Entrépo microlender freezes loans after government payroll change
Namibian microlender Entrépo has frozen new loan applications following the government's decision to terminate the payroll deduction management system. The company is currently undergoing staff retrenchments and evaluating its future viability as its primary business model becomes unsustainable.
Why it matters
The shift in government policy has significant economic consequences for the microlending sector and the financial stability of civil servants who rely on these services.
Microlender Entrépo, which had a payroll deduction arrangement for civil servants, is weighing its future after the government ended the deductions on which its business mainly depended.
This comes as a result of a decision the Ministry of Finance made last year to end the government’s payroll deduction management system (PDMS) in November.
The company, 55.5% owned by Capricorn Group, extends loans to government employees only.
As at the first quarter of the year, Entrépo was the second-largest term lender in the country, accounting for 28% of the N$7.3-billion sector.
Entrépo Finance has confirmed it is no longer granting new loans, while its majority shareholder, Capricorn Group, says the company is under pressure to adapt to a new operating environment.
The developments have fuelled speculation that the microlender could eventually close, although Capricorn insists the business remains profitable and sustainable.
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