The Namibia Financial Institutions Supervisory Authority (NAMFISA) has issued Standards on 24 October 2018 under Section 35(5) of the Microlending Act, 2018 (Act No. 7 of 2018). It is important for all microlenders to take note of these Standards; we have therefore drafted the following explanation thereof:
Microlending Standard 1: The form and manner of any application required to be made under the act
This Standard requires a microlender to make application to NAMFISA for the following:
- (i) registration as a microlender;
- (ii) the change of name;
- (iii) purchase, amalgamation or transfer of microlending business;
- (iv) to conduct other business on licensed premises; and
- (v) the opening of additional microlending branches.
According to this Standard these applications must be submitted to NAMFISA manually in hard copy as well as electronically on the NAMFISA Electronic Regulatory System (ERS).
Microlending Standard 2: Fit and proper criteria for any key responsible person
This Standard is applicable to any key responsible person and includes a schedule: The fit and proper assessment for a key responsible person.
The Standard sets out the various fit and proper criteria for a principal officer, a branch manager, directors, a shareholder, member, owner, legal or natural person with at least 5% ownership or decision-making role in the microlending business.
Microlending Standard 3: The submission of returns, statements and reports
This Standard is applicable to every registered microlender and it includes two schedules:
- the MLR-1 (Certification of compliance); and
- the MLR-2 (Quarterly return).
A microlender must submit the following periodical and other returns, statements and reports to NAMFISA electronically on NAMFISA ERS as well as a hard copy of the signed ERS declaration to NAMFISA:
- a MLR-1 return (the Certification of Compliance by the registered microlender’s principal officer);
- the audited annual financial statements in respect of a microlender incorporated as a company, financial statements certified by an accounting officer in respect of a microlender incorporated as any other corporate entity and unaudited financial statements for sole proprietors and partnerships;
- a MLR-2 return (the Quarterly Financial and Statistical Return); and
- the summarised monthly management reports.
The quarters for submission of the Quarterly Returns for every calendar year are as follows: January until March (Quarter 1), April until June (Quarter 2), July until September (Quarter 3) and October until December (Quarter 4).
This Standard also sets out other detailed requirements regarding the submission of returns, statements and reports.
Microlending Standard 4: The form and content of the affordability assessment
This Standard is applicable to all registered microlenders and to every microlending transaction concluded. It sets out the requirements for an affordability assessment.
No microlender may enter into a microlending transaction or provide a loan to any borrower unless an affordability assessment, as required according to this Standard, clearly demonstrates the borrower’s ability to repay the loan and the finance charges, taking into consideration the borrower’s income and all other existing financial obligations.
No microlender may enter into a microlending transaction with any borrower or provide a loan where, in terms of the affordability assessment, the amount of the repayment of the loan exceeds 50% of the borrower’s net monthly salary or ⅓ (one-third) of the borrower’s gross salary, whichever is the lesser amount.
The Standard prescribes the form and content of the affordability assessment in a supporting schedule, Schedule 1.
Microlending Standard 5: The terms and conditions of the standard loan agreement
This Standard is applicable to all registered microlenders. The Standard sets out the minimum requirements that a standard written loan agreement to be used in respect of every microlending transaction must provide. It also sets out prohibited terms and a plain language requirement.