(Bloomberg) - South Africa's Constitutional Court ordered the nation's welfare agency to extend Net1 UEPS Technologies Inc.'s 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 matter.
The court discharged its supervisory role in November 2015 after Sassa informed the court it would not open a new tender and would undertake the payments of grants in house, but the Department of Social Development and Sassa only informed the court this month that it would be unable to pay the grants from April 1.
The court was only informed on February 28, despite Dlamini being informed in October 2016 that Sassa couldn't carry grant payments.
She told the South African government's news agency: "This judgment will ensure that there's no interruption in the provision of social grants".
CPS now charges R16.44 per beneficiary paid, but wanted SASSA to increase this fee and pay it as a lump sum of R4.6 billion over a contract which would last two years.
The "deepest and most shaming of ironies", said Froneman, is that Sassa now seeks to rely on a company (US-Nasdaq and JSE-listed Net1, the parent company of CPS) without a commitment to transformation in its management structures. "He knows that the process starts on the 20th, not on the 16th, and money is transferred from Treasury three days before payment of grants takes place", Magwaza said.
The judgment, handed down by Judge Johan Froneman with all the judges concurring, followed an application to the Court by the Black Sash.
"The Minister has had more than enough opportunities to show respect for her oath of office, for the Constitutional Court and for the people of South Africa".
After all, both Dlamini and President Jacob Zuma have repeatedly denied that there is a crisis around Sassa payments. CPS had defended its right to profit from the contract.
The party's Bridgette Masango says it's a victory for the 17 million social grants beneficiaries.
Minister Dlamini's conduct has been questioned by the court and she'll have to explain what went wrong by the end of March.
"On the other side of CPS, to be honest with the country, CPS has done very well for us".