In 2012, the South African Social Security Agency (SASSA) awarded a five-year, R10 billion contract for social grant payments to Cash Paymaster Services (CPS), a subsidiary of US-listed Net1 UEPS Technologies. The contract covered payments to approximately 17 million social grant beneficiaries — the largest social grant system in the developing world.
AllPay Consolidated Investment Holdings, a competing bidder, challenged the tender. In AllPay I ([2014] ZACC 4), the Constitutional Court found the tender process constitutionally invalid due to irregularities. In AllPay II ([2014] ZACC 12), the Court faced the dilemma of what to do with an invalid contract that 17 million people depended on. It allowed CPS to continue until the contract expired on 31 March 2017, expecting SASSA to develop an alternative.
Meanwhile, CPS/Net1 exploited its position. Using access to beneficiary biometric data and the payment system, Net1 subsidiaries sold funeral policies, airtime, and loans to grant beneficiaries — often without informed consent — deducting payments directly from grants before beneficiaries received their money. The Black Sash Trust and other civil society organisations documented widespread exploitation of some of South Africa's most vulnerable people.
As the March 2017 expiry approached, it became clear that SASSA under Minister Bathabile Dlamini had made no meaningful progress toward an alternative payment system. A constitutional crisis loomed: 17 million beneficiaries — elderly pensioners, disabled persons, child support recipients — faced non-payment.
The Constitutional Court intervened directly in an extraordinary series of proceedings (Black Sash Trust v Minister of Social Development). The Court ordered CPS to continue payments beyond the contract expiry, appointed a panel of experts (including retired Judge Bernard Ngoepe) to report directly to the Court on SASSA's progress, and effectively supervised the grant payment system itself — an unprecedented judicial intervention necessitated by complete executive failure.
SASSA and Dlamini gave misleading information to the Court about the state of readiness. Dlamini established secret "parallel workstreams" that duplicated and undermined SASSA's official transition process — the Court later found these were designed to maintain the CPS contract rather than develop a genuine alternative.
On 22 June 2018, the Constitutional Court delivered its landmark ruling ([2018] ZACC 36). It found Dlamini personally responsible for the crisis, reckless and grossly negligent in her conduct, and guilty of misleading the Court about the parallel workstreams. The Court imposed an unprecedented personal costs order: Dlamini was ordered to pay 20% of the Black Sash/Freedom Under Law litigation costs from her personal funds — estimated at R650,000 to R1 million. A sitting Cabinet minister personally ordered to pay litigation costs was an extraordinarily rare sanction.
Dlamini was subsequently convicted of perjury in 2022 for lying under oath about her involvement in the parallel process, receiving a fine or suspended sentence. She was replaced as Minister after the 2019 elections but remained active in the ANC Women's League.
The eventual transition of grant payments moved to the South African Post Office and direct bank payments. The process was fraught with difficulties as SAPO itself was dysfunctional, and many beneficiaries experienced payment delays. The full transition was only completed by late 2018.
Regulations were subsequently introduced to limit unauthorised deductions from social grants, providing belated protection against the exploitation that CPS/Net1 had engaged in.