Outsourcing the Disbursement of Social Grants and Banking the Unbanked : the Case of Net1 UEPS Technologies, Ltd. in South Africa

Abstract

The outsourcing of South Africa’s social grant payment system to Cash Paymaster Services, a private financial service provider, has been the subject of increasing public attention in recent years. In 2012, reports of unauthorized deductions from grant beneficiaries’ bank accounts for financial services sold by CPS’ sister companies emerged, and the looming grant payment crisis facing South Africa’s Social Security Agency (SASSA) dominated the news headlines for months in 2016 and 2017. Many observers saw these events as yet another instance of corruption and incompetence on the part of individuals in high places in government and the private sector in Africa. Such allegations have come to have a prominent place in local and international media reports about the continent, and carry the implication that the solution to the problem lies in getting rid of the guilty individuals – the ‘bad apples’ – who undermine an otherwise well-functioning system. This dissertation attempts to take the discussion of the social grants saga beyond this perspective, thus filling the gap between the public debate and the ‘bigger as advocated by Prahalad’s “Bottom of the Pyramid” theory and concepts such as ‘corporate social responsibility’ and ‘financial inclusion’. The aim is to challenge the public perception of the social grants saga as a case of ‘corruption and incompetence’ on the part of selected individuals, to make a local contribution to the global debate on the changing relationship between corporations and states, and to illustrate the detrimental effects this changing relationship can have on the poorest and most vulnerable part of the population.