Allan Gray would welcome further social grant controls

Johannesburg - Net1’s second-biggest shareholder said that if the company concludes a new welfare distribution contract with the South African Social Security Agency (Sassa) it would welcome further controls on how payment recipients’ information is used. 

Allan Gray, which owns 16% of Net1, said in a statement posted on its website this week that while there have been allegations that the company has, under its existing contract, used information gleaned from payments to improperly sell grant recipients additional services through its related companies these have not been proven.

On March 15 South Africa’s Constitutional Court will hear a case brought by Black Sash Trust, a human rights group, demanding that the court have oversight of any contract concluded with Net1 and rule that no information gathered about recipients be given to Net1 associated companies that sell services ranging from mobile phone airtime to loans. 

While Net1’s current contract was ruled invalid by the court in 2014 the welfare agency failed to appoint a new provider.

“Given the perceived issues with the cross selling of other products by Net1, we would welcome any additional controls or limitations imposed by a potential new contract,” Allan Gray said.

The welfare agency is currently scrambling to conclude a new contract so that more than 17 million people can receive their payments next month after the current contract expires. The chaos around the R151.6bn a year program has led to calls from opposition parties and the country’s largest labour group for the resignation of Social Development Minister Bathabile Dlamini.

Allan Gray said it doesn’t plan to sell its stake. Net1’s biggest shareholder is the International Finance Corporation.