- Friday, 13 December 2013 08:24
- Published Date
- Nyasha Francis Nyaungwa
- Hits: 865
Slamming the brakes on the raging holiday spirit, the Bank of Namibia this week said it will target the curbing of consumer credit citing several legal arrows in its arsenal.
If the Bank of Namibia has its way, the Credit Agreements Act of 1980 will soon be amended to increase the amount of deposit consumers pay when buying goods on credit.
The Governor of the central bank Ipumbu Shiimi said the bank is consulting with the Ministry of Trade and Industry - custodians of the Credit Agreements Act - and the Ministry of Finance to use the Act as a tool to reduce the prevailing high consumer indebtedness.
Shiimi said this on Thursday as the apex bank announced that annual growth in the private sector credit extension rose to 13.7% at the end of October 2013 compared to 13.3% in September due to increased demand for credit from businesses and individuals.
Figures released by the bank this week show that credit extended to individuals increased to 14.9% year-on-year at the end of October while growth in credit extension to the corporate sector increased to 11.9%.
The bank said the rate of credit expansion to individuals has remained high, thus it warrants targeted intervention.
Governor Shiimi said after a robust debate by management of the central bank, a decision was taken to use the Credit Agreements Act as a targeted intervention instead of increasing interest rates as this will not tamper with the stimulus effect of the low interest rate regime.
Amendment to the Act will likely see consumers buying goods through higher purchase agreement pay deposits of between 15% and 20% up from the 10% required by law currently.
The central bank governor said if gazetted into law, the revised deposit payments will help promote a culture of saving in addition to slowing down credit growth.
The decision to use the Credit Agreements Act to fight high individual indebtedness comes after the central bank had long said it was concerned about the rapid and unsustainable expansion of consumer loans including installment credit and overdraft facilities as it may crowd out funding for more productive activities and put unwarranted pressure on the countryâs international reserves. sIn August last year, Shiimi told the Economist that:âThere are various tools that one can look at to try and tame too much credit going into unproductive activities. We donât have a single position yet; we are still thinking about it. If the situation gets better we may not do anything, but if [consumers] continue to borrow too much to finance private consumption we will be forced to act.â
- Articles In This Category
- FNB kicks dust in competitionâs eyes (165 hits)MarketsFirst National Bank (FNB) Namibia Holdings last Friday released its full results reflecting a EBIT profit of N$1.171 billion. The retained (after...New Karas entrepreneurs (557 hits)MarketsThis group of entrepreneurs in the Karas Region had the good fortune last week to attend a training session by Bank Windhoek to make them more aware...PIN security can defeat most fraud (349 hits)MarketsEster Kali, Executive of Retail & Business Banking at FNB Namibia said that being vigilant when it comes to bank card PIN security is the best...Competition promotes financial literacy (1319 hits)MarketsNamibia Breweries and the Namibia Stock Exchange has announced that the Scholars Investment Challenge which was launched on 1 March, has a total of...Standard Bank ranked âcleanestâ bank (161 hits)MarketsStandard Bank Group, Africaâs largest bank by assets and earnings, has been ranked 19th in the Bloomberg Markets Worldâs Greenest Bank Report....Regus launches first business centre (1023 hits)MarketsGlobal workplace provider, Regus recently opened its first business centre in Namibia in Windhoekâs Maerua Mall. The launch of the business centre...DBN appoints CEO (462 hits)MarketsMartin Inkumbi has been confirmed as the substantive CEO of the Development Bank of Namibia after acting in that capacity for the past eight months....Investors for Trans Kalahari truck ports (825 hits)MarketsThe governments of South Africa, Botswana and Namibia aim to boost regional trade by improving the efficiency of the Trans Kalahari Corridor network...Deloitte appoints Regional Managing Partner (1615 hits)MarketsDeloitte has appointed Junius Mungunda to Regional Managing Partner for the Deloitte Southern Corridor member firms which includes Botswana, Malawi,...Simonis Storm appoints Muller Kotze (1067 hits)MarketsSimonis Storm Securities (SSS), one of the leading stockbrokers in Namibia and Members of the NSX this week introduced Muller Kotze, their newly...
- Related Articles
- Most businesses defy consumer charter (1514 hits)General NewsMost businesses or economic sectors would not adhere to the Namibian Consumer Protection Group (NCPG) charter if they can get away with it. The...Consumer rights day commemorated (1130 hits)General NewsNamibians joined consumers all over the globe to commemorate World Consumer Rights Day on 15 March. Consumer rights day is commemorated in...Consumer technology likely to grow this year (1003 hits)General NewsThe overall global demand for consumer technology is likely to grow this year. This is according to the Telecommunications, Media and Technology 2012...MarketsMicrosoft has announced the availability of Office 2013 in West, East, Central Africa and Indian Ocean Islands. Office 2013 has been designed to work...Consumer Price Index (973 hits)HeadlinesThe All Items Consumer Price Index for March 2013 increased by 0.8 percentage points from 201.9 recorded in February to 202.7. This increase...
- Latest Articles
- Weather 27 February 2015 (18 hits)WeatherRAINFALL FIGURESHeadlinesLaunched at the end of 2009, Galz & Goals is the first national project to entice young females into competitive soccer to provide a feeder pool...National maize stocks hit low (29 hits)HeadlinesOnly a third of the countryâs total cereal demand will be met from local production due to poor rainfall in the dryland maize production triangle...MTC 3rd most expensive operator (51 hits)HeadlinesA report released by The Research ICT Africa Network has found that Namibian cellphone subscribers pay nine times more than their Kenyan counterparts...Weather 27 February 2015 (23 hits)WeatherWhat Happened The combination of low pressure and unstable, tropical air produced some spectacular rainfall results this week, showing just what is...