EPWP Social security in the time of COVID-19 SOCIAL SECURITY REVIEW VOLUME 2
ACKNOWLEDGEMENTS The Department of Social Development extends its appreciation to the Human Sciences Research Council for providing editorial services for this edition of the Social Security Review. Special thanks go to Ms Shirin Motala, Dr Tim Hart, and Mr Stewart Ngandu for their excellent guidance and support to the Department to ensure a high standard for the publication, including management of the peer review of all the chapters. Dr Jaqueline Harvey, serving in her capacity as project manager for the publication, ably managing the entire process. The Department is immensely grateful to the Authors for their submissions under very tight timelines and for the various edits and approving of final drafts. This is more so as many of these requests came at short notice. We wish to acknowledge the contribution of the team of Peer Reviewers, who will remain unnamed as the approach used was a double-blind peer-review process. They provided their intellectual insights and gave direction to the authors to enhance the quality of the contributions. We appreciate other colleagues at the Human Sciences Research Council whose various contributions in the execution of the project enables the achievement of milestones under tremendous pressure. These include Shingirirai Muzondo, Mmatselane Maja, Ilse Visagie, Lindiwe Malumbazo, Tahiya Moosa, and Amanda DiphokoPhetla. A special thanks to Kashan Advertising and in particular Bryony Terblanche who exercised immense patience and flexibility in ensuring that we got the publication to this stage. Copyright 2024 Department of Social Development This publication is an output of the Department of Social Development with support from researchers at the Equitable Education and Economies Division of Human Sciences Research Council as editors. EDITORS: Ms Shirin Motala, Dr Tim Hart, and Mr Stewart Ngandu. Department of Social Development Project Team: Ms Brenda Sibeko, Mr Anthony M Makwiramiti and Mr Thabiso Modise. Credits Cover illustration and design 2024, book layout, and production by Kashan Advertising. Copy editing by Dr John Seagar. Copyright statement The text and data in this publication may be reproduced if the source is cited. Reproductions for commercial purposes are forbidden. Rights and Permission – All rights reserved. Publisher: Kashan Advertising Ordering information: Copies can be obtained from the DSD Edition and Year: Second Edition 2024 Disclaimer The views and opinions expressed in the various chapters are those of the author and do not necessarily reflect the official policy or position of DSD and the HSRC. The conclusions and assumptions made in the analysis are not reflective of the position of any entity other than the authors. Any errors or defects remain the responsibility of the editorial team and authors. Suggested citation Department of Social Development. (2024). Social Security Review Volume 2: Social Security in the time of Covid-19. Department of Social Development, Pretoria. ISBN: 978-0-621-51839-9
Social Security Review Volume 2 1 Table of Contents Minister’s Foreword 2 1. Introduction: Social Security in the Time of COVID-19 4 Ms Shirin Motala, Dr Tim Hart and Mr Stewart Ngandu 2. The Potential for Blockchain to Promote Social Security Inclusion 9 Ms Robyn Evans Cunningham 3. Social Security for Migrants Post-COVID-19: Revisiting the Legal and Policy Framework 20 Prof. Marius Olivier 4. From Exclusion to Inclusion: Extending Parental Protection to Informal Workers 41 Mr Shaka Keny Bob, Ms Shirin Motala and Mr Charles Parkerson 5. Grants and Development? Exploring the Relationship Between Child Support Grant Access and Child Cognitive Development in Children of Adolescent Mothers in South Africa 62 Ms Claire Tatham, Dr. Janina Jochim, Prof. Lucie Cluver, Dr. Kathryn J. Steventon Roberts, Ms Marguerite Marlow, Ms Camille Wittesaele, Dr. Katherine Eyal and Assoc. Prof. Elona Toska 6. Food Assistance and Cash Grants During the Early COVID-19 Waves: Insights from South African Experiences 94 Dr Peter T. Jacobs, Dr Vandudzai Mbanda, Ms Sisonke Mtyapi and Ms Nolukholo Mabharwana 7. Social Insurance for South Africa: The Rationale and the Options 114 Prof. Alex van den Heever 8. An Assessment of the Response of South Africa's Social Protection System to COVID-19: A Systems Approach 125 Mr Stewart Ngandu, Ms Shirin Motala, and Dr Bongiwe Mncwango 9. COVID-19 Triggers Growing Support for a Basic Income Grant in South Africa 164 Dr Tim G.B. Hart, Dr Benjamin J. Roberts, Advocate Gary Pienaar, Dr Yul Derek Davids, Prof. Narnia Bohler Muller, and Dr Carin Runciman 10. Financing and Innovation in Social Security Amidst COVID-19: Impacts and Long-Term Considerations 187 Dr Mark S. Blecher, Ms Nangamso C. Manjezi, Ms Rito D. Valoyi, Ms Lindi Mzankomo and Ms Pebetse Maleka
Social Security Review Volume 2 2 Minister’s Foreword It is my pleasure to present the Social Security Review Volume 2 publication. This Volume follows the inaugural edition entitled, “Social Security Review 2021: Evolution of Social Security in South Africa, An Agenda for Action”. The first edition showcased the evolution of social security in South Africa, domestic and international legal frameworks, and policy gaps that called for further action in the development of social security systems. The inaugural edition unpacked the historical journey in the evolution of South Africa’s social security system dating back to decades of apartheid which was dominated by racial segregation. The fragmented social security system was based on race, gender and geographic location. These legacy policies, legislation and programmes were inadequate, inequitable, inappropriate, and ineffective in addressing poverty and basic human needs, and it is for this reason that they were scrapped. The post-1994 democratic ethos within which the social and economic transformation has been taking place demands of our social security system to become more inclusive with coverage extended to previously-excluded vulnerable groups. It is on this backdrop that progressive legislative changes have contributed to the gains we have witnessed to date. For instance, in the signing the Social Assistance Act into law, South Africa took a historic step toward fulfilling a fundamental principle of the Freedom Charter and the Constitution of our country: that access to social security is a right, not a privilege. Thirty (30) years on — under the constitutional democracy — our social security system continues to be transformed and strengthened. Our social assistance programme cushions millions of vulnerable children, women, persons with disabilities, older persons and unemployed adults of working age from abject