Black Sash Trust enters fray against Net 1

THE government is facing a legal counter challenge in a dispute with Net 1 UEPS Technologies with a rights group demanding that it protect welfare recipients from firms that are allegedly selling the nation’s poorest people goods and services they don’t need and deducting payments from grants paid to them by the state.

Black Sash Trust, a human rights activist group, applied yesterday to the High Court in Pretoria to intervene in cases between the state and Net 1 and its associates. Net 1 has a contract to distribute welfare grants on behalf of the government, while companies in which it has shareholdings, and board members in common, sell grant recipients services ranging from loans to cellphone air time.

“The state is under a constitutional and legal obligation to protect the beneficiaries of social grants from exploitation,” Black Sash, which is represented by the Johannesburg-based Centre for Applied Legal Studies, said in court papers. It should be ordered to “make regulations under the Social Assistance Act that adequately protects social grants from exploitation in a manner that prevents grant beneficiaries receiving full benefit from them,” the group said.

The dispute between Johannesburg-based Net 1 and the government comes after regulations were amended in May to stop deductions by insurance companies from child support grants for funeral insurance polices for children, as well as for other goods and services. Of South Africa’s 53.9 million people, 16.9 million receive welfare payments. The state paid R129 billion in grants in the last financial year.

Net 1 challenge

Welfare recipients are being taken advantage of because they do not always understand what they are signing up for, according to the South African Social Security Agency (Sassa).

Net 1 said that they should be allowed to spend their money as they chose. Black Sash contends that the state must protect those on welfare from depletion of their grants.

Net 1 and its associates “seek to be able to continue to have de facto unrestricted access to the Sassa bank accounts of social grant beneficiaries to whom they market and provide products and services”, Black Sash said.

Net 1 said last month that the amended regulations breached the constitution. “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,” it said in court papers.

The amendments were “an unjustifiable and disproportionate intrusion on the individual autonomy of beneficiaries to regulate their own affairs”. – Bloomberg