Johannesburg - Welfare-grant distributor Net 1 UEPS Technologies said a state agency had breached the constitution by amending regulations to prevent deductions from the payments to some of the country’s poorest people.
In May, the South African Social Security Agency (Sassa), which oversees the payment of welfare grants to more than 16 million people, amended its rules to prevent what it said were illegal deductions for goods and services directly from grants, ranging from funeral insurance to cellphone airtime.
The amended regulations “unjustifiably infringe beneficiaries’ right to contractual freedom and self-autonomy, which is an incident of the right to human dignity protected” by the constitution, Johannesburg-based Net 1 and companies that it part-owned said in court documents that were filed with the North Gauteng High Court last month in preparation for a case due to be heard on October 17 and 18.
The assertion that Sassa has behaved unconstitutionally is the latest development in a dispute that has pitted Net 1, its associates and insurance firms that are providing funeral cover, against the government.
Taken advantage
While the welfare agency said that grant recipients were being taken advantage of because they did not always understand what they were signing up for, Net 1 asserted that they should be allowed to spend their money as they saw fit.
The amendments were made as Sassa said it wanted to stop the sale of funeral insurance for children, which was paid for from child-support grants paid to their parents or guardians.
“Beneficiaries have been able to enjoy the security and convenience of electronic banking, as well as access to credit facilities, which were previously inaccessible to them under the cash-based payment system,” said Net 1, which won the contract to distribute the payments in 2012.
The amendments were “an unjustifiable and disproportionate intrusion on the individual autonomy of beneficiaries to regulate their own affairs”.
Sassa said it had not broken the constitution.
Net 1 shares had declined 15 percent in Johannesburg since the government said in May that it would amend the regulations.
BLOOMBERG