and dehumanising conditions of extreme poverty and inequality. Our social grants have been proven to be effective in poverty alleviation. Social security is and will remain a sound investment in the human capital of our country. Building on the inaugural edition, this second edition entitled, “Social Security Review 2023: Social Security in the times of COVID-19” explores the intersections of the social security policy imperatives and the COVID-19 pandemic-induced crises which exacerbated the pre-existing challenges of poverty, inequality and unemployment. Surely, the lessons from this experience can be transposed to future disasters, crises and shocks. The peer-reviewed chapters in this edition are centred on the extension of social security coverage to vulnerable groups such as atypical and informal sector workers, migrant workers, unemployed working age adults (aged between 18—59), institutional frameworks, the role of technology in social security and creation of fiscal space to fund critical social security interventions. The COVID-19 pandemic resulted in a crisis that affected everyone in different ways and its impact will be felt over a long-period of time. As a policy response, many countries expanded their existing social security provisions and introduced new, albeit of a short-term nature, interventions.
Social Security Review Volume 2 3 In 2020, the government of South Africa unveiled a R500 billion socio-economic relief package to counter the effects of the COVID-19 pandemic. This investment included the introduction of innovative social assistance programme within which was the payment of temporary top-up grants as well as the special COVID-19 Social Relief of Distress (SRD) (R350) for unemployed adults of working age. This publication therefore inspires a national discourse on social security issues arising from the past and the COVID-19 crisis experiences. Various authors underline the importance of addressing the identified social security gaps. Establishing a comprehensive social security system that ensures that no one is left behind is therefore critical. While it is evident that the COVID-19 pandemic presented unprecedented challenges, it equally offered social security institutions with opportunities that could be leveraged pursuant of accelerating the implementation of our timely social security policy responses. Going forward, there is need to augment the investments made to build a coherent and systematised social security that cushions everyone from vulnerabilities and contingencies due to whatever catastrophic eventualities. I thank all the contributing authors and editors. The Department of Social Development welcomes the diverse views provided by the independent contributing authors. The recommendations in each chapter are critical for the review and improvement of the design and implementation of our social security interventions. The Department remains committed to the promotion of knowledge generation that is relevant to everyday living and can influence policymaking debates for the benefit of all South Africans. This Social Security Review publication was commissioned in recognition of the need to contribute to knowledge generation and provide thought leadership in the social security policy and legislative environment by institutionalising a regular publication that can act as a reference resource for use by social policy practitioners, researchers, students, journalists, ordinary citizens and other stakeholders. As we mark the 30 years of our democracy, I am convinced that this Social Security Review publication will make a huge contribution to policy debates in the 30 years ahead of us. This must continue to be a platform for engagements which help in building a better life for all South Africans. Ms Lindiwe D Zulu, MP Minister of Social Development
Social Security Review Volume 2 4 1. Introduction: Social Security in the Time of COVID-19 Editors: Ms Shirin Motala, Dr Tim Hart and Mr Stewart Ngandu In the wake of the COVID-19 pandemic, the world witnessed unprecedented socio-economic disruptions, fundamentally challenging the resilience and inclusivity of social security systems globally. This second volume of the Social Security Review, themed Social Security in the Time of COVID-19, is a timely and critical contribution to the discourse on social protection in the face of large-scale socio-economic shocks, particularly in the context of developing countries such as South Africa. The Department of Social Development, with the Human Sciences Research Council (HSRC), has curated a collection of insightful chapters that not only dissect the pandemic's profound impact on vulnerable populations but also offer a forward-looking perspective on enhancing the resilience and inclusiveness of social security systems. Comprehensive overview and significance This volume emerges from a crucial need to address the gaps in understanding and implementing effective social security measures during times of crisis. It builds on the foundational work of the inaugural edition, moving from identifying gaps to proposing actionable strategies for a more inclusive and responsive social security framework. The chapters collectively argue for a shift towards universal and inclusive social security systems that can better protect the vulnerable, informal and migrant workers, female workers, parents, people with disabilities, children, youth, elderly and the unemployed, during times of crisis. Integration of diverse viewpoints The diverse chapters, while varied in focus, converge on the imperative of extending social protection coverage to all vulnerable groups. From exploring the extension of parental protections to informal workers to the innovative use of blockchain technology for social grant disbursement, the volume offers a multifaceted understanding of the challenges and opportunities within South Africa's social security landscape. The narrative weaves through legal and policy frameworks for social security for migrants, the rationale for comprehensive social insurance, and the transformative potential of grants on child development, to insights into food assistance and the financing and innovation in social security. Expert commentary and future directions It is evident that the COVID-19 pandemic has served as a stark reminder of the fragility of our existing social security systems, and it also presents an unparalleled opportunity to rethink and reconfigure these systems. The volume underscores the need for South Africa to prioritise reforms that enhance the inclusivity, resilience, and responsiveness of its social protection system, balancing fiscal implications with human rights. Key points and directed readings The volume is designed to guide readers through a comprehensive exploration of social security in times of crisis, emphasising: • The need for extending social protection to informal and migrant workers, as well as parents and the unemployed. • The potential of technology to transform social security delivery and accessibility. • The critical role of legal and policy frameworks in ensuring inclusive social security for migrants. • The importance of a comprehensive social insurance model to address long-term social issues and crises. • The impact of social grants on child development, especially among vulnerable populations. • The effectiveness of food assistance and cash grants in reaching intended recipients during crises. • Innovative financing mechanisms and the potential for a basic income grant (BIG) as part of South Africa's social security future. • Enhancing the social protection system's robustness and responsiveness through
