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S Africa court halts impasse that threatened welfare grants

AFP  |  Johannesburg 

A South African today gave a private company a one-year extension of its contract to distribute vital welfare grants to millions of people, easing fears of a payments disruption.

A dispute arose after nearly a third of the country's welfare beneficiaries faced problems when a agency failed to secure new terms before the contract expired this month.

Judge Johan Froneman of the Constitutional ordered the Social Security Agency (SASSA) and the company, Paymaster Services, to "ensure payment of social grants to grant beneficiaries from 1 April 2017 for a period of 12 months."

Froneman also criticised Social Development Minister Bathabile Dlamini for not showing "interest" in making sure a new contract was negotiated to avoid a lapse in payments.

pays out about 140 billion rand (USD 11.8 billion) a year to beneficiaries including pensioners, unemployed mothers and the disabled.

The had ruled in 2014 that the had not followed the proper procedures in awarding the lucrative contract.

Dlamini has been facing fierce criticism for denying there was a looming crisis, with opposition lawmakers calling for her resignation.

On Wednesday, President Jacob Zuma came to her defence, telling lawmakers in parliament that "there is no crisis".

The payments are pivotal in South Africa, a country of 56 million people where poverty is widespread.

Analysts say the payouts, particularly in rural areas, help the governing African National Congress (ANC) maintain its support.

The ANC, which led the struggle against apartheid, came to power in 1994 under Nelson Mandela but has lost support in recent years, posting its worst results ever in local elections last year.

is scheduled to hold its next general election in 2019.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, March 17 2017. 17:58 IST