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IFC playing coy on Net1 allegations

The company’s largest shareholder is monitoring activities.

The International Finance Corporation (IFC), a member of the World Bank Group and Net1’s largest shareholder, promises to engage with the management of the company to “promote responsible business practices and behaviour” it said in response to questions put to it by Moneyweb.

This follows on from allegations that Net1, through access to information provided to its subsidiary Cash Paymaster Services (CPS) for the payment of social grants, was engaging in a number of dubious practices with respect to the marketing of financial services and products – including personal loans – to the poor.  

The IFC became a shareholder last year when it subscribed for almost 10 million shares in Net-1 for an investment of $107 million (R1.3 billion). Atul Mehta, IFC director of Telecoms, Media and Technology, said at the time: “Net1 has created impressive propriety technology for the delivery of services and demonstrated its effectiveness in South Africa. IFC and IFC AMC’s funds’ investments will help Net1 expand regionally, especially into African countries where there is limited banking infrastructure and availability of financial services for the poorest segments of the population.”

Moneyweb asked IFC if it would take the same approach as Allan Gray in stridently investigating the company’s business practices and engaging with management on issues following revelations made in a number of media outlets. These reports seemed to indicate that far from assisting the poor, Net1 might well be preying on them through the improper use of beneficiaries’ personal information and the terms and conditions of personal loans, which are deducted before the grant even reaches the beneficiary’s bank account.

This was the IFC’s response:  

“Today millions of people rely on payments that are delivered on behalf of the South Africa Social Security Agency through Cash Paymaster Services, a subsidiary of Net1 UEPS Technologies. IFC supports efforts by the government, Net1 and others to find a solution that ensures timely and efficient payments to South African beneficiaries in line with South African law and at a fair cost to taxpayers for services provided. 

IFC invested in Net1 in April 2016, after Sassa announced that it would directly take over distribution of social welfare payments at the expiration of Net1’s contract in March 2017. IFC’s investment in Net1 UEPS Technologies was based on its plans to extend operations into new segments in South Africa, provide services and access to financial services for low-income consumers in other countries in sub- Saharan Africa and Asia, and roll out mobile solutions to deliver financial services to the underserved. Net1 has developed innovative technology that securely and efficiently provides a variety of financial services at low-cost compared with alternatives. Its services can be easily scaled to reach millions of customers. 

IFC will continue to monitor the activities of Net1.  Consistent with corporate governance requirements, IFC will engage with Net1’s management and other shareholders to promote responsible business practices and behaviour.”

Obviously, recent developments puts the IFC in a very difficult position. It has just made a substantial investment in a company it believes would be aiding financial inclusion for the world’s poorest, not exploiting them. But while Net1 possesses innovative technology that is enabling of the ideals of the IFC, this shareholder needs to figure out if the practices of Net1 live up to the same standards, otherwise it will just be paying lip service to corporate governance.

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Ja no well fine – Net 1 should just walk away from this govt as they are now being forced to extend an illegal contract on unfavorable terms!!!! You cannot be in business for social obligations!!!

This saga has tainted Net 1,although with all the allegations they have never been found guilty of wrong doing!!

Casper you are right.

Capitalist greed will not go far. Make money; nobody disputes this; but don’t blackmail and say things like pigeons delivering grant payments. Sies.

They have not been found guilty YET. Time will tell on their dubious practices.

Don’t you smell a rat?
1) Whay would a minsiter be hell bent on continuing with this provider; when the courts found the contract to be invalid,
2) This company have not BEE crediatials; yet they continue to operate,
3) These dubious practises of opening a seperate Frinrod account have not been investigated.

@casper1,… My comment to Net1 is simple… “Have they no decency, sir?”….

Net-1 will never ever ever ever ever ever ever walk away from this.

You are naive if you even consider that they might.

This is their bread and butter.

They are feasting at the trough with the ANC.

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