1. Introduction: Social Security in the Time of COVID-19 5 inclusiveness, financial and fiscal sustainability, and cost-effective optimisation of service delivery. Scholarly foundation and frameworks The chapters' theoretical, methodological, and conceptual frameworks provide a solid foundation for understanding and analysing the complex dynamics of social protection. These frameworks are crucial for interpreting evidence and applying it to policy and practice, particularly in disciplines such as social protection and public policy. Chapter overviews Cunningham explores blockchain's transformative potential to revolutionise social grant administration and disbursement is explored by Cunningham in her chapter "The Potential for Blockchain to Promote Social Security Inclusion". Despite limitations, the chapter recommends exploring blockchain solutions to enhance social security inclusion by exploring its potential to address pervasive challenges of fraud, access barriers and inefficiencies in South Africa’s social assistance system. Characteristics of blockchain technology, namely its security, transparency, immutability, and efficiency, are examined as a solution to these pervasive challenges. Cunningham concludes with a forward-looking perspective, recommending that the Department of Social Development, alongside public and private sector partners, actively explore and potentially adopt blockchain solutions as they become more feasible. This entails not only investing in the technology itself but also in the infrastructure and educational programmes necessary to bridge the digital divide. Olivier spotlights migrant rights in "Social Security for Migrants Post-COVID-19" through scrutiny of the adequacy of social security policies for migrants, rooted in the understanding that the pandemic not only exposed but exacerbated the fragilities in the social security net available to migrants, including temporary workers and undocumented individuals. The author highlights the essential role of international law standards and constitutional mandates in shaping a more inclusive social security policy that extends protections to all individuals within the country's borders, regardless of their migration status. Through this chapter, Olivier presents a compelling case for reevaluating and reforming South Africa's social security policies for migrants. He articulates a vision for a more inclusive, equitable system that recognises the inherent dignity and rights of all individuals, highlighting the need for a concerted effort to bridge the gap between policy and practice in the post-pandemic era. In "From Exclusion to Inclusion: Extending Parental Protection to Informal Workers" Bob et al. examine the challenges faced by informal workers, particularly women, who were excluded from social protection during the COVID-19 pandemic, particularly maternal and paternal protection. Through empirical findings, the authors illustrate the exacerbated challenges faced by informal workers, including increased care burdens due to school closures and the closure of informal enterprises resulting in reduced working hours and income. The authors highlight the importance of social capital as a coping mechanism and call for the inclusion of representative informal worker organisations in the social insurance system to advocate for and secure the rights and protections of informal workers. The authors argue for extending maternity and paternal protections to the informal sector and advocate for early childhood development services near informal workplaces. Analysis by Tatham et al. "Grants and Development? Exploring the Relationship Between Child Support Grant Access and Child Cognitive Development in Children of Adolescent Mothers in South Africa" highlights the relationship of timely Child Support Grant (CSG) access as a catalyst for child cognitive development. Drawing on evidence from the Eastern Cape, findings reveal that children who accessed the CSG within their first year exhibited significantly higher cognitive development scores. Conversely, each month's delay in CSG initiation was associated with a decrement in these scores, underscoring the grant's profound impact on early childhood development. Moreover, the analysis highlights a concerning trend—adolescent and young mother recipients faced challenges securing the CSG timeously, compared to caregivers, pointing towards systemic barriers that exacerbate vulnerabilities. They recommend 'cash-plus' interventions designed for adolescent mother-child pairs that cater to the unique needs of adolescent mother-child pairs. In "Food Assistance and Cash Grants During Early COVID-19 Waves: Insights from South African Experiences," Jacobs et al. offers a comprehensive assessment of South Africa's response to food insecurity
Social Security Review Volume 2 6 during the initial stages of the COVID-19 pandemic. The study focused on the South African government's suite of livelihood protection measures including food parcels, food vouchers, and the expansion of cash grants, designed to mitigate the growing hunger crisis. One key finding is the significant role that geographic location played in determining the receipt of food assistance, indicating disparities in the capacity of different provinces to respond to the crisis. The research also highlights the pivotal roles of non-governmental organisations and civil society in distributing food, suggesting a critical need for institutional preparedness and flexibility in crisis response. The authors recommend that food assistance during crises like the COVID-19 pandemic should be universally applied, irrespective of an individual's demographic or socio-economic status. Van den Heever provides a compelling case for overhauling social insurance in his chapter "Social Insurance for South Africa: The