Entr茅po microlender freezes new loans after government payroll deduction system changes
Microlender Entr茅po has stopped granting new loans following the Namibian government's decision to end its payroll deduction management system PDMS in November of last year. Entr茅po, 55.5% owned by Capricorn Group, primarily extended loans to government employees, relying on direct payroll deductions for collections. The company, which was the second-largest term lender in Namibia, accounting for 28% of the N$7.3-billion sector in the first quarter, is now under pressure to adapt its operating model. Sources indicate that Entr茅po has retrenched nearly 20 employees, with more job cuts anticipated, and has not approved new loans for over six months. The company is reportedly considering selling its debt ownership or servicing rights and potentially shutting down. Capricorn Group spokesperson Marlize Horn confirmed that the government's decision to discontinue deduction codes through the PDMS significantly impacted Entr茅po's business model. While the Ministry of Finance introduced a manual process for new borrowers, Capricorn Group deems it inefficient. Despite these challenges, Capricorn Group states Entr茅po remains profitable and contributed between 10% and 12% of its profit after tax over the past two years. The group is working with Entr茅po's board and management to restructure its operating model. The uncertainty also coincides with an ongoing legal battle where Entr茅po is seeking to appeal a High Court decision that dismissed its application to hold finance minister Ericah
