Thursday, 9 October 2014

Namibia’s form of capitalism must be reigned in

(First Published in New Era Newspaper - 4 June 2014)

Recently a family member of mine woke up to the reality of how cold it really is this winter in the capital. At the end of April the City of Windhoek came to cut his power supply because of arrears in the family water and electricity account. The amount of arrears had accumulated over a period of twelve months as the family did not every time pay the full amount due. After around a year, the family was faced with just under N$3,000 they had to pay before electricity could be re-connected.

A friend in Windhoek recently came to the end of their rental contract of a year and presumed that the contract would automatically be renewed with a possible slight increase from her present N$ 5,000 per month. Imagine her surprise when the landlady sent her the new contract with the rental agreement now being N$ 6,200 per month. This is a month on month increase of N$ 1,200 or 25%. The friend and her family earns around N$ 12,000 in total and there is no way that they will be able to afford this sudden increase. The worst part is that the landlady is aware of this, but she already has a future renter that is willing to pay the proposed N$ 6,200 per month.

The price of chicken and milk has gone up since the government started protecting these industries as infant industries. This means that imports from outside the country are made more expensive by charging administrative levies on these products from outside and in this way allowing the local producer to increase their prices as the competitions prices are now higher for the end consumer.
Looking at these issues one has to come to the realisation that the Namibian form of capitalism has lost its course.

Now what is capitalism? Capitalism is the economic system in which trade, industry and the means of production are controlled by private individuals with the specific goal of making profits. Capitalism is also reliant on a political system that agrees with the principle of capitalism and actively encourages the economic aim of individual profit making.
In a perfect capitalist world, both parties to a transaction determine the prices at which assets, goods or services are exchanged. Namibia is not such a place!

In Namibia, most of the poor consumers have very little choice, if any, on what is available to buy and at what price. The location of consumer to the service outlets, and the lack of political action still leaves the consumer as a victim in a situation where they have no bargaining power, and no protection by the legislature (parliament), the executive (GRN) or the judiciary.

It is up to the consumer activists and the media to bring an end to this never ending road to poverty for the majority of Namibians. The economic situation of this country and its citizens was ruled by the apartheid policies before independence and this was one of the main factors for the people of the country wanting change. Now, twenty years after our Independence, the economic systems that are in place still do not reflect the needs of the poor. It is high time that the parliamentarians and the state takes cognisance of the need to protect consumers through the enactment of a Consumer Charter and relevant consumer protection measures.

Milton Louw is the IT Project Coordinator at the Electoral Commission of Namibia. This column is written in his personal capacity as a consumer activist and the views expressed in this column are his own.

What is a consumer activist?

(First Published in New Era Newspaper - 11 June 2014)

Last week Wednesday, my first consumer column for New Era appeared and I was very pleased when a fiend indicated that he had seen my column. I was however very quickly deflated when he added that he had glanced through the article but was not actually sure what it was about. After some light questioning, I realised in fact that he had only read the heading and perhaps the first paragraph.

This led me to question (for at least five minutes anyway), why do I bother writing about consumer issues if not even my friends were reading it? Immediately though my common sense returned and reminded me that I am, and always will be, a consumer activist. This led me to the topic of today’s column, namely “What is a consumer activist?”

A consumer activist according to the dictionary meaning is “a person whose job is to protect the rights of customers, for example by giving advice, testing products, or trying to improve laws relating to the sale of goods.” This does explain what I do as an activist, except it is a non-paying job. That’s right, I do not get paid for trying to improve the laws relating to consumer affairs - in fact I do not even get paid for this weekly column. So what then motivates me and other like-minded individuals to propose boycotts, petition the government, write in the media and organise consumer interest groups on Facebook and elsewhere?
Personally speaking I consider the active role I play in consumer activism as a continuation of the active role I played in political activism during the Apartheid era in this country. There were “silly” laws during Apartheid such as black and coloured people were not allowed to buy white bread. That’s right. Not only were the people of this country prohibited from owning a business if they were not white, they were also prevented from buying white bread.

Since Independence, many Namibians have commented on the fact that the political struggle has been won but the economic struggle is not yet complete. Many of these same people are often times only referring to the ability of black business to enter the business environment and then be given opportunities that were denied to them under Apartheid. However, most of us forget to add that not only were the entrepreneurs and business people part of the struggle, but the consumer as a section of the population also played a crucial role.

The international consumer was roped into the struggle through getting the consumer to challenge the social order and help to change it through consumption choices which questioned their morality and indirect support of companies that did business with the Apartheid regimes in southern Africa.

