What is the information you need when taking a bank loan?

Before you take a loan (or other financial product) you have the right to receive all the necessary information that will allow you to make an informed financial decision.
If you are taking a loan, you should know the answers to the following questions before agreeing to the loan.

• What is the size of the loan amount you are borrowing?
• What is the loan term? This is how long it is going to take to repay the loan.
• What is the interest rate? This is the percentage of the total loan amount charged for using the loan amount. It is normally charged on a monthly basis.
• What are the fees on this loan? These are normally once-off payments or administrative costs such as a loan processing fee.
• Do I have to take out insurance with this loan? If you take out loan insurance it will pay back your loan if something bad happens to you. This will protect your family and guarantee the bank gets its money back.
• How much is the loan payment? This is the amount of money you have to pay at regular intervals to repay the loan.
• What is the repayment schedule? This is the frequency with which you need to pay. Normally a bank loan is repaid on a monthly basis.
• Do I need collateral? This is a guarantee in the form of assets such as property that the lender can take if you fail to pay the loan.
• What happens if I pay late? If you do not repay on or before the dates agreed, the bank may charge a penalty. It can be that penalties in the form of a fee or increased interest charges are added to your payment for each day you are late. 
• What are the consequences of default? If you should stop repaying the loan completely, the bank will take your collateral and will register you with the credit bureau.

Remember, the relationship with your bank is a life time one. The longer the bank knows you, (and the more your bank gets to trust you because you keep your commitments), the easier it becomes to get preferred rates and charges that will provide you with even cheaper credit.

History of credit in Namibia

Credit is a word with various meanings. These include praise, recognition or acknowledgement and that is why the list of names at the end of a movie is called credits. It can also refer to reputation or character, but most often we use it to refer to a product or service that is provided now and paid for in the future.
Most of us use credit to purchase a house, a car, clothes and sometimes even groceries. If we take on too much credit, we find it difficult to get out of the cycle of indebtedness. In Namibia, indebtedness has become one of our biggest problems and needs to be tackled sooner rather than later.

In this week’s column, I investigate the history of credit in Namibia under German colonial rule and see if we can learn any lessons from the past.

The credit system evolved in the early 1840s and started to destroy the economic structures of many Namibian communities. It is recorded in the history books that around this time Jonker Afrikaner incurred heavy debts with the trader Morris. It is speculated that Jonker’s raids on the Ovambanderu in 1846 was a direct response from Morris on him to pay his debts.

By the late 1890s, the German Administration had realised the extent of the problem and the administration decreed that “no person could be sued for credit”. Pressure from the business community forced the administration to suspend the regulation on 22 February 1899.

Increases in trading activity also brought problems for Samuel Maharero. The traders expected his help in collecting their debts and held him personally responsible if debts were not paid. These rising debts led to the “sale” of land, and traders such as Gustav Voigts, Fritz Wecke, Ludwig Conradt and John William Wallace of Okombahe were paid in this way. It is recorded that the missionaries Diehl and Viehe sharply attacked Samuel Maharero for “selling” the Okakango locale, north of Okahandja, to settle his debts.

This made it necessary for the District Chief of Okahandja, Zürn to relieve the pressure on Samuel Maharero by declaring that “while Samuel himself still has unpaid debts, he could not accept responsibility for the debts of others”.

This increase in trading activities on credit (and the method of debt collection) drew attention to the more serious problem of the “land issue”, which conflicts with the notion of a “settler colony”.

By 1903, a Credit Commission appointed by the German Government to study the problem of credit and look into how indigenous people should settle their debts to the traders completes its recommendations. Theodor Leutwein, (the “Kaiserlicher Landeshauptmann” or Governor) issued a proclamation in July 1903 that enacted the long awaited credit regulations. The credit regulations outlawed the sale of “tribal” (communal) land to curb abuses. Recognising that the regulations would restrict their ability to collect debts, the traders used even harsher methods to collect outstanding debts before the regulations came into law.
In early 1904, just before the Ovaherero uprising, Gustav Sonnenberg held discussions with Chief David Kambazembi on the growing indebtedness of the Ovaherero. The uprising had several causes including the loss of control and ownership of traditional land, moneylending by traders, increasing debts, cases of rape, the sale of alcohol, and threats to Samuel Maharero’s life.

In history we can see that the business and financial practices under colonial rule led to the people of the country becoming disqualified from the economic opportunities of their own country. Our modern struggle for Independence will only be complete when the business and financial practices become a qualifying force to enable Namibians to participate in the economic opportunities of the ‘Land of the Brave’.

