Term lending recovers as PDMS curbs ease
The lifting of the temporary suspension of the Payroll Deduction Management System (PDMS) has resulted in the disbursement of N$7.3 billion for the first three months of 2026, the Namibia Financial Institutions Supervisory Authority (Namfisa) said.
The non-banking financial sector regulator attributed the rebound to the resumption of lending transactions by a major term lender after the temporary suspension of loan disbursements to government employees in response to the finance ministry's directive on PDMS.
"The suspension contributed significantly to the sharp decline in term-lending disbursements observed during the fourth quarter of 2025. As such, the increase recorded during the review period largely represents a normalisation of lending transactions within the term-lending category," it said in its quarterly report.
Despite the recovery, overall disbursement levels remained below those recorded prior to the PDMS-related disruptions, suggesting the sector is still adjusting to the evolving operating environment.
"Payday lenders continued to account for the majority of disbursements at 72%, highlighting the continued importance of short-term credit within the microlending sector," Namfisa said.
The total number of new loans issued declined by 7% quarter-on-quarter to 175 018 during the first quarter of 2026. Loan originations decreased marginally by 0.7% on an annual basis, suggesting lending transactions have broadly stabilised compared with the same period, according to Namfisa.
The market in a nutshell
Payday lenders continued to dominate loan issuance, accounting for 94% of new loans, with term lenders comprising the remaining 6%.
Average loan values increased across both lending categories during the quarter. "The average term loan value rose to N$25 620 and the average payday loan value increased to N$4 030," Namfisa said.
Concentration within the payday-lending category remained elevated, with a limited number of institutions accounting for the majority of outstanding credit.
"Express Credit Cash Advance retained its dominant position, representing approximately 68.5% of the total payday loan book; Janeel Financial Services CC accounted for 5.9%; and Pause Financial Services CC held a market share of 3.2%," Namfisa said.
Letshego Micro Financial Services emerged as the largest participant in term lending, accounting for 28.8% of the portfolio, followed closely by Entrepo Finance with 28.1%, and Old Mutual Finance, which maintained its position as the third-largest lender with 22.3%.
What is the Payroll Deduction Management System?
The PDMS has, since its launch in 2003, enabled approved lenders and insurers to automatically deduct loan repayments, insurance premiums and other voluntary obligations directly from civil servants' salaries at source, giving creditors low-risk collection while providing government employees easy access to credit.
On 28 August 2025, the finance ministry issued a directive to end discretionary payroll deductions on the system from 30 November, saying only existing loans would continue, while statutory deductions such as tax and pension contributions would remain.
The ministry argued that payroll deductions used by microlenders do not comply with the Labour Act and have enabled lenders to bypass proper affordability checks. The proposed phase-out is aimed at forcing stricter lending practices and reducing over-indebtedness, the ministry explained.