Rationale and the Options". He offers an incisive critique of South Africa's existing social security framework, illuminating its failure to establish a comprehensive and equitable system. Van den Heever argues for a modernised social security system that can adeptly navigate both longstanding socio-economic challenges and emergent crises. He proposes a visionary three-tier system designed to offer robust non-contributory protections, introduce basic contributory benefits through public social insurance schemes, and encourage complementary private coverage. This comprehensive model underscores the necessity for aligning social security measures with the multifaceted needs of the South African populace. The chapter presents a compelling case for systemic overhaul, emphasising the urgent need for policies that foster inclusivity, resilience, and social justice. Van den Heever's analysis and recommendations offer a blueprint for transforming South Africa's social insurance landscape, charting a path towards a more equitable and secure future for all. The chapter, "An Assessment of South Africa's Social Protection System's Response to COVID-19 Using the Core Diagnostic Instrument (CODI) Framework" by Ngandu et al. employs the CODI Framework to evaluate South Africa's social protection response to COVID-19. The assessment reveals strengths in policy coherence and integration but identifies gaps in inclusiveness, financial and fiscal sustainability, and cost-effectiveness. One of the most striking revelations from the assessment is the system's struggle with financial and fiscal sustainability, achieving a lower score in this dimension. This challenge is particularly concerning given the increased demands on social protection during the pandemic and the subsequent strain on national resources. The authors recommend improvements in evidence use for policymaking, governance, stakeholder participation, and financial planning to build a more robust and responsive social protection system that can effectively support vulnerable populations during crises and beyond. The timely contribution of Tim Hart et al. "COVID-19 Triggers Growing Support for a Basic Income Grant (BIG) in South Africa" explores the mounting advocacy for BIG as a response to the pandemic's economic impact. This chapter scrutinises the historical reluctance of the South African government to adopt a universal or basic income grant despite the glaring challenges of poverty, inequality, and unemployment exacerbated by the pandemic. The authors highlight the introduction of the temporary R350 Social Relief of Distress (SRD) grant in April 2020 as a pivotal moment, providing a lifeline to vulnerable South Africans affected by the economic fallout of the pandemic. The chapter argues for BIG as a viable policy measure for post-pandemic recovery and long-term socio-economic resilience. "Financing and Innovation in Social Security Amidst COVID-19: Impacts and Long-Term Considerations" by Blecher et al. navigates the financial underpinnings and innovative practices that bolstered South Africa's social security system during the pandemic. Highlighting the government's expanded expenditure on social grants and the introduction of the COVID-19 Social Relief of Distress (SRD) grant, the narrative addresses the dual challenges of immediate crisis response and the sustainability of such measures in the long term. The continuation, or potential permanency, of the COVID-19 SRD grant is depicted as a critical issue, demanding a reliable financing strategy to avoid exacerbating the fiscal deficit. The authors advocate for continued investment in digital infrastructure and comprehensive reforms to strengthen social security and labour market interventions for the working-age population.
1. Introduction: Social Security in the Time of COVID-19 7 Conclusion The chapters in this edited volume collectively demonstrate the significant progress South Africa has made in expanding social protection, despite facing serious fiscal constraints. The country's social protection system has shown resilience and adaptability in the face of the unprecedented challenges posed by the COVID-19 pandemic, while also highlighting areas for improvement and reform. The collective insights from this volume offer a blue-print for action—highlighting the urgency of extending and enhancing social protection coverage, leveraging digital technologies, and engaging in the national debate on basic income support. The recommendations serve as a valuable guide for policymakers and stakeholders in their efforts to build a more inclusive, responsive, and sustainable social protection framework that can effectively support the nation's most vulnerable populations, even in times of crisis. As South Africa continues to navigate the complex landscape of social protection provisioning within the context of limited resources, the lessons learned from this volume will undoubtedly contribute to shaping a more equitable and resilient future for all its citizens. Author profiles Ms Shirin Motala is a Director of Impact and Research Development in the Equitable Education and Economies Division at the Human Sciences Research Council (HSRC), working within the research theme of Employment Creation and Inclusive Development with over 35 years of experience in the social development sector. She holds an MA in Social Science from the University of KwaZulu-Natal. Her research interests focus on poverty, social protection, active labour market interventions, employment and public employment programmes. Her research portfolio over the past twenty years has included serving as principal or coinvestigator and/or Project Manager on various studies commissioned by national and provincial governments, international development agencies, non-profit organisations and donors. Journal. Email: smotala@hsrc.ac.za Dr Tim Hart was a Chief Research Specialist in the Developmental, Capable and Ethical State Division at the HSRC until December 2023. He is currently a Visiting Associate at the University of York, United Kingdom, and a Research Fellow at the University of Stellenbosch, South Africa. He has over 30 years of interdisciplinary research experience covering various aspects of social development from innovation, food security, and land reform to xenophobia, disability and human rights. He holds an MPhil (cum laude) from the Department of Sociology and Social Anthropology, Stellenbosch University, and a DPhil from the same institution. Email: timgbhart@gmail.com Mr Stewart Ngandu is a Chief Research Manager in the Equitable Education and Economies Division at the Human Sciences Research Council (HSRC). He holds a Master of Science degree in Economics from the University of Zimbabwe. Most of his research falls in the field of development economics, with a special focus on poverty, unemployment, public employment programmes, industrial development, inclusive development and the assessment of the efficacy of developmental public policy. His other research interests include economy-wide modelling and policy analysis, microdata analysis, multidimensional poverty analysis, and impact evaluation design and assessment. Stewart has extensive experience in the conceptualisation, design, and planning/budgeting of public focused research projects and the delivery and dissemination of highquality policy-relevant research that achieves impact. He has produced a variety of research outputs including client reports, peer-reviewed journal articles, book chapters, policy briefs, and conference presentations. Email: sngandu@hsrc.ac.za