Growing trend of mobile phone spam in Namibia

A consumer recently sent a copy of an SMS that offered the consumer a chance to make money from filling in forms and directed them to a website. The email reads:
“Earn Extra income. Get paid up to N$3 750 per form. No computer needed. Very profitable. Visit www.mynamcash.com to get started.”  The short message was sent from the short service number 5001.
Once a consumer uses the website link, (which sounded Namibian) they were redirected to a website in South Africa. In addition, the page created a pop-up window which offered a free computer programme download. This is a typical example of spam being used to get more of your personal details which the website owners can sell to other spammers and they use your network of contacts to further spread their message.

Unfortunately there is no easy way to make money. These types of messages are mobile phone messaging spam that is aimed at getting you interested in something for nothing before making your money disappear.

What is SPAM?

SPAM stands for Salted Pork and Meat (or as we know it in Namibia – bully beef), and is now commonly used to refer to uninvited messages or advertising sent out in bulk. While the most widely recognised form of spam is e-mail spam, the term is applied to similar abuses in other media: instant messaging 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 networking spam, social spam, television advertising and file sharing network spam.

The aim of the SPAM is to get you — the consumer — to react to the information message and then be drawn into making a purchase, giving your personal information or even becoming involved in an attempt to defraud you of your money.

How do I stop SMS spam?

The cellular providers in Namibia do not have a regulatory body as yet. In South Africa commercial SMS messaging is regulated by the industry organisation WASPA (Wireless Application Service Providers’ Association). Membership of WASPA was made mandatory in 2005 by the mobile operators and TV stations for any company doing value added services in South Africa. They also provide a list of approved SMS providers and allow consumers to complain via their website or telephonically.

The Namibian cellphone companies allow businesses to send SMS messages to users using the short service number (for example 727 or 5001). Businesses using this service can determine how much they wish to charge if a consumer uses this number to send in a reply. The cellphone companies charge the costs of a normal SMS, and a further 50 percent of the costs being charged to the consumer. When a company wishes to rent a short service number they are informed that they should get permission from the consumer to send to their number, but no official procedure seems to be in place to manage consumer complaints.
As a consumer it is your responsibility to protect your cell phone number by being careful who gets your number. One of the biggest sources of SMS spam is number gathering carried out by Internet sites offering “free” ring tone downloads. In order to simplify the download, users must provide their phones’ numbers. This information is then used to send frequent advertising messages to the phone.

It must be noted that companies can collect your number to send you messages you might want to receive, for example your account payment reminders or promotional offers. You should check whether they keep your information private and do not share it with other businesses.

Another consumer scam

While investigating this issue, the cellphone companies wished to remind consumers to be careful when answering missed calls or CallMe requests from a number you do not recognise. Some consumers have been fooled into phoning back and the party answering has transferred their call or some other trick to keep them on the line. When the consumer gets their account, they find this was a premium number and they have been charged a lot of money for this call back.

Namibian Telephone Numbering Plan

Your telephone number belongs to you. This is a basic accepted principle by any consumer. After all, who would dial your number unless they wanted to speak to you?

It should therefore mean that you can keep your number even if you change your provider from Leo to MTC or even from a mobile company like MTC to your home telephone. The idea that your number belongs to you is called number portability and the method of implementing this is through a National Telephone Numbering Plan.

As a consumer, you have an attachment to your number. After all, you give out on your CV, to your friends and family and to creditors. If you change your telephone service provider, you will have to face the inconvenience of learning the new number, changing your documents and making sure everyone knows your new number. This inconvenience has a financial cost and could be important in forcing you to stay with your service provider, even if you are unhappy with the service, or can get a better deal from another provider.
Being able to change your provider without changing your number gives you, as the consumer, the power and the right to choose the telephone service provider that makes you happy with it price, service and products.

Since 2002, most countries around the world have opened their telecommunications markets to competition (that include a national numbering plan), which has accelerated the deployment of telecommunications services more quickly and cost-effectively than past monopolies have achieved. For example, the European Union (EU) Universal Service and Users’ Rights Directive (2002/22/EC), Article 30 — effective since July 2003 — imposes on all EU member states the following obligations:
“Member states shall ensure that all subscribers of publicly available telephone services, including mobile services, who so request can retain their number(s) independently of the undertaking providing the service:
• In the case of geographic numbers, at a specific location; and
• In the case of non-geographic numbers, at any location.”

The Communications Regulatory Authority of Namibia (Cran) is mandated to establishing a numbering plan and to require mobile number portability by 2013. According to a recent advertisement, Cran is looking for sufficient information to justify the implementation of number portability taking into account consumer needs, ensuring fair competition in the market and economic feasibility.

