By Dawid Shikongo
Imagine this, it is 3:00 PM on a Thursday. Your geyser bursts, flooding your bedroom in Windhoek’s Khomasdal suburb.
Your child needs school fees by Monday, or they cannot write their exams. Or perhaps a medical emergency has arisen, and your medical aid has refused to cover a critical procedure.
You do not have three to five working days to wait. You need cash now.
So, you turn to a microlender. You take out a short-term loan of N$5,000 at a higher interest rate, fully aware of the cost, because the application takes twenty minutes and the cash lands in your account within the hour. You solve your crisis.
Three months later, you go to your traditional bank, say, FNB, Nedbank, or Bank Windhoek and this is to apply for a consolidation loan or a small personal loan to breathe easier. Your credit record is spotless. Your disposable income is healthy. You have never defaulted on a debt in your life.
Then comes the rejection letter. The reason? “Adverse credit record due to existing microlender exposure.” Laughable right?
You have a microlender loan precisely because your bank was too slow to help you. And now, because you sought speed in an emergency, the bank is calling you a pariah.
This is not a logical risk assessment. It is financial hypocrisy.
The Logic Gap
Let us be clear about what is happening in Namibia. Traditional banks have long argued that a client with a microlender loan is a “high-risk” client. Their reasoning is that microlenders charge exorbitant interest rates (often up to 30%) , and therefore, if you were desperate enough to accept those terms, you must be financially unstable.
But that argument collapses under the slightest scrutiny.
First, desperation, is not default. A person taking a microlender loan to cover a two week cash flow gap is not the same as a chronic over-indebted spender. In Namibia’s economy, where salaries often run out before month-end and emergencies don’t wait for payroll, microlenders serve a legitimate function which is speed.
Second, disposable income does not disappear. Many Namibians rejected by banks for having a microlender loan actually have more than enough net income to service a bank loan. They are not being turned away because they cannot afford the repayment. They are being turned away because of a label.
One client, a government employee from Ongwediva with a clean 10-year credit record, was recently declined a N$20,000 bank loan because of an outstanding N$3,000 microlender balance. His monthly disposable income after expenses was N$8,500. The math worked. The system did not.
The Punishment Cycle
What is worse is the perverse cycle this creates.
The client needed cash quickly. The bank took six days to return a “we’re still processing” message. The client went to a microlender. Now the bank says, “We won’t touch you because you went to a microlender.”
So the client is stuck. They cannot refinance the high-interest microlender loan into a cheaper bank loan. They cannot consolidate their debt. They remain trapped paying 30% interest to the microlender, when they could have been paying 12% to the bank.
The bank, ironically, loses a profitable client. The client loses financial freedom. And the microlender wins another month of high interest.
This is not prudent lending. This is lazy underwriting.
A Wrong Approach That Must End
Banks in Namibia are sophisticated institutions. They have access to bank statements, Payslip data, Namfisa credit bureau reports, and real-time income verification. They can see exactly how much disposable income a client has after the microlender payment is made.
So why is a microlender loan treated as an automatic disqualifier?
The honest answer is institutional rigidity. Most bank credit scorecards are built on outdated models that label any non-bank lender as “sub-prime.” The models do not distinguish between a client who has six runaway microloans and a client who has one microloan taken three months ago for a funeral or an emergency car repair.
This is a uniquely Namibian problem because of our geography and income cycle. In rural areas like the Zambezi or Kunene regions, bank branches are hours away. Internet banking is unreliable. A farmer or a teacher cannot wait five days for a loan decision. Microlenders are the only practical option.
Yet those same rural clients are then blacklisted by the very banks that failed to serve them.
What Needs to Change
It is time for the Bank of Namibia and the Namibia Financial Institutions Supervisory Authority (NAMFISA) to step in. A directive is needed, Banks must assess affordability, not origin.
A microlender loan should be treated as simply another liability, no different from a store card or a car loan. If the client’s debt-to-income ratio is healthy and their payment history is perfect, the source of the debt should be irrelevant.
Furthermore, banks should be required to offer “switching loans” products specifically designed to allow clients to pay off a microlender loan and move the balance onto a lower-interest bank loan. That would be actual financial inclusion, not the pretence of it.
The Bottom Line
Namibian consumers are not stupid. They know microlenders are expensive. They use them not out of ignorance, but out of necessity. When a burst pipe or a hospital bill cannot wait for a bank’s “five to seven business day” approval, the microlender is the only lifeline.
To penalize that decision, to call it a mark of financial irresponsibility is to misunderstand the reality of life in Namibia. It is time for banks to stop looking at where the loan came from and start looking at whether the client can pay it back. Until then, they are not protecting themselves from risk.
They are simply punishing speed and common sense.
* Dawid Shikongo in his personal capacity.
