Amid increasing concerns over the rising debt levels of ordinary Namibians, The Brief (TB) caught up with Letshego Holdings Namibia Chief Executive Officer, Ester Kali (EK), to provide valuable insights into how Letshego is addressing the issue and contributing to responsible financial practices in the country. Letshego Holdings Namibia is the parent company of Letshego Micro Financial Services Namibia and Letshego Bank Namibia, providing micro-lending and banking services, respectively. Below is an excerpt from the interview.
TB) With rising concerns over household indebtedness in Namibia, how is Letshego addressing these issues through its lending practices?
EK) Letshego acknowledges the rising concerns over household indebtedness in Namibia, where the household debt-to-income ratio stood at around 88.2% in 2023 according to the Bank of Namibia (BoN). Letshego continues to adopt responsible lending practices by focusing on affordability and ensuring loans are tailored to individual financial circumstances. We conduct rigorous credit assessments to evaluate customers’ ability to repay loans without overburdening them.
More than 52% of our customers use loans to invest in projects that improve their livelihoods. At Letshego, we recognise that over-indebtedness often has historical and cultural roots, linked to a lack of practical financial literacy. To address this, we invest in financial literacy programs in partnership with the Ministry of Finance’s Financial Literacy Initiative and organisations like FinFit. In 2024, we launched these educational efforts, benefiting over 600 teachers, 200 Ministry of Health employees, and 91 community members at the Ongwediva Trade Fair. These sessions, fully funded by Letshego, empower individuals to make informed financial decisions, manage their finances responsibly, and engage in productive borrowing. Our financial literacy programs are specifically designed to teach the “three Ms” of money: Make Money, Manage Money, and Multiply Money.
TB) What specific measures does Letshego have in place to ensure clients are not overburdened by debt, especially those already heavily indebted?
EK) Letshego operates under the regulatory frameworks of the Bank of Namibia for banking services and NamFISA for micro-lending, ensuring full compliance with national lending regulations. We follow strict affordability assessments and credit risk guidelines to safeguard customers, monitoring debt obligations through credit checks and setting lending caps based on income to prevent over-commitment. Our flexible repayment structures allow customers to choose manageable terms, reducing financial stress. In addition, Letshego offers tailored financial literacy programs to enhance clients’ financial knowledge.
Through our banking services, Letshego provides low-cost transactional accounts and high-interest savings call accounts. Our home loan solution includes free homeowner insurance for the first 36 months. In the micro-lending sector, we offer loans with a 22.5% interest rate, inclusive of all administration costs, making them more affordable and accessible to our customers.
TB) How does Letshego promote financial literacy and responsible borrowing among its clients to prevent over-indebtedness?
EK) Financial literacy is core to Letshego’s mission. We intentionally educate the public through community workshops and one-on-one consultations at branches. Our sales consultants engage customers to assess loan purposes, prioritising loans for productive uses. These efforts, combined with our partnerships in financial education, empower customers to manage their finances responsibly, contributing to reducing the risk of over-indebtedness.
TB) Is Letshego concerned about being labelled as one of the key contributors to the indebtedness of Namibians through its products? How do you respond to such perceptions?
EK) Letshego is aware of perceptions that micro-lenders contribute to national indebtedness, and we are committed to fostering financial inclusion in a responsible manner. Micro-lenders play a vital role in promoting financial inclusion by offering customers who are unable to secure bank loans an opportunity to improve their financial status. Our products are designed to support the financial needs of underserved populations while ensuring that customers are not put at undue risk of financial distress. By promoting transparency and adhering to ethical lending standards, Letshego continuously strives to mitigate such concerns. Our loans are often used by customers to invest in income-generating projects and building rural homes, where traditional banks may not provide financing. Perceptions of indebtedness motivate us to be intentional and proactive in conducting strategic initiatives that empower Namibians to benefit from ethical, trustworthy financial services and engage in productive lending to improve their lives.
TB) What steps does Letshego take to monitor and manage the debt-to-income ratios of its clients to ensure financial stability?
EK) Letshego employs a debt-to-income ratio model to ensure clients remain financially stable. By calculating customers’ total debt obligations against their monthly income, we determine an acceptable threshold for lending. Clients with high ratios may either be denied new credit or offered alternative solutions, such as debt restructuring. This policy ensures clients are not stretched beyond their financial means, reducing default risks.
TB) Has Letshego introduced any new initiatives or policies aimed at reducing the risk of over-indebtedness among its clients, and what impact have they had?
EK) In line with our commitment to responsible lending, Letshego has introduced a Debt Consolidation Loan designed to assist customers with multiple loans from various providers. By consolidating these debts into a single, manageable loan, customers benefit from reduced repayment pressures and lower interest rates. In addition, Letshego has intensified its focus on customer debt counseling, offering clients loan restructuring options and ongoing financial support. These initiatives have resulted in lower default rates and improved financial well-being among our clients.
As part of its social framework, Letshego issues social bonds, with plans to use the proceeds to finance eligible social projects that align with specific objectives of the United Nations Sustainable Development Goals (SDGs).
These proactive solutions, underpinned by strong internal policies, reflect Letshego’s dedication to responsible lending and its commitment to supporting the financial stability of Namibians.
