‘Net1 saved the govt R10bn’

The Star Early Edition - - COMPANIES - Joseph Booy­sen

PAY­MENT so­lu­tions firm, Net1, saved the South African gov­ern­ment more than R10 bil­lion within five years.

This is ac­cord­ing to Her­man Kotze, who was ad­dress­ing jour­nal­ists at­tend­ing a me­dia tour to Kok­stad, KwaZulu-Natal, and Bizana, East­ern Cape, last week, dur­ing his first few days as the firm’s new chief ex­ec­u­tive.

Net1 is the par­ent firm of so­cial grant pay­ment provider Cash Pay­mas­ter Ser­vices (CPS), who pro­vide a pay­ment ser­vice to about 10 000 re­cip­i­ents across the coun­try.

Kotze re­places Net1’s for­mer chief ex­ec­u­tive Serge Belamant, who is re­ported to have re­ceived a re­mu­ner­a­tion pack­age of more than R200 mil­lion in to­tal.

Kotze said the tour was aimed at rec­ti­fy­ing the neg­a­tive per­cep­tions por­trayed in me­dia re­ports re­cently.

He said that the pay point in Bizana was a fair rep­re­sen­ta­tion of the other pay points, mainly in ru­ral locations, and what the grant re­cip­i­ents go through when re­ceiv­ing their pay­ment each month.

He said there were a num­ber of re­cent an­nounce­ments that were made in the last few days in­clud­ing that the firm filed CPS’ fi­nan­cial per­for­mance state­ment for the last five years for the con­sti­tu­tional court, which re­flected that Net1 made a profit of over R700m in to­tal.

“As a public listed com­pany we en­deav­our to run our op­er­a­tions at a profit.

“The re­ported profit of R700m is ac­tu­ally a lot less than what was orig­i­nally pro­jected in our ten­der doc­u­ment which was sub­mit­ted es­ti­mated that we would make a profit of roughly R1.1bn. So the R700m was sig­nif­i­cantly less.”

Kotze said this was be­cause fewer ben­e­fi­cia­ries were paid over the last five years than was orig­i­nally pro­jected and also in­cluded sig­nif­i­cantly higher le­gal and in­ves­ti­ga­tion fees as this ten­der be­came a highly con­tro­ver­sial sub­ject dur­ing the pe­riod.

“It is also im­por­tant to note that we in­vested more than R1.3bn in the cre­ation of this sys­tem for this ten­der, our fin­ger­print bio­met­ric ver­i­fi­ca­tion sys­tem, and for us the high­light of what we’ve man­aged to achieve in our view is that we’ve ac­tu­ally saved the gov­ern­ment in ex­cess of R2bn a year.

“That is ac­cord­ing to their own cal­cu­la­tions in terms of the re­moval of du­pli­cates with fraud­u­lent grants be­ing paid, so the to­tal sav­ings in the past five years is in ex­cess of R10bn.”

Op­por­tu­nity

He said the sec­ond thing that was an­nounced re­cently was the firm’s par­tic­i­pa­tion in the Cell C re­cap­i­tal­i­sa­tion trans­ac­tion, a trans­ac­tion that is on­go­ing and will take an­other cou­ple of weeks to close and will give the firm an op­por­tu­nity to ex­pand its prod­uct base and demon­strate the many mo­bile pay­ment op­tions it de­vel­oped.

Kotze also touched on the exit pack­age of Belamant, he said there were a num­ber of re­ports in the me­dia, all huge num­bers.

“We ac­knowl­edge that and we un­der­stand that, but I think we need to put it in con­text.”

He said a num­ber of fac­tors were taken into ac­count with re­gards to Belamant’s pack­age, such as the amount of shares he held with the com­pany, that he was the founder of Net1, his 30 years of ser­vice with the firm, the in­come that he for­feited as he re­tired be­fore the time, ac­cel­er­ated stock op­tions, the strength of trade as well as the own­er­ship of in­tel­lec­tual prop­erty is­sues.

Kotze said with all of this taken into ac­count the firm’s re­mu­ner­a­tion com­mit­tee were of the opin­ion that the pack­age was in line with in­dus­try prac­tice for a listed com­pany and was not ex­trav­a­gant.

He said there was also a lot of ref­er­ence in the me­dia that the firm’s cur­rent con­tract with the South African So­cial Se­cu­rity Agency (Sassa) was il­le­gal which was un­true.

“We are op­er­at­ing un­der a valid con­tract with Sassa or oth­er­wise we would not be able to do what are do­ing.”

A file photo show­ing protests out­side of uM­lazi Sassa of­fice. Net1 are the pay­mas­ters for the gov­ern­ment grants. Photo: Sibonelo

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