The morning queue outside the SASSA office in Gugulethu stretches nearly two blocks. I count at least sixty people—most elderly, some with small children, all waiting patiently in the autumn sun for their turn to navigate South Africa’s social grant system. Nomsa Khumalo has been here since 5:30 AM, three hours before opening time. At 62, she collects her pension and disability grants for her grandson through a Post Bank card that’s been giving her trouble for months. “Every time I come, there’s a new problem,” she tells me, shifting her weight to ease her arthritis. “The system is down, the card doesn’t work, or they say I need more documents.”
Also Read:- Social Security boost for more than 3.2 million coming in April Check Eligibility
Stories like Nomsa’s represent just one facet of South Africa’s complex and often troubled social grant distribution system—a system that now stands at the precipice of its most ambitious expansion yet: the proposed Universal Basic Income Grant (UBIG). As the nation grapples with staggering unemployment rates, deepening inequality, and the lingering economic scars of the COVID-19 pandemic, the UBIG has emerged as a potential solution. But beneath the promises of poverty alleviation and economic stimulus lurks a web of corporate interests, political calculations, and systemic challenges that demand closer scrutiny.
Having spent the past three months investigating the proposed UBIG, interviewing government officials, financial service providers, community organizers, and potential recipients, I’ve uncovered a narrative far more nuanced than the public debate typically acknowledges. The question that began my investigation—who really stands to profit from South Africa’s UBIG?—has yielded answers both expected and surprising.
The Anatomy of a Massive Cash Transfer
South Africa’s social grant system is already one of the most extensive in the developing world. The South African Social Security Agency (SASSA) currently distributes monthly grants to over 18 million beneficiaries, including child support grants, old-age pensions, and disability benefits. These grants represent a lifeline for millions of families, with research consistently showing their positive impact on nutrition, education, and health outcomes.
Universal Basic Income Who Gains from SASSA’s R2,910
The UBIG would dramatically expand this system by providing a monthly cash payment to all working-age South Africans between 18 and 59 who are currently ineligible for other grants. Depending on the implementation model chosen, this could mean between 10 and 33 million new beneficiaries.
“The scope of this expansion cannot be overstated,” explains Dr. Mbali Ntuli, a social policy researcher at the University of Cape Town whom I met at a recent policy conference. “We’re talking about potentially doubling or tripling the number of South Africans receiving monthly transfers from the government. The administrative and logistical challenges alone are staggering.”
These challenges begin with the fundamental questions of how much money would be distributed and how it would be funded. Current proposals range from a minimalist approach of R350 per month (approximately $19 USD)—essentially making permanent the temporary Social Relief of Distress (SRD) grant introduced during the pandemic—to more substantial amounts of R1,500 or even R3,500 monthly.
The Price Tag: Funding South Africa’s Biggest Social Program
The financial implications vary accordingly. The most modest proposal would cost approximately R50 billion annually, while more generous versions could require up to R400 billion per year—a mammoth sum representing roughly 8% of South Africa’s entire GDP.
During tense budget committee hearings I attended in Cape Town last month, Treasury officials presented various funding mechanisms, including:
- Increased income and wealth taxes on high earners
- New or increased consumption taxes (VAT)
- Restructuring existing expenditures
- A solidarity tax on companies
- Reducing tax incentives for private pensions
“Each funding option creates its own winners and losers,” notes financial analyst Jonathan Kriel, who has been modeling the economic impacts of various UBIG proposals. “Raising VAT might be administratively simpler, but it’s regressive. Targeting high income earners through new wealth taxes might be more equitable, but potentially more difficult to implement and enforce.”
The funding question extends beyond mere technicalities to the heart of South Africa’s economic philosophy. In a country still grappling with the legacy of apartheid and among the highest inequality rates globally, decisions about who should pay for social protection are inherently political.
The Corporate Players: Following the Money Trail
While debates about funding dominate public discussion, far less attention has been paid to who stands to profit from implementing and administering the UBIG. My investigation identified several key corporate stakeholders with significant financial interests in how the grant system expands.
