to ensure the contract is upheld by the life insurance company. To this end the Government has created the Namibian Financial Institutions Supervisory Authority (NAMFISA). It operates under the auspices of the Ministry of Finance, and it has no profit motive.

I believe that taking out life insurance is not a gamble but a risk reduction factor in my planning of my financial matters. As a consumer, I must hope that the government through NAMFISA will ensure that my interested are looked after even when I am in my grave. Looking at the present capability and track record of the regulator, I wonder if it will be there for me against the insurance company?

Milton Louw is the IT Project Coordinator at the Electoral Commission of Namibia. This column is written in his personal capacity as a consumer activist and the views expressed in this column are his own.

Let us sue for our money rights

(First Published in New Era Newspaper - 25 June 2014)

Imagine your brother loses his job. He is a family man with two children and is now in need of a place to stay. You have a one-bedroomed flat at the back of your house that you normally rent out for N$ 2,000.00 a month. At the time he loses his job, you have no renters so you decide to give your brother and his family the chance to stay there. In addition, your brother and you agree that you will help him until such time as he gets another job and that when he gets a job, he will give you back the money that you have lost as an opportunity cost.

Now, while it is true that you are helping your brother, you are also having an “opportunity cost”.

Opportunity cost is the value of the next best choice that one gives up when making a decision. In basic terms, any decision that involves a choice between two or more opportunities has an opportunity cost. In the case above, the cost of helping your brother is going to mean a loss of N$ 2,000 to your monthly.

After three months, your brother got a job and is able to move back into a new place for him and his family. However, he has now been working for over a year and does not seem intent to repay your three months of “lost rent” amounting to N$ 6,000. What can you possibly do to get your money paid back?

Before we look at the possible solutions to this problem, let us explore another scenario.

You have purchased a second-hand vehicle and as part of the deal you exchanged your old car and paid an additional amount of N$ 20,000. After two months, the car you purchased breaks down and the vehicle is not reparable. You find out after some investigation that the dealer who sold the car to you had bought the car on auction after the car had been declared a write-off by an insurance company. When you speak to the dealer he insists that you took the vehicle “voetstoots” and that he can return your car in exchange for the broken car, BUT, he will keep the deposit of N$ 20,000 as his cost for the transaction. What can you possibly do to get your money paid back?

As can be seen from the two examples, you have done something in good faith, but the other person, either as an individual or a business, has not treated you fairly.

This is not a criminal case, but is referred to as a civil case. According to the dictionary, “A civil case is a lawsuit that usually deals with contracts and/or torts. Torts, generally speaking, are wrongful (negligent) acts that result in damage or injury.”

In the two examples above, the amounts are not over N$ 25,000 and will probably cost you more in lawyer’s fees. You may even end up getting your money but this would be an empty victory as the lawyer’s fees may exceed the amount you receive in compensation.

What we need in Namibia is a small claims court to assist the person on the street to be able to claim money that is too little to involve a lawyer.

A “Small Claims Court” is a court of law where ordinary people can handle their own cases. It is not necessary to have a lawyer (and their costs) as the forms are meant to be a kind of “do-it-yourself” where you fill in the blanks. The court has less formal and less complicated rules and procedures than the Magistrates Court.

I propose a small claims court be established where parties could settle their differences in cases up to the value of N$ 25,000. This can, and should, become part of a Consumer Protection Act.

Milton Louw is the IT Project Coordinator at the Electoral Commission of Namibia. This column is written in his personal capacity as a consumer activist and the views expressed in this column are his own.

Namibia’s form of capitalism must be reigned in

(First Published in New Era Newspaper - 4 June 2014)

Recently a family member of mine woke up to the reality of how cold it really is this winter in the capital. At the end of April the City of Windhoek came to cut his power supply because of arrears in the family water and electricity account. The amount of arrears had accumulated over a period of twelve months as the family did not every time pay the full amount due. After around a year, the family was faced with just under N$3,000 they had to pay before electricity could be re-connected.