The Role of Digital Technology in Social Security and COVID-19 Blockchain
2. The Potential for Blockchain to Promote Social Security Inclusion 9 2. The Potential for Blockchain to Promote Social Security Inclusion Ms Robyn Evans Cunningham1 1 Freelance Development Consultant Abstract COVID-19 accelerated the use of technology in our daily lives. The digital momentum it created has been touted as an opportunity to transform and accelerate government service delivery, especially in developing countries. During the pandemic in South Africa, technology was harnessed to speed up the delivery of social protection grants, helping to reach millions in a short period, but the process was hampered by infrastructural challenges and inefficiencies. Furthermore, many without digital access and literacy were excluded. Blockchain technology could provide solutions to some of the implementation problems by improving trust in the system. Whilst the technology is relatively unproven in its public sector application, its security, transparency, immutability and efficiency features present compelling solutions to a social security system dogged by fraud, delay, compromised security and inaccessibility. However, the technology is complex and would require significant investment, and in South Africa, parallel investment in improving digital access and literacy to narrow the digital divide. Whilst not a panacea, as blockchain matures and becomes more viable for large-scale use, there is a strong argument for further research and interdisciplinary evaluation of its benefits for social security inclusion. Introduction Lockdowns initiated to curb the spread of the COVID-19 pandemic around the world led to technology being utilised in new ways for service delivery, e-commerce, work and entertainment, spurring huge momentum in digital transformation (Deganis et al., 2021). One area where technology was critically harnessed was in the delivery of social protection and financial support to vulnerable people hardest hit, or “government to people (G2P) social transfer programmes” (Gelb & Mukherjee, 2020:1). South Africa’s well-developed social welfare apparatus still relied predominantly on cash-based transfers but digital innovations to speed up the distribution of the Special COVID-19 Special Relief of Distress (SRD) grant demonstrated the potentially transformative power of digital technology (Gronbach et al., 2022). The digital system used to deliver the grant was problematic, however, and created barriers for those without digital access, highlighting the extent of the digital divide in South Africa (Gronbach et al., 2022; Senona et al., 2021). It has been argued that the experience of COVID-19 presents an opportunity for accelerating digital adoption to improve the quality of government service delivery in developing countries, which in many cases has been frustrated by poor infrastructure, networks, technology, and skills (Ndulu et al., 2022). Certainly, given the impact of the SRD, it is imperative for the Department of Social Development (DSD) and the South African Social Security Association (SASSA) to assess the potential of different technology solutions to drive greater socio-economic inclusion. This will need to be accompanied by a frank assessment of whether the supporting infrastructure is fit for purpose, how it might help to close the digital divide, the technology skills that will be required to build and support the technology, and whether the overall benefits outweigh the cost of significant upfront investment. In evaluating alternative digital solutions, DSD must consider technologies that can address some of the challenges that have dogged social grant payments in the past, including compromised security of cash and data transfers, corruption, delays, costs, and barriers to access (Gronbach et al., 2022). Blockchain was identified but not implemented in the proposed design of the SRD in 2020 (Philip et al., 2020). Blockchain technology has received a lot of hype in recent years for its ability to provide security, transparency, and immutability to transactions and information flows. Monethi (2023) and
The Role of Digital Technology in Social Security and COVID-19 10 Shava and Mhlanga (2023) argue that blockchain has the potential to address challenges faced by several African governments in service delivery service delivery, such as corruption, and a lack of transparency and accountability in bureaucratic processes. However, whilst there has been a lot of interest globally in how blockchain could be harnessed to improve government services, there is a degree of ambivalence towards it and few viable use cases exist (Di Prisco & Strangio, 2021; Lindman et al., 2020; Sung & Park, 2021). Little research has been conducted on the topic in South Africa, with the exception of an examination of its application to reduce fraud in public records management and procurement (Ajibade & Mutula, 2021), and improving security and trust in services offered by health systems (Ndayizigamiye & Dube, 2019). Certainly, the author is not aware of any research on the use of blockchain to facilitate social grant dissemination. Therefore, this chapter seeks to elucidate the potential opportunities and challenges for blockchain as a technology solution to some of the ongoing implementation problems encountered in social grant dissemination in South Africa. This study, through a critical review of the literature, aims to catalyse further examination of the topic, especially in the South African context. The first section reviews the impact of digital technologies on the rollout of the SRD in South Africa during COVID-19. Then an overview is given of the core features of blockchain and why these make it a disruptive technology. The third section illustrates potential use cases of blockchain technology for social grant management and payment. Finally, there is a