Net 1 UEPS Technologies wants to propose an enhanced version of its current social security payment solution, to provide the South African Social Security Agency (SASSA) with the business functionality it needs.
Net 1's R10 billion deal, to provide the payment solution to around 15 million grant recipients, was sent back to the drawing board last month, after the Constitutional Court ordered the agency to issue a new five-year tender. However, should SASSA not choose to issue a new tender, the current deal will be allowed to be completed, subject to certain conditions, it ruled.
The decision follows last November's ruling that the contract was invalid, but its future was put on hold, pending a Constitutional Court decision over an equitable remedy.
Timing unclear
Now, chairman and CEO Serge Belamant says - in the company's third quarter results - that the publication of a new tender "may take some time". SASSA estimated, in court papers, that the total time for implementing a new system would be not less than 24 months and would cost between R5 million and R10 million.
Belamant said the dual-listed group was ready to propose "an enhanced version" of its current solution to SASSA. This would "continue to provide SASSA with the business functionality which they described in detail during the legal processes", he says.
The court's declaration of invalidity was based on two grounds: SASSA failed to ensure Net 1 unit Cash Paymaster Service's empowerment credentials were objectively confirmed, and the second bidders notice did not give enough clarity around the biometric requirements, rendering the process uncompetitive.
Belamant notes Net 1's technology has saved government $3 billion a year with the removal of more than a million invalid grants. Rival bidder AllPay - the Absa unit that took the matter to court - told the court that, had it won the deal, SASSA would have saved R926 million over five years.
Should Net 1 lose the deal in six months, it would face "financial exposure of R41.5 million", which drops to R32 million if the contract terminated within 12 months, it told the court. For the third quarter to March, its income gained 24% in dollar terms, to $138 million, while fundamental net income grew 818%, to $21.7 million.
Belamant was "delighted" with the results and said the group would continue to focus on optimising its cost structures.
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