A friend in Windhoek recently came to the end of their rental contract of a year and presumed that the contract would automatically be renewed with a possible slight increase from her present N$ 5,000 per month. Imagine her surprise when the landlady sent her the new contract with the rental agreement now being N$ 6,200 per month. This is a month on month increase of N$ 1,200 or 25%. The friend and her family earns around N$ 12,000 in total and there is no way that they will be able to afford this sudden increase. The worst part is that the landlady is aware of this, but she already has a future renter that is willing to pay the proposed N$ 6,200 per month.

The price of chicken and milk has gone up since the government started protecting these industries as infant industries. This means that imports from outside the country are made more expensive by charging administrative levies on these products from outside and in this way allowing the local producer to increase their prices as the competitions prices are now higher for the end consumer.

Looking at these issues one has to come to the realisation that the Namibian form of capitalism has lost its course.

Now what is capitalism? Capitalism is the economic system in which trade, industry and the means of production are controlled by private individuals with the specific goal of making profits. Capitalism is also reliant on a political system that agrees with the principle of capitalism and actively encourages the economic aim of individual profit making.

In a perfect capitalist world, both parties to a transaction determine the prices at which assets, goods or services are exchanged. Namibia is not such a place!

In Namibia, most of the poor consumers have very little choice, if any, on what is available to buy and at what price. The location of consumer to the service outlets, and the lack of political action still leaves the consumer as a victim in a situation where they have no bargaining power, and no protection by the legislature (parliament), the executive (GRN) or the judiciary.

It is up to the consumer activists and the media to bring an end to this never ending road to poverty for the majority of Namibians. The economic situation of this country and its citizens was ruled by the apartheid policies before independence and this was one of the main factors for the people of the country wanting change. Now, twenty years after our Independence, the economic systems that are in place still do not reflect the needs of the poor. It is high time that the parliamentarians and the state takes cognisance of the need to protect consumers through the enactment of a Consumer Charter and relevant consumer protection measures.

Milton Louw is the IT Project Coordinator at the Electoral Commission of Namibia. This column is written in his personal capacity as a consumer activist and the views expressed in this column are his own.

What is a consumer activist?

(First Published in New Era Newspaper - 11 June 2014)

Last week Wednesday, my first consumer column for New Era appeared and I was very pleased when a fiend indicated that he had seen my column. I was however very quickly deflated when he added that he had glanced through the article but was not actually sure what it was about. After some light questioning, I realised in fact that he had only read the heading and perhaps the first paragraph.

This led me to question (for at least five minutes anyway), why do I bother writing about consumer issues if not even my friends were reading it? Immediately though my common sense returned and reminded me that I am, and always will be, a consumer activist. This led me to the topic of today’s column, namely “What is a consumer activist?”

A consumer activist according to the dictionary meaning is “a person whose job is to protect the rights of customers, for example by giving advice, testing products, or trying to improve laws relating to the sale of goods.” This does explain what I do as an activist, except it is a non-paying job. That’s right, I do not get paid for trying to improve the laws relating to consumer affairs - in fact I do not even get paid for this weekly column. So what then motivates me and other like-minded individuals to propose boycotts, petition the government, write in the media and organise consumer interest groups on Facebook and elsewhere?

Personally speaking I consider the active role I play in consumer activism as a continuation of the active role I played in political activism during the Apartheid era in this country. There were “silly” laws during Apartheid such as black and coloured people were not allowed to buy white bread. That’s right. Not only were the people of this country prohibited from owning a business if they were not white, they were also prevented from buying white bread.

Since Independence, many Namibians have commented on the fact that the political struggle has been won but the economic struggle is not yet complete. Many of these same people are often times only referring to the ability of black business to enter the business environment and then be given opportunities that were denied to them under Apartheid. However, most of us forget to add that not only were the entrepreneurs and business people part of the struggle, but the consumer as a section of the population also played a crucial role.

