(Bloomberg) -- South Africa's top court ordered the government and the nation's welfare agency to explain how a crisis that's threatening welfare-grant payments to more than 17 million people came about and what's been done to fix the problem.
In 2012, the state contracted Net1 UEPS Technologies Inc. to distribute the grants for five years. Two years later, the Constitutional Court ruled that its appointment was illegal. The company continued making the payments after the welfare agency failed to appoint a replacement. It's now set to get a new contract in an apparent contravention of the court order and against the advice of the Treasury and central bank.
In papers filed Wednesday, the court asked who at the welfare agency decided it was incapable of paying out the monthly stipends itself, when the decision was taken and why the court wasn't notified. It also asked whether the state agency has concluded a new disbursement contract with Net1's Cash Paymaster Services unit and, if so, to provide it with all details.
The government and welfare agency have argued that Net1 is the only entity with the capacity to ensure that payment of the grants continues uninterrupted. The Black Sash Trust, a human-rights group, has asked the court to rule that it oversee any new contract the welfare agency signs with Net1. The court on Wednesday rejected an application by the Democratic Alliance, the main opposition party, to join that case.
To contact the reporters on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net, Antony Sguazzin in Johannesburg at asguazzin@bloomberg.net.
To contact the editors responsible for this story: Karl Maier at kmaier2@bloomberg.net, Ana Monteiro
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