Strategic Failures: Cash Transfers and the Constitutional Court in South Africa

Abstract

Between 2015-2022, I worked with the Black Sash, a 75-year-old human rights organization to stop predatory lending on cash transfers. During this time, the South African Social Security Agency (SASSA) outsourced the payment of cash transfers to a private corporation, Cash Paymaster Services (CPS). CPS used their monopoly over personal and financial data to compel grantees to use their state entitlements as collateral for high-interest loans in the name of financial inclusion. In 2017, the Black Sash used my research to file a series of applications with the Constitutional Court (ConCourt) to end the contract with CPS. The ConCourt judgements led to a change in service provider from a private cash transfer system to a public one run by the Post Office. Five years later, however, the Post Office bank has struggled to deliver grants to the 24 million people who rely upon them, leading to the gradual take-over of grant distribution by commercial banks. As such, this paper reflects on one particular “problem space” that frames urban scholarship and cash transfer research: i.e. the assumption that the state or the public is necessarily a better solution to the private sector. The Black Sash and I initially assumed a developmental state program would necessarily be an antidote to a predatory private one. However, while one arm of the state, the Court, proved visionary and progressive in its judgments, another arm of the state, the Post Office, proved ineffective at implementing them due to years of austerity. This raises questions about the possibilities and limitations of romanticizing the state (particularly amid neoliberalism, state capture, etc) and the types of interventions necessary to undo predatory financial capitalism.