Rights Group Seeks Court Appeal in South Africa Welfare Saga

Updated on
  • Black Sash seeks right to appeal ruling on welfare deductions
  • High Court says Net1 allowed to make deductions from grants

The Black Sash Trust, a civil-rights group, asked South Africa’s Supreme Court of Appeal to let it seek to overturn a High Court ruling allowing Net1 UEPS Technologies Inc. to continue making deductions from welfare grants distributed on the government’s behalf.

The High Court, which made its ruling in May, has refused Black Sash the right to appeal. The group argues that a range of companies, some part-owned by Net1, take advantage of some of South Africa’s poorest and least educated people by selling them goods and services ranging from loans to funeral insurance they can’t afford and on terms they don’t fully understand.

“Complaints are endemic across South Africa that various corporations have engaged in exploitative practices that have unjustifiably depleted the social grants of beneficiaries,” the Centre for Applied Legal Studies, which is representing Black Sash, said in affidavit filed to the Supreme Court on Thursday.

The welfare program, which sees more than $11 billion distributed to about 17 million people annually, is embroiled in controversy after the South African Social Security Agency failed to comply with a 2014 Constitutional Court ruling that it replace Net1 as the distributor of grants because the tender was flawed. In March, the court ordered a new distributor must be appointed in a year.

While the government had changed regulations to stop the deductions, Net1 took it to court to have those changes nullified. Net1 argues that the deductions, used to pay for services such as loans, funeral insurance and mobile-phone airtime, are legal and the High Court ruled it can’t restrict what people decide to do with their money.

The case is also being brought on behalf of six welfare recipients who are protesting against deductions made from their grants.

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