Government is facing a legal demand that a planned renewal of a welfare distribution contract with Net1 UEPS Technologies should be supervised by South Africa’s top court after the state failed to comply with a 2013 ruling that it stop doing business with the company.
The Black Sash Trust, a South African human rights organisation, asked the constitutional court on Tuesday to supervise the terms of the new contract and its terms to ensure that more than 17m people continue to get their welfare payments in April after the current contract ends.
The association, represented by the Centre for Applied Legal Studies, named the country’s social development and finance ministers as respondents as well as the state welfare agency and Cash Paymaster Services, a unit of Net1.
The payments, which amount to R139,5bn/year, are a signature policy of the ruling ANC, which says the grants are an important measure to reduce inequality. An interruption to their payments could dent its support.
The constitutional court four years ago ruled that the Net1 contract was invalid because of the way it was awarded, and the South African Social Security Agency (Sassa) is now effectively asking the nation’s highest court to allow its own ruling to be ignored.
“The court should compel Sassa and CPS to enter into a contract on terms designed to protect grant beneficiaries,” Black Sash said in court papers. “It would be appropriate for this court to reinstate its oversight role.”
Opposition parties, including the Democratic Alliance, have said that Sassa’s inaction to comply with the 2013 ruling was designed to ensure that Net1’s contract was renewed.
The treasury, which falls under finance minister Pravin Gordhan, warned social development minister Bathabile Dlamini in a 1 February letter that extending the contract, or entering into a new one, without constitutional court approval would open the government to legal challenges.
In addition to demanding that Dlamini and Sassa regularly report to the court on progress on finding a new provider, Black Sash is seeking an order that any information on welfare recipients gleaned by the Net1 unit be handed to the government when the contract ends.
It also wants the company to be prevented from encouraging recipients to allow their data to be shared. Black Sash wants to prevent South Africa’s poorest people from being targeted for the sale of goods and services by financial companies, it said in the application. — (c) 2017 Bloomberg LP
This article was originally published in TechCentral.