discussion on the implications of the use cases presented within the South African context, and considerations for future research. COVID-19 advancing digital transformation COVID-19 and the lockdown measures introduced in response led to a major increase in the number of people around the world working remotely, to internet traffic escalating, to digitalisation of products and services, and to governments providing more services online (Deganis et al., 2021). This surge in digital transformation demonstrated the connective power of technology and the opportunities it presents to promote greater social inclusion. However, this relies on internet accessibility and usage, and in South Africa, 31.8% of the population does not have internet access, despite high levels of mobile telephone penetration (FurtherAfrica, 2022; GSMA, 2022). Those households that do, access it predominantly through mobile broadband, or via work, places of study, public hotspots, or through family members who have access to these channels. Moreover, there is a wide disparity between the network coverage in rural and urban areas (Ndulu et al., 2022). Ndulu et al. (2022) also make the point that the lack of internet usage is perhaps more critical than access, which is, despite the gaps, continuously improving. Household usage tends to be much higher in metropolitan areas (83%) compared with households in general (75.3%) (Stats SA, 2022). Barriers to usage range from cost, to poor internet speed and connectivity, to a lack of digital literacy and to digital content that is not always relevant to all users. The COVID-induced drive towards digital adoption has therefore also laid bare the “digital divide” (Deganis et al., 2021:1) in South Africa and the resulting social exclusion of those without mobile or internet access and connectivity, or with low levels of digital literacy. To fully realise the social potential of digital technology, this gap needs to be closed. In the specific case of G2P transfers, a report compiled mid-pandemic by the Center for Global Development (Gelb & Mukherjee, 2020) highlights the role that digital infrastructure can play: from onboarding, identifying, and screening recipients, to making payments to them, resolving their grievances, managing databases of recipients, and integrating this data with digital infrastructure. In South Africa, emergency relief measures were enacted during the pandemic, both topping up existing social welfare grants and also introducing the SRD as an additional grant for vulnerable people not already receiving a grant. Whilst the grant payment process remained predominantly cash based, to process applications and verification for the SRD grant, SASSA cooperated with private companies to develop the country’s first automated social grant application system. This system leveraged mobile technology, digital communication platforms and biometric verification
2. The Potential for Blockchain to Promote Social Security Inclusion 11 technologies. It had significant challenges, such as system crashes due to high application numbers, reliance on digital applications making access difficult for those without cell phones or internet connectivity, lack of live support, and database inaccuracies (Senona et al., 2021). Nonetheless, it has been argued that this automated application portal was the “most innovative and transformative feature of South Africa’s social protection response” to COVID-19 (Gronbach et al., 2022:51), enabling it to reach most intended recipients in a relatively short period. The payment system for the SRD grant relied heavily on manual cash disbursements and was frustrated by inconsistencies, poor communication, red tape, confusion and delays (Gronbach et al., 2022; Senona et al., 2021). Unlike other sub-Saharan African countries, mobile cash transfers had not previously been used for social grant payments. The mobile payment option mooted by the DSD, in which recipients could opt to receive payments via a code sent to their mobile phones that would enable them to withdraw cash from an ATM, was not implemented in the first 12 months of the SRD grant programme (Gronbach et al., 2022). Despite these challenges, over 6 million people received the SRD in that period (Gronbach et al., 2022). This experience suggests there is potential for digital technology to alleviate some of the ongoing challenges SASSA has been facing since its inception in 2005, variously including irregularities and fraud in the grant payments process, delays, costs, barriers to access, and compromised security of cash and data transfer (Davis, 2019; Gronbach et al., 2022). What is a blockchain? A blockchain at its core is a shared digital database and encrypted store of information. Unlike traditional databases, a blockchain stores information in a series of records, called ‘blocks’, that are linked using cryptography. The database is shared amongst different computers in a network such that multiple identical copies of the database are held on many different machines, or ‘nodes’. Each time new information is created or added to the database, such as a payment transaction, it must first be validated by a majority of network participants before it is recorded in a block and encrypted with a cryptographic hash, or unique block identifier, and timestamp. Each hash contains information from previous blocks and transactions, in addition to new information related to the new transaction (Hayes, 2023; Synopsys, 2023). New information is validated once all participants reach consensus using a consensus model. Traditionally, decision-making or validation is done by a central authority, but in a blockchain these mechanics are decentralised, or ‘distributed’. Different types of consensus models are used depending on the type of blockchain or context. Each time new information is added, including changes or amendments, a new block is created, cryptographically hashed (given a secure unique ID), and linked to the previous block, creating a chronological record, or ‘chain’. That record, being held by multiple parties, is visible to all participants in the network, and as such is unchangeable, or ‘immutable’ unless there is consensus to change it (Berryhill, et al., 2018; IBM, 2023). It is this distributed structure of blockchains or distributed ledger technology (DLT) that makes them potentially disruptive. DLT is a unique method for enabling data to be shared quickly, reliably, securely and without being altered, via decisions made either through the consensus of decentralised actors, or the logic of encrypted algorithms called smart contracts. Smart contracts are algorithms that enable automatic execution, for example of a payment transaction, based on logic built into the code. Smart contracts are autonomous and decentralised. In other words, they run automatically off information held within the blockchains into which they are built. No centralised intervention is possible, and no centralised server is required off which to run them (Berryhill et al., 2018; Tang et al., 2022). It is no longer necessary to rely on a centralised intermediary or authority like a government or a bank to mediate a transaction or process (Berryhill et al., 2018). By decentralising the decision governing a transaction away from a central authority, to a consensus of nodes in the distributed ledger - or different computers in the network - trust is shifted to users of the network. This works because of the checks and balances and security built into the system that makes it inherently trustworthy