“The distribution of social grants in South Africa has always attracted private sector involvement,” explains Thandi Mokwena, a longtime social justice activist who has been organizing UBIG advocacy campaigns in Johannesburg townships. “Sometimes this brings efficiency, but it also introduces profit motives into what should be a public service.”
The history of South Africa’s grant payment systems offers cautionary tales. The previous national contract holder, Cash Paymaster Services (CPS), became embroiled in a Constitutional Court case over irregular tender processes and was ordered to repay R316 million in profits. Despite this controversy, private sector involvement remains central to grant distribution.
Banking and Payment Providers: The First-Line Beneficiaries
The most obvious corporate beneficiaries of an expanded grant system are the financial institutions that would process millions of new monthly payments. Currently, grants are distributed through a combination of:
- Post Bank accounts
- Commercial bank accounts
- Electronic payment systems
- Cash payments at designated points
Each transaction generates fees—either paid directly by the government or extracted from recipients through account maintenance charges, withdrawal fees, or other financial products marketed to grant recipients.
During my visit to Postbank’s operations center in Pretoria, senior manager David Mkhize showed me the extensive infrastructure built specifically for grant distribution. “We’ve invested billions in systems to serve grant recipients,” he explained, gesturing toward rows of servers and monitoring stations. “Expanding to millions more recipients would require substantial additional investment, but the economies of scale make it potentially very profitable.”
Commercial banks have been even more direct about their interest. Internal strategy documents from two of South Africa’s “big four” banks, which I obtained during my investigation, explicitly identify grant recipients as a growth market, with one bank projecting potential annual revenue of R1.7 billion from account fees and financial services marketed to UBIG recipients.
“Banks view grant recipients as a captured audience,” explains financial inclusion researcher Dr. Nomfundo Dlamini. “Once you’re receiving regular electronic payments, you become a potential customer for everything from funeral policies to micro-loans—products that generate significant fee income.”
The Technology Providers: Digitizing Social Protection
Beyond the financial sector, technology companies stand to gain substantially from UBIG implementation. The pandemic-era SRD grant demonstrated both the potential and challenges of digital application and verification systems.
The SRD grant application process—conducted primarily through a USSD menu system, website, and WhatsApp channel—represented a dramatic shift from traditional in-person applications. While it reduced some barriers to access, it also created new challenges, particularly for those with limited digital literacy or connectivity.
“The move toward digital social protection is inevitable and potentially beneficial,” notes Siyabonga Madlala, a technology policy specialist I interviewed at an innovation hub in Durban. “But it also creates lucrative opportunities for tech companies to secure long-term government contracts for everything from identity verification to fraud detection systems.”
Several major global technology firms have already positioned themselves for these opportunities. IBM, Microsoft, and Oracle have all established dedicated public sector teams in South Africa focusing on social protection digitization. Local companies like EOH and Altron have similarly prioritized government contracts related to grant administration.
The stakes are enormous. One internal proposal I reviewed from a major technology vendor estimated a five-year contract value of R3.8 billion for developing and maintaining the digital infrastructure required for UBIG verification, enrollment, and complaint resolution.
Biometric Authentication: The Next Frontier
Particularly concerning is the push toward expanded biometric authentication systems for grant recipients. After the CPS controversy—which involved the company collecting and commercially exploiting biometric data from millions of grant recipients—civil society organizations have raised alarms about new proposals for fingerprint, facial recognition, and even voice authentication systems.
“Biometric systems are presented as anti-fraud measures,” explains privacy advocate Lebohang Mokone, who has been challenging SASSA’s data collection practices. “But they also represent extremely valuable data assets that can be monetized in various ways, and they raise serious privacy and consent issues, especially for vulnerable populations.”
During a closed-door industry conference I attended under journalistic pretenses, representatives from security and authentication companies openly discussed the “massive market opportunity” presented by the UBIG expansion. One executive projected potential revenues of “several hundred million rand annually” for maintaining biometric verification systems for tens of millions of recipients.
The Retail Sector: Where the Money Gets Spent
While much attention focuses on the distribution mechanism, an equally important question is where UBIG money would ultimately be spent. Here too, corporate interests have been quietly positioning themselves to capture this potential revenue stream.
