20 March 2017

South Africa: Net1 and BEE Deals - a Gift That Keeps On Giving

Photo: Ihsaan Haffejee/GroundUp
Demonstrators outside the Constitutional Court during hearings on the future of the social grants payment system.

It is a well-known fact that any government tender awarded in South Africa carries a heavy weighting towards black economic empowerment. The most important criterion taken into account is black ownership. No exceptions... except for Net1, it appears.

At this stage, it will probably not come as a surprise to anyone to know that Net1 had absolutely no black ownership credentials in 2011 when it bid for the Sassa contract, and absolutely none when the contract was awarded.

Apparently, they did claim in the tender that 74.57% of the services performed by Cash Payment Services (CPS) would be outsourced to its BEE partners, with a circular clause which then said that the same BEE partners would outsource those services back to CPS. One of the partners was Born Free Investments 272, headed by Mazwi Yako. This is as clear an example of "fronting" as I have ever come across.

On January 18, 2012, Sassa awarded CPS the contract for the provision of social grant payment services for five years.

On January 26, 2012 Net1 announced a BEE deal. If I were not as cynical as I am, I would probably assume that they felt guilty about the "fronting" situation and...

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