The South African Social Security Agency (SASSA) failed to set aside funds for its contract with Postbank to process social grant payments, the Constitutional Court of South Africa heard on Tuesday.
The dispute between SASSA and Postbank has escalated to the country’s highest court after SASSA terminated its agreement with the state-owned bank.
Since the Master Services Agreement began in 2022, Postbank has facilitated grant payments to about three million beneficiaries across South Africa.
Constitutional Court Questions SASSA Over Lack Of Funding
In December, the Constitutional Court ordered that the existing arrangement between SASSA and Postbank should remain in place until the legal dispute is finally resolved.
However, Postbank alleges that SASSA has not complied with that directive.
During Tuesday’s hearing, SASSA’s legal representatives told the court that no budget had been allocated to continue paying Postbank for administering grant payments, despite the standing court order that the agreement should remain in force pending the outcome of the case.
Justice Steven Majiedt questioned SASSA’s legal team over what appeared to be a failure to comply with the court’s instruction.
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SASSA’s lawyers argued that while there is no budget to pay Postbank for its facilitation services, funding for the social grants themselves remains in place.
They added that beneficiaries would still receive their grants through traditional banks, which they said had agreed to process the payments at no cost.
The matter is being closely watched because of its potential impact on millions of South Africans who rely on monthly social grants for essential support.
