How South Africa’s Grant System Can Benefit from Blockchain

In some parts of the world, social grants and government subsidies are the only things the population can rely on in order to survive. South Africa is one of those countries, as over a third of its population depends on social grants and other government disbursements.

​What Is a Social Grant?

Social grants are the funds given to people living in South Africa. They help to fight poverty, which has been growing at an astonishing rate lately. Millions of South African citizens depend on these grants. Mainly, they are dispersed to elderly citizens, as well as the disabled ones, or citizens with young children.

Beneficiaries of the grants must be South African citizens, refugees, or permanent residents of South Africa. The South African Social Security Agency (SASSA) is responsible for the distribution of social grants. However, due to the political turmoil in the region, SASSA often goes on strike.

SASSA on Strike

Source: The Citizen

When this happens, millions of people are forced to starve. Despite how far the African National Congress (ANC), Africa’s governing party, has come with the election of Nelson Mandela in 1994, the current administration is often broadly criticized.

The South African Social Grant Crisis

In 2016, a subsidiary working under the ANC was accused of corruption. Apparently, the company was withholding funds from South African citizens. As a result, SASSA’s president had to resign. Following his resignation, many of SASSA’s employees became extremely uncomfortable with their working conditions.

From that day, the strike began, and it continued through 2018. Within that time frame, another company had taken over grant disbursements and was accused of corruption and fraud, as many citizens who went to collect their monthly payments were often turned away and left to starve.

Blockchain for a Better Social Grant System in South Africa

Blockchain acts as a digital ledger; there is no single, definitive account of events that can be manipulated. Each node (a computer connected to the blockchain network) has the same copy of the cryptography-backed ledger, which makes blockchain decentralized and practically immutable.

Because of this, many consider this technology to develop more transparent systems in the social grants distribution, which is only one of many domains where blockchain technology can bring significant changes.

Blockchain can help the South African social grant system tackle many issues. Let’s take a look at a couple of examples.

Putting an End to Corruption

Blockchain is transparent and can be viewed by any network member in real-time; thus, using blockchain would limit corruption in the South African grant system.

Fighting Fraud

Social grant fraud is common and sometimes involves officials. As the South African social grant distribution system is currently mostly offline, it’s often impossible to verify IDs in any central, governmental system, since no such system currently exists.

Additionally, because the current government ID system is based offline, several people may end up having the same ID number, which only adds to complications.

Moreover, the rural areas themselves have even more issues. Whenever a transaction involving a social grant happens there, it always happens offline, with no automatic updates of the database. Thus, there is another issue South Africans face in their social grant distribution system: the lack of automation.

Increasing Automation

Blockchain technology can optimize and automate the social grants distribution system significantly. Instead of relying on government agencies to disburse the grant payments by hand, a system can be developed on a blockchain so that grants are disbursed each month automatically.

Automating grant distribution through the use of blockchain is beneficial in one more way: it will bring social grant payment costs down by eliminating intermediaries.

For instance, a registry could be set up on which South African citizens could register their names and current issues. Mothers could register how many kids they have, and payments would be based on the number of children and their age. Seniors could do the same, but upload ages and medical issues instead, so payment would be made to accounts at a certain point of each month.

Disabled people could indicate their condition and how it affects their income (like the inability to get a job), and they could be paid on a certain date of the month as well. Such information would be kept secure on the blockchain.

Is There an Alternative to the Current Social Grant System in South Africa?

Yes, blockchain is also involved there. In 2017, a group of South African businessmen launched Project UBU. The project is built on the backbone of the universal basic income idea and distributes funds to the individuals in need at no cost.

Every month, those citizens receive a certain number of Universal Basic Units (UBU), which can be later converted to the currency of their choice.

Bringing a Better Future to South Africa with Blockchain

South Africa has been going through many issues throughout its history. Alas, some of them will stay for years to come.

However, as we said earlier, blockchain can bring substantial changes to the region. As a secure, immutable, and transparent ledger, it can prevent corruption, fight fraud, and increase automation. With blockchain technology, the system of social grants can be streamlined and modernized, allowing millions of South Africans to live a more secure and fulfilling life.