Cran will have to establish a numbering policy that provides a legal, legislative, and regulatory basis for competition. Then Cran must decide on numbering and dialing schemes, services, technologies, and billing and tariff methods that support its chosen numbering policy. Lastly, it must also establish a fair, neutral office for numbering administration.

From discussions with Cran and industry representatives, it is obvious that certain telephone providers would prefer not to have a numbering plan implemented. The argument being put forward is that the plan has not worked well in some countries because of the costs involved, the implementing agency not being technically capable, etc.

It is understandable that Cran should look at the costs or other issues involved for the providers as they will put these costs on to us as the end user. However, the power granted to the consumer to change providers will force cheaper prices and a better service which is the ultimate reason for the establishment of regulatory authorities that need to “take into account consumer needs”.

As consumers, we often do not have the regulations or protection we need because we lack an adequately funded organisation that will look after our needs and address issues such as the national numbering plan to ensure that government and its regulatory authorities such as Cran, Electricity Control Board, etc do “take into account consumer needs”.

This needs to change.

We need Consumer Protection laws

Since Independence, Namibia’s lawmakers have been preparing laws to make all our citizens equal and to ensure that our rights are protected. They have scrapped discriminatory laws and created laws that give us access to equal opportunities. Thanks to these efforts by our parliament, all of us know exactly what our human rights are.

As part of the efforts of creating equal opportunity for all, the government ministries and institutions have concentrated on bringing laws and regulations that assist in sharing the wealth of the business community amongst the black population. These laws have covered ownership of businesses in various sectors such as farming, mining and fishing as well as lifting of restrictions on certain business areas which excluded the majority of Namibians.

One of the major partners in these efforts has been the chamber of commerce and industry. The NCCI was instrumental in getting one voice for business and has become a partner for development. In exchange, the government has helped the chamber by channeling grants and donor funds, and even gone so far as to purchase them a building in Windhoek for their operations. It is good that Namibia has become a country friendly to business, but what about the protection of the consumer?

We hear about consumer protection but hardly do we ever hear exactly what that means to us as a person. The question you have to ask is, “Who do I need protection from?”

According to Wikipedia - “Consumer protection law or consumer law is considered an area of law that regulates private law relationships between individual consumers and the businesses that sell those goods and services.” Unfortunately, Namibia’s lawmakers have failed to create the laws necessary to protect its consumers. This needs to change.

A recent example of this is the decision by NAMFISA to “remove the Consumer Credit Chapter from the Financial Institutions and Markets Bill. The scope of the Consumer Credit Chapter was deemed too wide and necessitates considerably more research in order to develop a comprehensive policy for consumer credit in Namibia.”

The history of this law makes one realise that Namibian consumer is being ignored.

History of the Consumer Credit Chapter

In 2006, the Parliamentary Standing Committee on Economics, Natural Resources and Public Administration invited the public, banks and the private sector to discuss what can be done to make banking more affordable for the majority of Namibians. At the meetings, it was agreed by various presenters that we need legislation that will cover competition issues, but just as important would be the need to have consumer credit legislation. The Parliamentary Committee then tasked the Ministry of Finance and its institutions to prepare legislation in this regard.

After 6 years of consultation, meetings, road shows and various legal drafts, NAMFISA has removed the legal provisions which would cover what types of credit agreements would be allowed, the registration of credit providers, rules for the listing in credit bureau and the registration of debt counsellors.

More importantly, they will no longer include the following rights of the consumer:

•  Right to apply for credit
• Protection against discrimination in respect of credit
• Right to reasons for credit being refused
• Right to information in plain and understandable language
• Right to receive documents
• Protection of consumer credit rights 

The laws we need

The laws we need in Namibia have to cover the following issues:

• Product liability - Businesses who make products must be held responsible for the injuries those products cause;
• Unfair Business Practices – These should include looking at leasing of property and the increases in rental prices, the settlement of insurance claims and debt collection when there is a default;
• Guarantees – Forcing sellers to provide a money-back guarantees to consumers if they wish to return a defective product
• Consumer Credit – Regulation of credit bureau (such as ITC and Compuscan), assistance with debt counseling and repairing of credit reports, consolidation of loans and regulating of credit that can lead to bankruptcy
• Small Claims Court - This 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
• Privacy Protection –At present the Constitution guarantees only Physical Privacy. The storage of personal and business information (Informational Privacy) must have legislation that will prevent misuse of this information. In addition, the individual in Namibia must be able to access any, and all, information that is stored by the state (public institutions).