On a positive note, news of Serge Belamant’s retirement does show that shareholder activism can be deployed in a constructive way and that shareholders are not just passive passengers when it comes to influencing the strategy of a business. Hopefully, it also signals a true potential for the transformation of Net1’s business practices which, in a nutshell, amount to financial exploitation of the poor.

On the other hand, this might be a purely cosmetic exercise designed to take the pressure off Net1.

Buried in the detail of the announcement of the resignation are the following gems:

• Net1 appointed Herman Kotzé, its current Chief Financial Officer, to the position of the CEO effective 1 June 2017. Kotzé has been with Net1 for over 18 years and has been its CFO since 2004. He has been instrumental in the design and execution of Net1’s strategy to date. He stood shoulder-to-shoulder with Belamant in explaining that strategy to shareholders. Consequently, I remain a bit sceptical that this represents a true change of leadership. It would have been more reassuring to see a complete sweep-out, with a new CEO and a new CFO being appointed who could bring a new vision and some morality to the table.
• Belamant is not disappearing either. He will remain as a consultant to Net1 for two years. If his consulting fee is equivalent to his existing salary, not much would have really changed.

The reason I am doubly sceptical is that this move follows a similar announcement in April 2017 when Belamant stepped down as the chairman of Net1, just to be replaced by Christopher S. Seabrooke, a non-executive director of Net1 since 2005. I hope I am wrong when I say that all this looks a bit like rearranging deck chairs on the Titanic.

To give him his due, Seabrooke did say that the company will “introduce new business models responsive to the needs of South Africans”.

I have some suggestions that could be implemented immediately to test the new leadership:

• Lower the service fee on all microloans with immediate effect. Net1 has been charging effective annual interest rates of between 164% and 280% on microloans extended to social grant recipients. This is in a situation where there is a nil risk of non-payment as the repayment is deducted directly from the social grant every month and the guarantor of repayment is the government. May I suggest that an interest rate of prime plus, say, 2% would be a lot more appropriate?
• Cancel all deductions for electricity and airtime made against both the original SASSA accounts, and the EasyPay Everywhere accounts, and start from scratch. Let every social grant recipient re-apply for these services if they truly need them.
• Audit all funeral policies sold and allow those who do not wish to have these in place to cancel them with immediate effect.
• Introduce a complaints officer at each CPS pay-point who can note down the complaints from social grant recipients, starting next month, and address those as quickly as possible.
• Then astound us by publishing a record of all that you have done and achieved in levelling the playing field.

I guess only time will tell whether this move is a truly meaningful transition for Net1, a reputational win for its shareholders and financial victory for social grant recipients, or whether this is merely an attempt to put lipstick on a pig. DM