Net1 boss shows no concern about Sassa court case outcome

THE CHIEF executive of Net1 UEPS Technologies, which has the contract to distribute South Africa’s R129 billion in annual welfare payments, said he was not “remotely concerned” about the outcome of a court case that could stop deductions for services such as funeral insurance from state-funded grants to some of the country’s poorest people.

In May, the SA Social Security Agency (Sassa), which oversees the payment of welfare grants to more than 16 million people, amended its rules to prevent what it said were illegal deductions for goods and services directly from grants ranging from funeral insurance to cellphone airtime.

Net1 has challenged the amendments in court and chief executive Serge Belamant said the case, and resultant appeals, would take so long that it would not affect the company’s profitability. Black Sash Trust, an activist group, has filed a counter challenge demanding the government do more to protect grant recipients.

EasyPay While the court case would determine the meaning of the law surrounding deductions “between you and me and a bar of soap, I don’t really care what it means”, Belamant said on Friday. “It’s not going to make any difference to how much money we’re going to make.”

The court case between Net1, associated companies and the government has drawn in activists who say the regulations allow financial services companies to take advantage of people who often do not understand what they are agreeing to when they assent to deductions from their grants. Net1 claims that the amendments interfere with the rights of people to make their own financial decisions. The case will be heard in October. Sassa declined to comment. During the earnings conference call, Belamant said should the judge rule against Net1, the company could ultimately benefit as it might spur the development of its own banking system, known as EasyPay.

The company has been advertising to grant beneficiaries the option to move over to the EasyPay system in order to continue having deductions made on the money they receive from the government.

“By the time of the court case in October and a decision is made in November there may be an appeal either by ourselves or Sassa, depending on who wins or who loses, this could take another year. It could go to the constitutional court of course.”

Net1 is 18 percent owned by the International Finance Corporation. Net1 shares gained 0.19 percent to close at R 149.98. – Bloomberg