After Independence however, many of our leaders in both politics and business have ensured that the laws have changed to accommodate the rising black business community and the employees in need of special regulations. There has also been a move to create new legislation through Affirmative Action (AA), Black Economic Empowerment (BEE), and now the New Equitable Economic Empowerment Framework (NEEEF) BUT nothing has come about in creating consumer protection laws to protect consumer from unscrupulous business practices, misleading advertising and profiteers (for example rent prices running out of control).

This is why I am a Consumer Activist - because I have the means and the talents to ensure the business practices and laws keep in mind the consumer - who is often the most ill-informed and least appreciated section of the community.

Milton Louw is the IT Project Coordinator at the Electoral Commission of Namibia. This column is written in his personal capacity as a consumer activist and the views expressed in this column are his own.

Forgive us our debts

(First Published in New Era Newspaper - 4 June 2014)

Is it possible for the Government of Namibia, through the Bank of Namibia, to wipe all our bad credit information off the blacklist? I do not want to have the debt written off, but rather just have every consumer in Namibia start with a clean slate as far as their credit record is concerned.
I believe this will help address the issue of access to credit for those Namibian that can afford credit. Many of these consumers may have paid their debts in full – and are in a position to afford credit – but their access is blocked by negative credit information still being stored on their credit record. This writing off of the “bad history” will ensure that consumers who can afford credit can be able to access it. It is presently difficult to get credit, it is expensive and this holds back growth. Access to a sustainable credit market is essential to all our development goals, especially Vision 2030.
The Bank of Namibia (BoN) announced on 29 August 2013 that the proposed draft regulations to regulate credit bureaus in Namibia are now open for public consultation. The BoN states “There has been recent speculation in the media around whether or not credit bureaus are illegal in Namibia. The Bank of Namibia’s view is that the existing credit bureaus in Namibia are legal entities registered in accordance with the relevant laws by the Ministry of Trade and Industry.
That means they are not illegal. What is missing in our legal system at the moment is a specific law regulating how these entities should manage the information under their care, and there is no centralized credit information system that allows banks and other lenders to know the total exposure per client and their credit history so as to avoid overextending of consumers.”

What is a credit bureau?
A credit bureau (sometimes called consumer reporting agency or credit reference agency) is a company that collects information from various sources and provides consumer credit information on individual consumers for a variety of uses. Credit information such as a person’s previous payment of loans or accounts is a powerful tool to predict their future behavior. Through the collection of such information lenders such as banks and micro-lenders can assess credit worthiness, the client’s ability to pay back a loan. This information can also affect the interest rate and other conditions of a loan.

Currently Namibian credit providers are under no obligations to supply information to credit bureaus. It is against that background that the proposed regulations will seeks to establish rights and obligations of credit bureaus to be registered and licensed by the Bank of Namibia. It is also proposed by the BoN that all credit bureaus are to have a centralized system. Such a system should have the capability of calculating total credit exposure per client, and requires that all credit providers are to supply information to all credit bureaus. The Regulations also provide clear guidelines pertaining to the kind of data to be collected, the period of time information can be kept (retention period) etc.
Consumer activists, community organisations and the media must keep this issue in the public eye to ensure that the credit bureau and the respective regulations are made in such a way to ensure fair credit reporting practices.

As a start, we must make sure that all credit bureaus adhere to the following minimum guidelines:
  • Provide a consumer with information bureau’s files and to take steps to verify the accuracy of information disputed by a consumer;
  • If negative information is removed as a result of a consumer's dispute, it may not be reinserted without notifying the consumer in writing;
  • Credit bureaus may not retain negative information for an excessive period.

Tuesday, 29 July 2014

Property prices are too high in Namibia

This column first appeared in the Namibian newspaper on 29 November 2012

The inability of people to purchase a first time home is a common complaint heard everywhere in the country.
In this column I would like to look at problems created by property speculators and what can be done to assist in getting a bigger portion of our citizens to become homeowners.

One of the ways that speculators make money can be illustrated through the townhouse developments that have been springing up all over the country.  When the developer starts a project, most of the selling is done to a network of friends, family and other speculators who already own a property and gave the relationship with a bank to get the required financing fairly quickly and easily. Thus, sometime even before the first earth is turned, most of the houses in the development have already been sold. These purchasers however do not need to pay for the property until the actual development is completed. This means that they have only signed their name on the deed of sale and there is no need for any money at this point.

The property development can take a period of 18 to 24 months and as the developer reaches completion of the property, the speculators start advertising the property for sale. Most new homeowners are eager to purchase as they see the development is almost complete and wish to be the owner of a 'brand new' house. But there is a catch!

