South African Welfare Agency Seeks Treasury Funds to Replace Net1

  • Sassa says its needs funding to trial Post Office payments
  • Sassa says lack of funding could disrupt welfare payments

The South African Social Security Agency said it’s in talks with the National Treasury to provide additional funding so that it can comply with a Constitutional Court order and replace Net1 UEPS Technologies Inc. as the distributor of more than 150 billion rand ($11.4 billion) of welfare payments a year to at least 17 million people.

The agency, known as Sassa, wants funding to finance a pilot project so that it can conduct a trial for the South African Post Office to make the payments even though it only has funding to pay Net1, it said in the first progress report ordered by the court so that Net1 is replaced by April next year. While the court in 2014 ruled that the contract with Net1 was invalid, Sassa failed to find a new service provider. Net1’s contract was extended until 2018 to ensure welfare payments didn’t stop.

“The lack of budget may negatively impact on Sassa’s ability to pilot and may result in disruption of social grants payments on 1 April 2018,” it said in the documents.

The failure of Sassa to comply with the 2014 order and threat to welfare payments this year have caused criticism of Social Development Minister Bathabile Dlamini, the government and Net1, which human rights organizations allege has been illegally deducting payments from welfare checks for goods and services. Dlamini has admitted some fault while saying she wasn’t solely responsible. Government has apologized and Net1 has denied wrongdoing.

Welfare payments are a signature policy of the ruling African National Congress, which says its working to reduce the inequality caused by apartheid.

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