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Govt extends Net1's contract

Nicola Mawson
By Nicola Mawson, Contributor.
Johannesburg, 17 Aug 2011

Dual-listed Net1 UEPA Technologies' contract with the South African Social Security Agency (SASSA) to distribute grants has been extended for six months.

Net1 has a deal to facilitate SASSA's social welfare grants distribution in five of SA's nine provinces. In January, the contract was extended to September.

The company also said it would bid for a new contract, despite it leading to less revenue for its local operation, after a change in the terms of its current contract compared with the previous deal. Bids closed towards the end of June.

Net1 says the contract has been extended “on the same terms and conditions as the existing agreement”.

According to Net1's statement to shareholders, the agency pushed out the expiry date, because the procurement process is “still under way” and it wanted to ensure that service delivery continued.

The deal works on a fee-per-transaction basis with a minimum amount of beneficiaries. However, the amount to be paid and the number of guaranteed beneficiaries are lower than in the previous contract.

Finance minister Pravin Gordhan announced earlier this year during his budget speech that spending on social grants would come to R147 billion this year and rise to R172 billion in the 2013/4 financial year.

Almost 15 million people receive social grants in SA out of a population of about 50 million.

Net1, which operates in SA, Republic of Korea, Ghana and Iraq, provides a universal electronic payment system, or UEPS, as an alternative payment system for the unbanked and under-banked populations of developing economies.

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