Mobile money could be a handy tool in the arsenal of the South African Social Security Agency (Sassa), an analyst says.
The agency needs alternative disbursement methods, as Net1’s Cash Paymaster Services is due to hand over the reins in September. One option Sassa is actively considering is mobile money, a technology widely used in East Africa that has never gained traction in SA because of the country’s higher rate of financial inclusion.
Spokesman Kgomoco Diseko said Sassa was holding internal discussions about paying grants via mobile money. "Should there be agreement on this method, a procurement process will have to start."
Mobile operators would then need to respond to a request for proposal, he said.
Africa Analysis director Dobek Pater said mobile money would probably be "a good solution to Sassa’s woes – and certainly a lot better, safer, and most likely less expensive than handling cash". It would also benefit grant recipients, he said.
Pater said SA’s biggest mobile operator, Vodacom, would be able to leverage the experience of its group sister company – Kenya’s Safaricom – which had extensive experience with the M-Pesa platform. MTN would be able to draw on its mobile money services in other African markets. If Sassa went ahead with mobile money, the exact method of distribution – "probably a simple crediting of a phone account" – would need to be ironed out to ensure the law would be accommodating. For instance, the appointed network operators would probably not have to obtain banking licences.
Pater said it might be difficult to create a mobile money ecosystem for SA’s grant recipients as extensive as M-Pesa in Kenya or Tanzania.
In those markets, users can pay for a wide range of services with mobile money. "It would take some time due to the well-developed banking systems in SA and the legal framework. However, for now, the wide distribution networks of the mobile network operators could probably be leveraged to exchange mobile money for real cash by the recipients, as required."
Network operators have said money could be one part of the broader grants solution. But it would be difficult to implement at first because cash would still need to be distributed to remote areas so that beneficiaries could convert funds to cash.
Meanwhile, Pater said that assuming Vodacom and MTN were appointed as grant distributors, authorities would need to work out how to pay consumers who did not have SIM cards with these operators.
"Would they need to obtain an MTN or Vodacom SIM or account? Or would they be serviced through other means?"
Vodacom said in June it was in talks with the South African Post Office, Sassa’s new distribution partner, about the solution. Cape Town-based Wallettec said it had presented its mobile payments solution to Bathabile Dlamini when she was social development minister. Wallettec CEO Johan Meyer said at the time mobile money could save costs and reduce fraud, and act as a "trading platform" for the informal economy. Approved shop owners would be able to accept mobile money payments, giving Sassa the ability to control what grants were spent on — for instance, purchases of alcohol.