Sygnia CEO Magda Wierzycka on the Sassa grant contract

Net1 UEPS and its subsidiary Cash Paymaster Services have come under scrutiny for their involvement in the extension of the South African Social Security Agency (Sassa) grant contract. The companies have been accused of utilizing the database of grant recipients to cross-sell a range of additional services, raising concerns about compliance with environmental, social, and governance (ESG) policies governing investments in South Africa. Sygnia CEO Magda Wierzycka has expressed reservations about Net1's practices and the implications for investors and society at large. In a recent interview with CNBC Africa, Wierzycka highlighted key issues surrounding the situation. Net1's revenue model is heavily reliant on South African grant recipients, with a significant portion of profits stemming from selling financial services to the low-income population. Despite having a government contract to administer grant payments, Net1 also markets additional services like bank accounts, airtime, electricity, and microloans to the same grant recipients. Wierzycka pointed out that Net1 generates substantial income from these services, alongside processing grant payments, emphasizing the need for greater scrutiny on the company's activities. The lack of accountability and transparency in Net1's practices raises questions about the impact on ESG factors and responsible investing. Wierzycka underscored the importance of regulatory oversight and investor due diligence in ensuring ethical standards are upheld. She criticized companies like Net1 for exploiting vulnerable populations for profit and called for stricter regulations to prevent the cross-selling of services to government beneficiaries. When asked if she would invest in Net1, Wierzycka firmly stated, 'No,' citing ethical concerns and the need for asset managers to prioritize social responsibility. Sygnia's commitment to ethical investing was evident when they promptly divested from a manager with a minor stake in Net1, reflecting their commitment to upholding moral standards. Wierzycka's stance on responsible investing and corporate accountability serves as a rallying call for greater integrity in the financial sector and a reminder of the need for ethical leadership in business. As the Sassa saga unfolds, the spotlight remains on companies like Net1 and the moral obligations they bear towards society's most vulnerable members. Wierzycka's bold stance against unethical practices resonates as a call to action for companies and investors to prioritize social welfare and ethical conduct in all business dealings.