Johannesburg - The Constitutional Court ordered South Africa's welfare agency to extend Net1 UEPS Technologies' contract to distribute grants to more than 17 million beneficiaries for a year to avoid a “potential catastrophe” and slammed the government’s handling of the program.
The ruling on Friday effectively ends the threat of an interruption to a signature program of the ruling African National Congress but leaves President Jacob Zuma’s administration with a stinging condemnation by the nation’s top court of its performance.
Social Development Minister Bathabile Dlamini should explain before the end of the month why she shouldn’t pay the costs of the case in her personal capacity.
The court said it would supervise the new agreement.
“This court and the whole country are now confronted with a situation where the executive arm of government admits that it is not able to fulfil its constitutional and statutory obligations to provide for the social assistance of its people,” Justice Johan Froneman said in the ruling.
“And in the deepest and the most shaming of ironies, it now seeks to rely on a private corporate entity with no discernible commitment to transformative empowerment to get it out of this predicament.”
In the ruling, the court said the contract extension with Net1’s Cash Paymaster Services unit must continue on the same terms as the previous agreement that expires on March 31.
The welfare payments system was on the brink of collapse after the South African Social Security Agency failed to find a new company to administer the program after the court declared the original contract with Net1 illegal more than two years ago.
The fiasco is the latest in a series of missteps by Zuma’s administration that have curbed growth, dented investor confidence and stoked conflict between government officials and departments.
Human rights groups and opposition parties have accused Net1 of using information gathered on grant beneficiaries to sell services ranging from mobile-phone airtime to loans to some of South Africa’s poorest people without them always understanding what they were agreeing to.
It has denied the allegations.
The court ruled that personal grants data must remain private and not be shared for the purpose of marketing goods and services.
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