Chart of the Week
The microlending industry has been in a continued battle against the Ministry of Finance since mid-2025, when it was announced that the payroll deduction management system (PDMS), in place since 2003, would be phased out by 30 November 2025. Entrepo Finance (Pty) Ltd, a subsidiary of Capricorn Group, led the charge against the phaseout, arguing the Ministry's decision was irrational, irregular, and unreasonable, and while the courts have provided some temporary relief to the industry, the legal proceedings remain unresolved as of April 2026. In the meantime, major lenders have not waited for a final ruling to begin restructuring their origination models. Letshego, which historically originated 96% of its N$5.2 billion loan book through DAS, announced it would no longer issue new deduction at source (DAS) loans to government employees, transitioning instead to a debit-order-only model.
The impact of the directive is clear in the Namibia Financial Institutions Supervisory Authority's latest Quarterly Statistical Bulletin. The value and number of microloans disbursed fell 73.5% and 62.6% respectively in the fourth quarter (Q4) 2025. The total value of the term loan book stood at N$6.9 billion at end 2025, a 4.1% decline from 30 September 2025, while the number of outstanding term loans declined 7.9% to 158,697.
For context, the elevated Q4 2024 base reflects a one-off surge driven by Namibia's personal income tax amendment, which was only gazetted in September 2024 despite being effective from March; resulting in employers processing several months of tax refunds through Q4 payroll, temporarily boosting both borrower affordability and loan demand.
The proposed alternative to DAS is NamPay, an electronic funds transfer system developed in collaboration with the Bank of Namibia, which utilises the international ISO 20022 messaging standard. Its core collection mechanism, the Enhanced Debit Order system, differs from traditional debit orders in that it can repeatedly check for funds in a borrower's account for up to 14 days, improving collection success rates. However, unlike the PDMS which intercepted repayments before funds reached an employee's bank account, EnDO operates post-net pay, introducing a level of default risk that simply did not exist under the DAS model. How quickly and effectively lenders can adapt to this new collection environment will be the defining factor for the sector's performance in 20
26.
