Shafudah disputes contempt claims, citing an ambiguous court directive and a troubled data migration as key hurdles
Renthia Kaimbi
Finance minister Ericah Shafudah has rejected accusations of contempt, arguing that the High Court order governing the government’s payroll deduction system is unclear and difficult to execute. She also attributes delays in the system’s transition to significant data problems uncovered during a microlending data migration.
Shafudah submitted her defense last Thursday in response to a case brought by Entrepo Finance (Pty) Ltd, which centers on the Payroll Deduction Management System (PDMS).
The PDMS enables civil servants to repay loans directly from their salaries.
The Ministry of Finance moved to take over the PDMS after the private service provider Avril Payroll Deduction Management’s contract expired on 30 November 2025.
In her answering affidavit, Shafudah denies willfully disobeying an interim court order issued last month. She asserts she has not meddled with the loading of new deductions into the system nor issued any instructions to block them.
“I have neither interfered with the loading of new deductions nor issued any instructions to prevent it,” she states, adding that she has complied with the order.
Her defense emphasizes what she sees as a lack of clarity in the court order.
Shafudah contends the order does not specify who must execute it or how the PDMS should operate after Avril’s contract ended. She notes that her legal advisers have advised that the court cannot suspend existing laws.
According to her affidavit, the interim order would effectively suspend portions of the Labour Act of 2007 and the Public Procurement Act of 2015.
“Does the court order purport to grant me powers I do not possess, or am I expected to act unlawfully to give it effect?” Shafudah asks.
She also highlights serious data integrity issues that surfaced during the system’s migration. When the ministry received data from both Avril and Entrepo, officials found numerous inconsistencies.
More than 70,770 records from Entrepo had no matching entries in Avril’s data, with all Entrepo amounts listed higher. Another 22 active payments appeared in Avril’s system but were absent from Entrepo’s records. Over 1,400 records showed expired end dates.
Officials also found 896 employees listed as inactive on the government payroll, including 662 tied to Avril and 234 to Entrepo. Additional problems included invalid characters in bank account and identity number fields, as well as instances where a date was entered instead of a numeric loan balance, all of which prevented data import.
Shafudah says Entrepo was informed of these discrepancies in early December but could not explain them. Entrepo later submitted a revised dataset that exactly matched Avril’s data, prompting concerns because Avril’s file included a 2% service surcharge not present in Entrepo’s updated submission.
The ministry maintains that bringing the PDMS in-house could save the state about N$11.5 million per month.
In a supporting affidavit, the Namibia Financial Institutions Supervisory Authority (Namfisa) stated that discretionary payroll deductions were unlawful and emphasized that microlending must comply with affordability rules under the Microlending Act.
The Bank of Namibia (BoN) did not file an affidavit but warned about a lack of competition within the current system, noting fewer than 12 microlenders and deduction-code holders have direct access to the PDMS out of more than 860.
The central bank noted that the Payment Systems Act of 2023 aims to promote fair competition through platforms like the Enhanced Debit Order system.
The ministry says other financial institutions holding deduction codes are collaborating with officials to resolve data issues, with plans to complete the migration soon. The first payments under the government-managed system for teachers and police officers are expected by mid-December.
Sources told Windhoek Observer that some deductions were scheduled to run as far as 2080, despite microloans being limited to a 60-month term, which would keep civil servants indebted longer than allowed.
The sources urged the ministry to finish investigations into all deduction-code holders and to publish the findings or include them in the March next-year court proceedings.
High Court acting judge Lotta Ambunda is expected to rule on the contempt application later today.
Shafudah says she needs the High Court’s reasons for granting the interim order to fully understand her obligations.
The main review hearing, challenging the PDMS termination, is scheduled for March 2026.
This comes after the High Court earlier directed Shafudah not to interfere with loading new deductions onto the PDMS.
