Capital Appreciation sees growth from GovChat adaptations for Covid-19

Listed fintech group Capital Appreciation (Capprec) expects its communications platform GovChat to boost the business after the unit won a contract to provide a platform for social grant applications.

Capprec invested R20m in GovChat, a Pretoria-based citizen engagement system provider, in 2019 for a 35% stake. Since then, it has been adapted into a means for South Africans to apply for social grants and government relief programmes.

Through a partnership with the SA Social Security Agency (Sassa), GovChat has supported the government in the digitisation of the special Covid-19 social relief grant of R350 per month to people without work as part of the state’s coronavirus stimulus package.

GovChat is being used to screen and sign up grant applicants. This is “arguably one of the largest digitalisation initiatives in grant programmes across Africa”, Capprec said of the service, which went live on May 11. The company did not divulge the value of the Sassa contract.

Joint-CEO Bradley Sacks said earlier this week that the platform has received more than 10-million messages in the three days from May 29 to June 1 about the special grant, with traffic expected to grow over time. Most people were trying to track the status of their applications.

Capprec provides technology that banks and other financial services companies use to add more features to their digital platforms, such as integrating loyalty programmes and the sale of prepaid vouchers. Its blue-chip clients include the big four banks as well as Discovery Vitality, TymeBank and a number of asset managers.

Sacks put to rest speculation linking GovChat to the disgraced Net1 UEPS unit Cash Paymaster Services, which was irregularly awarded a contract by the department to pay welfare grants.

“In unequivocal terms there is no relationship whatsoever between Capital Appreciation and GovChat on the one hand, and Cash Paymaster Services and Net1 on the other. The only connection that ever existed was that the chairman of Capital Appreciation, Motty Sacks, was also the chairman of Net1 at its formation in 1996 through to 2000, when he retired.”

In 2000 “Net1 acquired Cash Paymaster Services but at that stage Sassa as an organisation or institution did not exist. It was only formed in 2005,” he said.

The strategy for GovChat to make money for the company is “evolving”, Sacks said. “You can see by the user data that the GovChat platform is generating and the nature of the reports that it is able to deliver to government and whole municipalities to make them accountable for their quality of service. Here is a tremendous opportunity to be able to derive value and deliver value.”

GovChat’s official “go-live” date was March 1, initially allowing SA residents to rate and report on government spaces and the quality of the services the institutions render. It also allows residents to log reports on items that require a municipal response and to identify their public representative or traditional leader, Capprec said.

Sacks said a number of other countries has expressed an interest in GovChat. The technology that underlies GovChat was developed in-house by its software services unit Synthesis, which specialises in cloud computing, security and hyperscale platforms.

In the year to end-March 2020, Capprec’s services division grew revenue to R195m, up 41.5% from the previous year. Sacks believes the unit still has room to grow.

gavazam@businesslive.co.za