The Role of Digital Technology in Social Security and COVID-19 12 to participants. Furthermore, each party in a transaction is verified using cryptography, allowing them to securely send and receive information or funds. Blockchain’s security protocols enable trust, removing friction, and the potential for moral hazard. The technology presents a potentially transformative solution for public sector departments and stakeholders. It could enable information sharing by cutting across siloes, and remove loopholes and the potential for corruption and manipulation that may arise as information and funds flow between them. This would increase transparency, consistency of information and fairness. Blockchain also makes the process of application and identity verification easier for recipients as they need only register once, or provide proof materials once (Berryhill et al., 2018; Tang et al., 2022). These features on the face of it make a compelling case for blockchain as a technology solution for public sector management of information and fund flows such as those administered by SASSA and the South African Post Office (SAPO). The next section evaluates use cases in more detail. Illustrating blockchain’s potential Whilst operational public sector use cases are few and far between (Di Prisco & Strangio, 2021; Lindman et al., 2020; Sung & Park, 2021), the following examples illustrate some ways in which the technology could be leveraged to support elements of SASSA’s social welfare disbursement infrastructure. Use case 1: protecting the integrity of government data After a series of cyberattacks in 2007, the Estonian government sought to find ways to protect the integrity of internal data such as healthcare registries and property registries (Lindman et al., 2020). The Riigi Infosüsteemi Amet2 (RIA), the Estonian Information System Authority, developed a blockchain based technology that uses linked time stamping to protect sensitive information held offline in digital databases. 2 This is the Estonia Information System Authority. The “KSI Blockchain” (Lindman et al., 2020:54) links the data to hashed records in the blockchain where any change or addition must first be approved or validated by consensus. It stores unique hashes that cannot be tampered with, protecting the data and making them immutable. Blockchain services are provided to different parts of the Estonian government by the RIA giving confidence to the Estonian government that the data can be trusted, enforced, and verified in real-time. SAPO, which has handled SASSA payments since 2018, suffered a similar security breach in 2019 (Gronbach et al., 2022). There are critical lessons here for SAPO. One is that blockchain could help to build trust in its ability to guarantee the accuracy of data upfront, to protect it securely and prevent any tampering, and that it is able to protect the personal details of beneficiaries and prevent fraudulent abuse of grants. The other is the importance of leveraging a well-resourced and skilled information authority that is able to navigate the complexity of the technology and deliver technology services that are fit for purpose, rather than trying to develop solutions independently. Use case 2: precise allocation of public funding In the Netherlands, blockchain technology was developed to support a voucher system for low income people to receive discounts on municipal services (Lindman et al., 2020). Individuals received a ‘quick response’ or QR code from the municipality on their mobile phones, which would then be used to pay for certain services. The technology was used to validate the vouchers using smart contracts with the intention of reducing fraud and double-spending, and improving the cost efficiency of the service. This worked well for about 20,000 users but when it needed to be scaled up they reverted to more traditional technologies (Lindman et al., 2020). In South Africa, the questions for implementing this system would be twofold. Firstly, scalability, which depends on the speed and ability of a blockchain to process transactions, store data, and reach consensus as new information is added. The technology is still in many respects very
2. The Potential for Blockchain to Promote Social Security Inclusion 13 nascent and capacity constraints are a challenge (Prabhat, 2022). However, ways to improve this are constantly evolving, for example by storing data offline and using private permissioned blockchains and consensus models (Tang et al., 2022) as we will see below. In early communications about the SRD, SASSA put forward an e-voucher option, but the idea was subsequently abandoned when they were overwhelmed by thousands of proposals for voucher systems (Gronbach et al., 2022). Perhaps introducing criteria such as the security provided by blockchain, and automation afforded by smart contracts, might help to narrow the field for a voucher system in the long-term. Use case 3: improved internet coverage in underserviced communities XOneFi is a UNICEF-funded start-up in Nigeria that is developing a solution to improve internet coverage in underserviced communities (UNICEF, 2023a). Using blockchain technology, they are creating a decentralised Wi-Fi sharing platform through which small businesses and individuals can share their internet access with the community at a much lower cost. XOneFi, whilst still being piloted, aims to create exponential and cheaper access through mini-Internet Service Providers (ISP), by giving internet access to more users through a single internet subscription held by individuals and small businesses. If proved viable and scalable, this solution could potentially serve to close internet service gaps in poorly served areas of South Africa. Whether this model could be scalable in South Africa would depend on the extent and quality of existing ISP coverage in more remote areas, and the cost of alternative sources of internet or Wi-Fi if mobile options are inadequate. However, as discussed above, accessibility is only half the battle; encouraging usage is the other, and a big focus on developing both sides would be essential to creating successful and fair access to digital grant services. 