The Minister of Finance, Ericah Shafudah, announced the implementation of the pension-backed housing scheme to improve access to decent and affordable housing mainly for civil servants who are not able to meet bank loan requirements.
Shafudah stated this in Parliament, noting an amendment to the pension fund regulation Act 24 of the Pension Fund Act of 1956.
She added that this is a joint initiative between the Namibia Financial Institutions Supervisory Authority and the Government Institutions Pension Fund.
"Under this scheme, members of the GIPF, both in the proclaimed and unproclaimed areas, will be able to use a portion of their accumulated pension savings as collateral for home loans. This facility may be used to, and I'm saying 'may be used to', among other rights, purchase residential property or lands intended for housing, construct or renovate a dwelling, settle an existing home loan or improve basic housing conditions."
She highlighted that the amended pension fund act will enable the pension fund to give loans to its members for housing purposes.
"The government is finalising administrative arrangements with GIPF and the payroll systems to ensure seamless implementation. Civil servants will soon then receive further communications from GIPF and their respective lenders with regard to the application process for them then to access state money."
She stated that the interest payable will be the prime lending rate plus 2.5% per year.
Explaining the logic behind the interest rate, Shafudah clarified that if the money had not been withdrawn by borrowers such as civil servants, it would have earned interest while sitting idle; however, once it is withdrawn and with repayment required, failing to charge interest would create a financial gap.
She emphasised that the aim is to place civil servants in the same financial position as if they had not accessed these funds at all, hence the application of the interest rate.
Shafudah said that implementation of this scheme highlights a step towards tackling housing inequality and empowering public servants.