12 September 2018 | Bankwese

Help for debt-ridden civil servants

Staff Reporter - NedLoans has introduced a product enhancement for government employees by increasing the maximum loan to N$200 000 per client, subject to affordability.

The primary purpose of the product enhancement is to respond in a meaningful way to the national crisis of multiple indebtedness attributed to a lack of financial wellness skills," Nedbank Namibia’s head of NedLoans: Erastus Haihambo, said in a statement.

According to the latest figures released by the Bank of Namibia (BoN), the total bank debt of consumers at the end of July was nearly N$55.1 billion – an increase of some N$3.47 billion or 6.7% compared to the same month in 2017.

As a significant rise in the level of household debt coincides historically with many severe economic crises, Nedbank Namibia said in its statement. The bank aims to assist civil servants to better manage their debt through debt consolidation, it said.

"Although a better deal is achieved when multiple debts are settled so that the client remains with one installment, it is equally important that we awaken people to the potential risks and consequences irresponsible borrowing may hold," said Haihambo.

“This is exactly what we assist our clients with at NedLoans and why the enhancement to the current product was developed. When times are tough, clients start seeking out ‘easy’ loan options as they need immediate relief of credit card debt and other willful consumption.”

Housing

In addition, NedLoans decided to become actively involved in delivering a village home solution to government employees living in unproclaimed areas who currently are not benefitting from the government housing scheme.

Consumer activist Rob Parker says this could be a good product for civil servants in far-flung rural areas as it is reaching out “to a segment of the populations who were previously without access to credit”.

“These products could also help consumers build creditworthiness,” Praker said.

He, however, urged clients to check the terms and conditions and make sure they understand it before signing the agreement.

The publisher of Consumer News Namibia, Willem Gariseb, said Nedbank Namibia's offer is a step in the right direction.

"It's about time the private sector showed some initiative. Decentralisation of vital services to the majority of Namibians can only be effective if the civil service can attract professionals to rural areas. This product could help those professionals to build proper houses in unproclaimed areas," said Gariseb.

Haihambo said there are civil servants who could not qualify for urban housing schemes and who, upon retirement, will have no choice but to return to their respective communal areas. “This is yet another reason why financial planning is so important.”