South Africa’s major retail chains—including Shoprite, Pick n Pay, and Spar—have been expanding their presence in townships and rural areas, often with store formats specifically designed to serve grant recipients. These stores typically cluster around SASSA offices and payment points, and schedule promotional activities to coincide with grant payment days.
“On pension day, we see sales increase by 300-400%,” revealed a regional manager for one of South Africa’s largest supermarket chains, speaking on condition of anonymity. “Our entire merchandising strategy and staffing model is built around the grant payment calendar. A UBIG would essentially create more ‘pension days’ each month, which would be tremendously beneficial for consistent revenue.”
The concentration of retail spending has concerning implications for local economies. Small, informal businesses—from spaza shops to vegetable sellers—already struggle to compete with major retail chains. The injection of billions in additional grant money could accelerate the dominance of large retailers at the expense of community-based enterprises.
Financial Products: The Secondary Market
Beyond direct retail spending, UBIG recipients would likely become targets for a range of financial products—some beneficial, others potentially exploitative. The regular, government-guaranteed income stream makes grant recipients attractive customers for credit providers, insurance companies, and savings schemes.
During field research in KwaZulu-Natal, I observed numerous financial service kiosks set up near grant payment points, offering everything from funeral policies to short-term loans at interest rates approaching the legal maximum.
“Grant recipients are seen as low-risk lending prospects because their income is guaranteed by the government,” explains consumer protection attorney Nkosazana Zuma. “This has created a shadow financial services industry that specifically targets social grant recipients, often with products of questionable value and high fee structures.”
The potential expansion of this market under a UBIG system has not gone unnoticed by major financial players. Life insurance companies, micro-lenders, and even mobile network operators have developed specific product strategies targeting grant recipients. Internal market research from one major insurer, shared with me by a concerned employee, identified UBIG recipients as a “high-growth, high-margin customer segment” worth potentially R5 billion annually in premium income.
The Human Impact: Beyond Corporate Interests
While corporate positioning offers important context, the true measure of any UBIG program must ultimately be its impact on recipients’ lives. Here, evidence from both international experiences and South Africa’s existing grant system suggests complex but generally positive outcomes.
“When people receive regular cash transfers, they typically spend it on basic needs—food, education, healthcare, transportation,” explains economist Dr. James Wilson, who has studied the impacts of South Africa’s child support grant. “This not only improves immediate wellbeing but often enables longer-term investments in human capital and economic participation.”
During visits to communities where the SRD grant has been widely received, I encountered numerous examples of how even modest cash transfers enable economic activity. In Orange Farm township, I met Thabo Molefe, who used his accumulated SRD payments to purchase tools for a small home repair business. “The grant money bought my first set of tools,” he explained as we sat outside his small workshop. “Now I earn enough to support my family, but I still need the grant to help during slow months.”
Employment Effects: Dispelling Myths
One persistent concern about UBIG is the potential impact on employment incentives. Critics argue that guaranteed income might discourage work, while advocates counter that it could actually enhance labor market participation by providing security for job-seeking and entrepreneurship.
The evidence from South Africa’s existing grants largely supports the latter view. Research on the child support grant and old-age pension shows minimal negative effects on adult labor market participation, and in some cases positive impacts as grant money enables job search or small business activities.
“The idea that poor people will stop working if given modest cash transfers isn’t supported by evidence,” emphasizes labor economist Dr. Ayanda Mthembu. “The proposed amounts—even at the higher end—are below the minimum wage and nowhere near enough to live comfortably. People will still need and want to work, but they might be able to avoid the most exploitative employment arrangements or invest in improving their skills.”
This perspective was echoed by potential recipients I interviewed. Bongani Ndlovu, an unemployed 26-year-old in Soweto with a partial technical college education, explained: “With a basic income, I could afford transportation to interviews and proper clothes. Maybe I could even finish my certification. Right now, I spend all my energy just trying to find enough money to eat and help my mother with rent.”
Implementation Challenges: The Devil in the Details
If the UBIG moves forward, its success will depend largely on implementation details that receive far less public attention than the broader philosophical debates. My investigation identified several critical challenges that will determine whether the program benefits recipients or primarily serves corporate interests.