Prices go up all the time. Because the demand for houses is so high, the price of the property will be higher at the end of the construction, that is, 18 months after the start of the development.
So, if the speculator bought the house at a price for N$ 400 000 in January 2011, the property will have increased in value with as much as N$ 150 000 by November this year. So the new homeowner will now be buying the property from the speculator for the price of N$ 550 000. What makes it worse is that sometimes the dates of the transfer of property from the developer to the speculator, and the speculator to the new homeowner, are the same.

In other words, the speculator 'bought' the property by signing their name on the deed of sale and has not paid a single cent during this period on the property, but is still able to sell the property at a huge profit.

Taxing multiple home owners

We should put higher taxes on people who own more than one house in Namibia. By forcing property owners who hold land on speculation to sell or rent out for what they can get, a tax on land values tends to increase the competition between owners, and will lead to the reduction of the price of land.

One way of doing this is to introduce a Capital Gains Tax, in other words a tax when you make a profit on the sale of a property or other asset. This is done in many countries all over the world and after introduction has seen house prices decrease by as much as 30 percent as demand by property speculators drops.
This tax will not affect your primary residence provided that your property is smaller than a pre-determined size (for example two hectares) and the profit you make is less than a certain amount (for example N$ 500 000). If you are a homeowner having a second property or a holiday home, you will taxed on the profit you make when selling the other property. In addition, the government should make capital gains tax applicable on all properties registered in the name of close corporations, trusts and companies.

As long as Namibians lack ownership of property they will have very little (or no) interest in their community. Home ownership has a positive impact on families, communities and Namibia's economy as private ownership of property is fundamental to both our freedom and our prosperity in the future.

Tuesday, 1 July 2014

Smart Toilet information – good or bad idea?

(First appeared in Consumer News Namibia Magazine May 2013)

Recently there was an article in an international publication about “smart toilets” being installed by municipal authorities of Toronto, Canada. The toilets were being installed at the city’s convention centre, the equivalent of our Windhoek Showgrounds. The purpose of installing the toilets is to allow them to analyse the data collected from the toilet.

When I heard about it, my first question had to be why? The second issue that came to mind is that there is no more privacy if I should use a public smart toilet.
(As I read further in the article, it turned out that the “smart toilets” was actually a publicity stunt.)
But let us look a little bit deeper at what the company was actually claiming to do. The fake company is called Quantified Toilets and they claimed to have installed sensors in the Toronto Convention centre and other public venues that would automatically analyse “deposits” in the toilets to detect a person’s gender, drug and alcohol levels, pregnancy status, sexually-transmitted infection status, and “the smell factor”.
The company (remember it is a fake business”), even put up signs in the bathrooms that read “Behavior at these toilets is being recorded for analysis.”
The company also created an accompanying website featured that featured a live stream of toilet data being collected in real time.

The idea of “smart toilets” is not actually a new idea. The IT company INTEL, has done a survey in the United States of America and found that “70% of people said they would be willing to share their smart toilet data if it led …. to lower medical costs”
The article however went on to explain why the idea of “smart toilets” is not a good idea. It was this part of the article that struck me most as a consumer activist.
What if the Government of Namibia (GRN) or a private company installs “smart toilets” and does not leave you with any option on whether your private information is collected or not. (In other words it is not your choice – there is no opt-out option.) Furthermore, it must be a worry that personal health data that is NOT being collected for use by a doctor. Imagine this was shared with an insurance company for example?
Let us look at some of the scenarios sketched in the article:
·         At a convention or concert, an organization could determine whether attendees have high rates of pregnant women with positive drug or alcohol tests, then use that knowledge to target public health messages to the demographic.
·         In stadiums, an organization could see which sections had higher blood alcohol levels, and even the peak levels during the game.  They could market more beer to that section—or make it harder for people in that section to buy drinks. They might even sell this data to beer vendors willing to pay for such demographic information.
·         Other ideas from the Quantified Toilets website: “We use this data to streamline cleaning crew schedules, inform municipalities of the usage of resources, and help buildings and cities plan for healthier and happier citizens.”
Now imagine your employer could get hold of this kind of data. The boss will be able to know which drugs you are taking, check to see if you show up at work drunk or even know which female employees are expecting babies.
As users of “smart phones” we already use a lot of applications to track our movements, pictures we take, where we eat meals, etc,. but there’s a serious line that must be drawn between the “quantified self movement”—in which people record as much personal metadata as possible—and public monitoring of our data. 
The author of the article ended his piece with the following paragraphs:
Sensors of all types are easily connected to the Internet. They can collect vast amounts of data, which can then be shared widely. As citizens, we don’t always know what data is being collected, who can access it, or how it will be used. Even seemingly secure networks can be comprised. 
We should be leading conversations about the legal privacy protections we need to establish for what once seemed to be private activities. In a data-rich connected world, even the most intimate spaces are becoming public.

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