By Lara Enslin
Microfinance credit providers have a critical role to play in shaping the financial landscape of Namibia. We are all navigating an economic environment that is both challenging and filled with opportunities. And herein lies the key – the Namibian financial ecosystem must be focused on fostering partnerships and collaboration, especially when it comes to the microfinance credit providers themselves. These organisations can enhance financial inclusion and empower individuals to build their financial futures. As a global information and insights company, TransUnion works with lenders and regulators around the world to help increase financial inclusion and benefit individuals and their families, while acting as a catalyst for increased economic growth.
The recent Namibian census has revealed that the population has surged to 3.02 million. A significant 71% of the citizens of the country are younger than 35. This demographic presents a unique opportunity for microfinance credit providers to expand financial access to a younger generation who is eager to participate in the economy but often lack the means to do so. Within this segment, TransUnion estimates that 1.66 million adults are eligible for credit participation. And yet, less than 674,000 individuals are currently credit active or credit visible. These numbers highlight the urgent need to widen the net of financial inclusion, particularly for young adults.
The benefits of an enabling environment
Financial inclusion for young adults goes beyond simply giving them access to credit. It also encompasses providing them with the tools to take ownership of their financial health and well-being. Think of it as enabling them to make informed decisions that will set the foundation for their future growth and economic participation.
This is where the microfinance industry becomes invaluable. Microfinance credit providers are often the first point of contact for those individuals who lack access to traditional banking services. These businesses offer people a lifeline that empowers them to improve their livelihoods and contribute to the broader economy.
According to the latest Namibia Financial Institutions Supervisory Authority’s (NAMFISA) stats, there were 674 registered microfinance credit providers in Namibia who serve over 180,078 clients annually. This sector’s impact on our communities is therefore something that cannot be ignored. Microfinance credit providers empower thousands of Namibians by giving them access to credit. Think of these micro-loans as solutions that can help uplift families, support entrepreneurship, and stimulate economic growth.
Part of the microfinance environment is to offer responsible and sustainable financial solutions that align with the long-term well-being of borrowers. The Microlending Act, which has been instrumental in regulating and guiding the industry, ensures that both lenders and borrowers operate within a framework that promotes fairness and accountability. This legislation reflects a growing awareness of just how important microfinance credit providers are to the country’s financial ecosystem.
Partnership platform
But regulation alone is not enough. To harness the potential of the micro-lending sector, we must foster strong partnerships between microfinance credit providers and other stakeholders. These include regulatory bodies like NAMFISA, which regulates and supervises financial institutions and intermediaries. Collaborations are essential to ensure that lending practices remain responsible, transparent, and sustainable. Moreover, working closely with companies like TransUnion can provide microfinance credit providers with the tools and insights they need to assess creditworthiness more accurately. In turn, default rates can be reduced, and microfinance credit providers can provide even more innovative financial solutions to their clients.
Data-driven insights are the key to unlocking growth opportunities in the financial sector. By sharing data and working together, we can empower microfinance credit providers to not only serve their clients better but also help them build their credit histories. After all, a strong credit history is a passport to better financial opportunities. This enables individuals to access larger loans, secure better interest rates, and achieve greater financial stability.
Change is coming
The role of microfinance credit providers in Namibia is therefore twofold. On the one hand, they are catalysts for financial inclusion. On the other hand, they become stewards of responsible lending. By providing access to credit for those who need it most, microfinance credit providers help to level the playing field, giving more Namibians the opportunity to participate fully in the economy. At the same time, by adhering to responsible lending practices and working within a regulated framework, they help to ensure that this participation is sustainable and beneficial in the long term.
The microfinance industry in Namibia extends beyond a financial service provider function. Instead, it is about putting in place the framework that grows the number of economically active Namibians. By working together, sharing insights, and fostering responsible lending practices, we can ensure that the opportunities within this sector are fully realised, benefiting not just the individual borrowers but the entire Namibian economy.
Let us continue to find new ways to expand financial inclusion and create a future where all Namibians have the opportunity to thrive. The role of microfinance credit providers in this journey cannot be understated. By working together, we can unlock the full potential of this vital sector.
Lara Enslin is the CEO of TransUnion Namibia