The international consumer was roped into the struggle through getting the consumer to challenge the social order and help to change it through consumption choices which questioned their morality and indirect support of companies that did business with the Apartheid regimes in southern Africa.

After Independence however, many of our leaders in both politics and business have ensured that the laws have changed to accommodate the rising black business community and the employees in need of special regulations. There has also been a move to create new legislation through Affirmative Action (AA), Black Economic Empowerment (BEE), and now the New Equitable Economic Empowerment Framework (NEEEF) BUT nothing has come about in creating consumer protection laws to protect consumer from unscrupulous business practices, misleading advertising and profiteers (for example rent prices running out of control).

This is why I am a Consumer Activist - because I have the means and the talents to ensure the business practices and laws keep in mind the consumer - who is often the most ill-informed and least appreciated section of the community.

Milton Louw is the IT Project Coordinator at the Electoral Commission of Namibia. This column is written in his personal capacity as a consumer activist and the views expressed in this column are his own.

Forgive us our debts

(First Published in New Era Newspaper - 4 June 2014)

Is it possible for the Government of Namibia, through the Bank of Namibia, to wipe all our bad credit information off the blacklist? I do not want to have the debt written off, but rather just have every consumer in Namibia start with a clean slate as far as their credit record is concerned.

I believe this will help address the issue of access to credit for those Namibian that can afford credit. Many of these consumers may have paid their debts in full – and are in a position to afford credit – but their access is blocked by negative credit information still being stored on their credit record. This writing off of the “bad history” will ensure that consumers who can afford credit can be able to access it. It is presently difficult to get credit, it is expensive and this holds back growth. Access to a sustainable credit market is essential to all our development goals, especially Vision 2030.

The Bank of Namibia (BoN) announced on 29 August 2013 that the proposed draft regulations to regulate credit bureaus in Namibia are now open for public consultation. The BoN states “There has been recent speculation in the media around whether or not credit bureaus are illegal in Namibia. The Bank of Namibia’s view is that the existing credit bureaus in Namibia are legal entities registered in accordance with the relevant laws by the Ministry of Trade and Industry.

That means they are not illegal. What is missing in our legal system at the moment is a specific law regulating how these entities should manage the information under their care, and there is no centralized credit information system that allows banks and other lenders to know the total exposure per client and their credit history so as to avoid overextending of consumers.”

What is a credit bureau?

A credit bureau (sometimes called consumer reporting agency or credit reference agency) is a company that collects information from various sources and provides consumer credit information on individual consumers for a variety of uses. Credit information such as a person’s previous payment of loans or accounts is a powerful tool to predict their future behavior. Through the collection of such information lenders such as banks and micro-lenders can assess credit worthiness, the client’s ability to pay back a loan. This information can also affect the interest rate and other conditions of a loan.

Currently Namibian credit providers are under no obligations to supply information to credit bureaus. It is against that background that the proposed regulations will seeks to establish rights and obligations of credit bureaus to be registered and licensed by the Bank of Namibia. It is also proposed by the BoN that all credit bureaus are to have a centralized system. Such a system should have the capability of calculating total credit exposure per client, and requires that all credit providers are to supply information to all credit bureaus. The Regulations also provide clear guidelines pertaining to the kind of data to be collected, the period of time information can be kept (retention period) etc.

Consumer activists, community organisations and the media must keep this issue in the public eye to ensure that the credit bureau and the respective regulations are made in such a way to ensure fair credit reporting practices.

As a start, we must make sure that all credit bureaus adhere to the following minimum guidelines:

• Provide a consumer with information bureau’s files and to take steps to verify the accuracy of information disputed by a consumer;
• If negative information is removed as a result of a consumer's dispute, it may not be reinserted without notifying the consumer in writing;
• Credit bureaus may not retain negative information for an excessive period.