Cape Argus E-dition

The meaning of the GovChat CEO’s resignation

WESLEY DIPHOKO wesley@fastcompany.co.za Diphoko is the Editor-In-Chief of Fast Company (SA) magazine.

RESIGNATION has dominated the national discourse this week. GovChat, a tech platform that facilitates engagement between citizens and the government, has shocked the tech world with the resignation of its founder, Eldrid Jordaan.

The chief executive, together with the company’s chief data officer, Goitse Konopi, caused a stir when they resigned. Why would a founder and a leader of a company resign?

In his resignation letter, Jordaan said: “I will be taking some time off to reflect on the journey and consider my next contribution. And definitely start my book, GovChat vs Facebook: The David & Goliath Story.”

These remarks, together with the fact that the chief data officer also quit, provide a glimpse into what could be behind the abrupt resignations.

The GovChat matter is complex for a number of reasons. The resignation of a founder is never a good sign. It often points to the displeasure of the investors and sometimes a key stakeholder.

During the same week in which GovChat founder resigned, its major investor announced its results and highlighted the major challenge faced by the company.

The company is embroiled in a dispute with Meta (formerly Facebook). It is accused of using the WhatsApp platform for a functionality it was not intended for in the form of government communications.

GovChat major investor, JSE-listed fintech group Capital Appreciation (Capprec), also announced that it had decided to impair its R56.3 million loan to 35%-owned GovChat.

This is a non-cash charge with no impact on headline earnings, but it did knock 4.6 cents off basic earnings per share.

In terms of a key stakeholder that may be unhappy, it could be that the South African government has finally realised that enabling GovChat to handle citizens’ data poses a data risk.

The non-profit civil society organisation Open Secrets has released a report which indicates that its investigation has revealed several red flags that it believes necessitate much closer scrutiny of GovChat’s relationship with the South African Social Security Agency (Sassa). According to Open Secrets, “GovChat secured its contract without any competitive bidding process. Second, and perhaps most important, GovChat’s claim that it is providing its services for free needs scrutiny.

“GovChat’s financial backers are not philanthropists but shrewd fintech businesspeople, who have unambiguously stated their intention to monetise GovChat’s model to secure returns for shareholders.”

The report indicates that Capprec is promising its shareholders that it will monetise the GovChat business in the future. How this will be done it’s not clear. The report by Open Secrets, Digital Profiteers – Who Profits Next from Social Grants? raises serious concerns about the potential for GovChat to make money from citizens’ data.

Despite everything that has been said about Meta, the global tech company seems to be concerned about similar issues.

Meta has said in the past that: “GovChat has repeatedly refused to comply with our policies, which are designed to protect citizens and their information, preferring to prioritise its own commercial interests over the public. We will continue to defend WhatsApp from abuse and protect our users.”

The recent resignations are pointing to an internal realisation that these matters are also of concern.

The resignation of Jordaan, however, is a great loss to GovChat and the South African government.

He formed this company after his tenure on the board of Mxit, another South African tech platform.

Jordaan has been an important power player in the tech company.

His political connections and business credentials played a key role in building GovChat. He is one person with political might and tech understanding that made it possible to develop a tech solution for a government challenge.

South Africa needs to find a way to avoid such an occurrence in the future. Government tech solutions should be managed in such a way that they don’t create a potential for abuse. At the same time, an environment should be created for entrepreneurs and innovators to develop solutions for governments’ challenges in a way that does not hurt their reputations and standing in the business world. When Jordaan publishes his book, let us hope it will shed light on the real reasons behind his resignation. If not, Meta and the South African government will have to tell their side of the story.

BIZ TECH

en-za

2022-12-04T08:00:00.0000000Z

2022-12-04T08:00:00.0000000Z

http://capeargus.pressreader.com/article/282102050699632

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