Administrative capacity represents perhaps the most immediate concern. SASSA has struggled with the comparatively smaller SRD grant, with applicants reporting system crashes, unexplained rejections, and payment delays.
“SASSA simply doesn’t have the internal capacity to handle millions of additional beneficiaries without significant support from external service providers,” admits a senior SASSA manager who requested anonymity. “The question is whether those partnerships can be structured to prioritize service delivery over profit extraction.”
The Identification Challenge
A fundamental implementation challenge involves correctly identifying eligible recipients while minimizing both inclusion and exclusion errors. South Africa’s identification systems, while relatively advanced for a developing country, still contain significant gaps.
The Department of Home Affairs estimates that approximately 3-5% of South African adults lack proper identification documents. These individuals—often among the most vulnerable—would face significant barriers to accessing a UBIG without substantial outreach and documentation efforts.
Conversely, preventing fraudulent claims presents its own challenges. The SRD grant has already experienced problems with government employees, formal sector workers, and individuals receiving other grants improperly accessing benefits. Scaling these verification processes to tens of millions of recipients while maintaining accuracy would require sophisticated data-matching capabilities.
“The identification and verification systems are where technology companies see their biggest opportunities,” notes digital rights advocate Themba Khumalo. “But these systems need strong oversight to prevent both exploitation of recipient data and exclusion of legitimate beneficiaries.”
FAQs: South Africa’s Universal Basic Income Grant
Question | Answer |
---|---|
What is the proposed amount for the UBIG? | Current proposals range from R350 to R3,500 per month, with the most likely initial implementation at the lower end (R350-R624). |
Who would be eligible? | Working-age South Africans (18-59) not receiving other grants or formal income, though some proposals suggest universal coverage with tax clawbacks from higher earners. |
How many people would receive the grant? | Between 10 million (targeted approach) and 33 million people (universal approach). |
What would it cost annually? | Between R50 billion (minimal approach) and R400 billion (comprehensive approach), representing 1-8% of GDP. |
How would it be funded? | Proposed mechanisms include increased income taxes, wealth taxes, VAT increases, and corporate solidarity taxes. |
When might it be implemented? | The current SRD grant expires in March 2025, creating a natural transition point, though political factors may accelerate or delay implementation. |
Which departments would administer it? | Primary responsibility would fall to SASSA under the Department of Social Development, with supporting roles from Treasury, Home Affairs, and Labor. |
What payment methods would be used? | Bank accounts, mobile money, dedicated grant cards, and cash payments, likely using a combination of approaches similar to existing grants. |
After months of investigation, the answer to my initial question—who will profit from South Africa’s UBIG?—remains multifaceted. Certainly, corporate interests across the financial, technology, and retail sectors stand to gain substantially. The implementation details will largely determine whether these corporate benefits represent reasonable compensation for valuable services or excessive profit extraction from a system meant to serve the vulnerable.
Yet the most important beneficiaries should be the recipients themselves—millions of South Africans currently excluded from both social grants and formal employment opportunities. The evidence suggests that even modest cash transfers can meaningfully improve lives when delivered efficiently and reliably.
“The debate shouldn’t be framed as for or against corporate involvement,” argues social policy expert Dr. Ntuli. “It should focus on how to structure that involvement to ensure it serves the public interest. Proper regulation, transparent contracting, reasonable fee structures, and strong data protection are all essential.”
As South Africa continues its UBIG deliberations, vigilance from civil society, media, and engaged citizens will be crucial to ensure that the program achieves its primary goal—providing economic security for millions of vulnerable South Africans—without primarily serving as a profit center for corporate interests.
For people like Nomsa Khumalo, still waiting patiently outside the SASSA office in Gugulethu, the stakes couldn’t be higher. When I ask what a UBIG might mean for her family, especially her unemployed adult children, her face brightens momentarily. “It would change everything,” she says simply. “They could help more with food, look properly for work, maybe even start small businesses.” Then, glancing at the still-lengthy queue, she adds with a hint of skepticism: “But only if it works better than this system. Otherwise, it’s just more empty promises.
Also Read:- Social Security boost for more than 3.2 million coming in April Check Eligibility