SASSA grant beneficiaries fuel Lesaka consumer unit boom

This emerged when the JSE- and Nasdaq-listed company today published its third quarter results for 2026.

At segment level, the consumer division delivered the strongest performance, with revenue rising 41% to R626.5 million and adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) increasing 81% to R212.5 million.

National Treasury oversees South Africa’s social grant system via the Department of Social Development and SASSA, with funding projected to rise to about R259.8 billion by 2026/27.

Lesaka plays an indirect role in SA’s social grant system through its EasyPay platform, which provides banking and financial services to grant recipients.

While it no longer distributes grants on behalf of government, the firm enables beneficiaries to receive, manage and spend their grant income via transactional accounts, cards and digital payment services.

It also offers credit and other financial products to this customer base, positioning itself as an alternative to traditional banks and Postbank.

Market share boost

In an interview with ITWeb today, Lincoln Mali, CEO of Lesaka Southern Africa, said he is pleased with the performance of the consumer segment.

He pointed out that one of the drivers of the growth is the number of active SASSA customers has grown 19% during the quarter.

“We are now sitting with more than two million customers. We have about 14.6% market share, and we’ve grown faster in this quarter than all the other players.”

According to Mali, the average revenue per user grew 19% year-on-year to R98.8.

“What’s interesting is that when you look at our penetration rate, it’s also very positive. About 50% of our clients have got two or more products, while 20% of them have three products with us. Our lending portfolio, for example, is up 33% in terms of lending origination. These are things that are giving us a sense of the health of the business.”

He added that the funeral plan portfolio also witnessed healthy growth during the quarter, with the number of policies up 34% to about 704 000.

“We still have a lot of runway because we think we can still get new customers, as there are 150 000 new grant recipients every month. We think that we are well-poised to be able to take those. We also think we can cross-sell more into our base on both funeral plans and loans.”

Mali also pointed out that Lesaka has started to sell insurance beyond its EasyPay customer base because there are about three million grant recipients who do not have a funeral plan.

“The other thing that excites us is we are looking at value-added services, such as data and airtime, although from a low base. We have just added an advance product where a customer can get electricity and airtime from us.

“With all this, we believe there is more room for the business to grow. We are extending our distribution footprint by adding more branches,” he said.

Profit rise

Meanwhile, Lesaka reported a sharp increase in profitability for the third quarter of fiscal 2026, driven by strong growth in the consumer and enterprise divisions, despite largely flat group revenue.

The fintech group posted revenue of R2.99 billion, marginally higher than the R2.98 billion recorded a year earlier.

Net revenue increased 16% year-on-year to R1.58 billion, while operating income surged 804% to R65 million from R7.2 million previously.

The company also swung to a net profit of R8.4 million, compared to a loss of R409.8 million in the corresponding quarter last year.

Group adjusted EBITDA climbed 45% to R337 million, while adjusted earnings rose 246% to R148.3 million. Adjusted earnings per share increased 247% to R1.80.

Commenting on the results, Ali Mazanderani, Lesaka chairman, says: “I am pleased to report another strong quarter for Lesaka as we continue to improve our profitability.

“We achieved group adjusted EBITDA growth of 45% and an adjusted earnings per share of R1.80, up more than 200% year-on-year. We have built a diversified platform, with multiple levers of sustainable growth that position us exceptionally well for the years to come.”

The enterprise unit also posted robust growth, with revenue climbing 78% to R310.5 million, while net revenue rose 51% to R219.9 million. Segment-adjusted EBITDA surged 1 370% to R35 million.

In contrast, the merchant division recorded weaker top-line performance, with revenue declining 13% to R2.08 billion and net revenue falling 4% to R751.3 million. However, adjusted EBITDA in the segment still increased 3% to R151.1 million, indicating improved operational efficiency.

Looking ahead, Lesaka maintained a positive outlook for the full 2026 financial year ending 30 June. The company expects net revenue of between R6.2 billion and R6.5 billion, with group adjusted EBITDA forecast at between R1.25 billion and R1.35 billion.

The group also expects to report positive net income attributable to Lesaka shareholders and adjusted earnings per share of between R5.50 and R6.00 for the year.