Showdown between Net1 and expert panel looms in top court over grants expenses
The company’s share price suffers biggest one-day loss since April 2018 as losing state contract bites
Controversial fintech company Net1 could be heading for the Constitutional Court over compensation for distributing social grants in the six months ended September, which it says resulted in a R557m loss for its subsidiary Cash Paymaster Services (CPS). Net1 wants the court to recommend that the National Treasury reimburse the full cost of distributing grants to rural-based recipients. But the expert panel appointed by the court has urged the court to consider the profit that Net1 continues to make from transaction-processing fees earned from social grant beneficiaries. Losses relating to grant distribution were the major factor behind what one local analyst described as a shocking 98% slump in Net1 profit to $1m in the three months to end-September. CPS’s five-year contract to distribute social grants to 11-million recipients on behalf of the SA Social Security Agency (Sassa), which was worth R10bn and was mired in legal battles since it was first awarded in 2012, was due to expire...
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