3 SPENN is the name of a blockchain system and is not an acronym. Use case 4: cash transfers to aid recipients A second UNICEF-funded start-up, CHATS (Convexity Humanitarian Aid Transfer Solution) uses blockchain technology to track and enable transfers of cash to aid recipients by donor programmes (UNICEF, 2023b), using not only mobile wallets but also SMS vouchers, QR codes, paper vouchers, and cards for those who do not have phones or internet access. Specifically, the use of a digital cash voucher transfer platform based on blockchain aims to remove fraud from the payment chain, ensuring that aid reaches the correct recipients, and giving donors certainty that this has happened. The CHATS paper voucher is designed with several security elements built into it, including barcoding that tallies with the CHATS platform ensuring that use is subject to beneficiary verification. Redemption can be done at selected participating vendors and then reconciled with the CHATS database (CHATS, 2023). In South Africa, a solution that could remove the potential for irregularities and fraud in grant payments, and ensure traceability of those payments, would be game-changing. Furthermore, using SMS or even paper vouchers removes the need for reliance on the internet (at least for the disbursement side of the offering). This example presents another argument for SASSA to give voucher systems more serious consideration. Use case 5: blockchain-based accounting to support mobile bank accounts SPENN3 is a mobile banking application (app) that allows users to control their own financial affairs (SPENN, 2023). The SPENN model is unique in that it eliminates the need for cash by digitalising national currencies. Users are able to easily download and register with the app on a smartphone, and then immediately create a digital account with the ability to transact and interact with others in the financial system.
The Role of Digital Technology in Social Security and COVID-19 14 SPENN uses a blockchain-based accounting system to keep track of the transactions and funds on the user’s SPENN account. The balance in the SPENN application reflects the balance of the customer’s funds held with a local bank partner. Their business model is finding traction in countries including the Philippines, Kenya, Rwanda, and Zambia (SPENN, 2023), where increased mobile penetration has enabled faster, safer, and wider adoption of digital accounts. Digitalising currency in this way could solve quite a few issues faced in the South African context and in the distribution of social protection grants. For one, the app is designed to be operated on 95% of all smartphones globally (Evans-Cunningham, 2018) and could therefore be used on low cost entry-level smartphones. Using the app consumes only a little mobile data and requires low bandwidth, lowering the cost barrier to mobile phone and mobile internet usage. This brings a financial inclusion solution to the table in addition to driving greater social inclusion. Banks that ordinarily struggle to service poor customers managing small sums of money such as the SRD could more efficiently and profitably handle accounts and transactions involving smaller amounts by leapfrogging hurdles like cost, identification verification, credit, and compliance risk. Perhaps the major stumbling block is that mobile cash and e-cash transfers have not previously been used for social grant payments in South Africa (Gronbach et al., 2022) and would require a significant investment in educating recipients, especially those less digitally literate, to increase the usage and viability of this type of solution. Use case 6: a blockchain based identity management system in South Korea With the exponential growth of data and digitalisation, and the accelerated effects of COVID-19 on digital adoption, there is a growing demand for user-driven public services that are both transparent and cost effective (Sung & Park, 2021). The question of privacy of personal information has also come to the fore, driving the concept of information sovereignty, or the right for individuals or companies to control their information themselves. Sung and Park (2021) describe the features and benefits of blockchain-based identity solutions in South Korea, which use decentralised identifiers (DID). These are technologies that provide data subjects with a unique identifier that is managed and stored in a distributed ledger. Electronic identity cards are issued by a national authority and accessed by individuals via mobile phones. Whilst these identities are issued by a centralised agency, they are owned and managed by the data subject. The technology also enables identity authentication in real-time through links to central government agency databases, validating digital signatures and storing them on the blockchain. The decentralised nature of the blockchain removes the single point of failure problem associated with data stored on centralised servers, reducing hacking risk. It also increases trust in the system as users have control over their own data. In the disbursement of the SRD during COVID-19 in South Africa, the digital application process (whilst innovative) fed into an approval system that required separate checks by SASSA, the South African Revenue Service (SARS), the Unemployment Insurance Fund (UIF), SOCPEN (SASSA’s existing grant system) and other databases, some of which contained out of date information, leading to thousands of eligible candidates for the grant being excluded (Senona et al., 2021). Therefore, the solution presented by a DID system could significantly improve accuracy, security, and efficiency of identity management and application processes. However, issues such as mobile usage, data literacy, and government regulatory compliance could present significant barriers to its successful adoption in South Africa. Sung and Park (2021) recommend that for this type of system to reach its potential, all stakeholders (including financial institutions, mobile operators, regulators, infrastructure operators, and policymakers) across the public and private sectors, would need to collaborate to holistically consider the frameworks required for implementation. Discussion What these examples show is that whilst blockchain is not yet sufficiently scalable to support very large scale application (Lindman et al., 2020; Prabhat, 2022), it might offer some solutions for G2P payments such as the grants
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