- Friday, 13 December 2013 08:24
- Published Date
- Nyasha Francis Nyaungwa
- Hits: 1016
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 country’s international reserves. sIn August last year, Shiimi told the Economist that:”There are various tools that one can look at to try and tame too much credit going into unproductive activities. We don’t 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.”
- Articles In This Category
- MarketsSwakara is high in demand with many furriers indicating they are keen to bid on the 53 000 Swakara pelts up for sale at next weekend’s auction in...Zambian business guru to open expo (509 hits)MarketsNamibia SME Expo ’13 will be opened by Zambian business leader, Patrick Chisanga. Chisanga is chairman of Air Namibia (Zambia) Ltd and is an...30 year old Insurance (197 hits)MarketsLast week Welwitschia Insurance Brokers turned 30. The company specialises in all types of corporate, commercial, SME, marine, aviation and personal...FNB open to government partnership (644 hits)MarketsLeading financial services group FNB Namibia, says it is willing to partner with the government in a number of areas to help the country achieve...Analysts divided on rate cut (1041 hits)MarketsThe decision by the central bank to cut interest rates by 50 basis points has left analysts divided with some saying the decision caught them by...IMF sets Namibia’s growth at 5% (333 hits)MarketsThe Bank of Namibia this week projected that Namibia’s real Gross Domestic Product growth would close at 5% and 5.5% in 2015 and 2016 respectively....Dimension Data in Garten Inc 2012 report (606 hits)MarketsDimension Data this week announced that it has been positioned by Gartner Inc. in the Leaders Quadrant of the Magic Quadrant for Communications...Regulation 15 under review (271 hits)MarketsRegulation 15 of the Long Term Insurance Act is expected to come under review according to Deputy Minister of Finance Hon. Natangwe Ithete who spoke...Website for banking (598 hits)MarketsFNB Namibia last week announced the unveiling of its updated, fully-scalable banking website, which automatically detects and adapts to the device...Service Audit brings unexpected bonus (647 hits)MarketsMaria Nangula Akudhenga, a client of Bank Windhoek’s Oshakati-North branch, won the N$10,000 prize in the annual Bank Windhoek Service Audit...
- Related Articles
- Most businesses defy consumer charter (1638 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 (1235 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 (1130 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 (1057 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
- HeadlinesThe Namibia Professional Hunters Association, NAPHA, last week donated N$30,000 to the Nau Aib Primary School in Okahandja, a town from which the...HeadlinesSince the ostentatious groundbreaking of the Tses Glass factory in June last year, the Groot Systems CEO, Simon Kapenda said that a Ukraine-based...Further cost cutting at Langer Heinrich (258 hits)HeadlinesAustralian uranium miner and owner of the Langer Heinrich mine, Paladin this week announced that it would cut costs further following an announcement...Editors DeskSince the launch of the Tripartite Free Trade Area in June this year, a voluminous body of scholarly work has been generated by many tertiary...Weather 31 July 2015 (43 hits)WeatherWhat Happened A rare phenomenon manifested during the course of the week. Early in the week, the customary high pressure cell sat over South Africa...