TECHNOLOGY & HUMAN RIGHTS

Locked In! How the South African Welfare State Came to Rely on a Digital Monopolist

The South African Social Security Agency provides “social grants” to 18 million citizens. In using a single private company with its own biometric payment system to deliver grants, the state became dependent on a monopolist and exposed recipients to debt and financial exploitation.

On February 24, 2021, the Digital Welfare State and Human Rights Project hosted the fifth event in their “Transformer States” conversation series, which focuses on the human rights implications of the emerging digital state. In this conversation, Christiaan Van Veen and Victoria Adelmant explored the impacts of outsourcing at the heart of South Africa’s social security system with Lynette Maart, the National Director of the South African human rights organization The Black Sash. This blog summarizes the conversation and provides the event recording and additional readings below.

Delivering the right to social security

Section 27(1)(c) of the 1996 South African Constitution guarantees everyone the “right to have access” to social security. In the early years of the post-Apartheid era, the country’s nine provincial governments administered social security grants to fulfill this constitutional social right. In 2005, the South African Social Security Agency (SASSA) was established to consolidate these programs. The social grant system has expanded significantly since then, with about 18 million of South Africa’s roughly 60 million citizens receiving grants. The system’s growth and coverage has been a source of national pride. In 2017, the Constitutional Court remarked that the “establishment of an inclusive and effective program of social assistance” is “one of the signature achievements” of South Africa’s constitutional democracy.

Addressing logistical challenges through outsourcing

Despite SASSA’s progress in expanding the right to social security, its grant programs remain constrained by the country’s physical, digital, and financial infrastructure. Millions of impoverished South Africans live in rural areas lacking proper access to roads, telecommunications, internet connectivity, or banking, which makes the delivery of cash transfers difficult and expensive. Instead of investing in its own cash transfer delivery capabilities, SASSA awarded an exclusive contract in 2012 to Cash Paymaster Services (CPS), a subsidiary of South African technology company to administer all of SASSA’s cash transfers nationwide. This made CPS a welfare delivery monopolist overnight.

SASSA selected CPS in large part because its payment system, which included a smart card with an embedded fingerprint-based chip, could reach the poorest and most remote parts of the country. To obtain a banking license, CPS partnered with Grindrod Bank and opened 10 million new bank accounts for SASSA recipients. Cash transfers could be made via the CPS payment system to smart cards without the need for internet or electricity. CPS rolled out a network of 10,000 places where social grant payments could be withdrawn, known as “paypoints,” nationwide. Recipients were never further than 5km from a paypoint.

Thanks to its position as sole deliverer of SASSA grants and its autonomous payment system, CPS also had unique access to the financial data of millions of the poorest South Africans. Other Net1 subsidiaries including Moneyline (a lending group), Smartlife (a life insurance provider) and Manje Mobile (a mobile money service) were able to exploit this “customer base” to cross-sell services. Net1 subsidiaries were soon marketing loans, insurance, and airtime to SASSA recipients. These “customers” were particularly attractive because fees could be automatically deducted from the SASSA grants the very moment they were paid on CPS’ infrastructure. Recipients became a lucrative, practically risk-free market for lenders and other service providers due to these immediate automatic deductions from government transfers. The Black Sash has found that women were going to paypoints at 4.30am in their pajamas to try to withdraw their grants before deductions left them with hardly any of the grant left.

Through its “Hands off Our Grants” advocacy campaign, the Black Sash showed that these deductions were often unauthorized and unlawful. Lynette told the story of Ma Grace, an elderly pensioner who was sold airtime even though she did not own a mobile phone, and whose avenues to recourse were all but blocked off. She explained that telephone helplines were not free but required airtime (which poor people often did not have), and that they “deflected calls” and exploited language barriers to ensure customers “never really got an answer in the language of their choice.”

“Lockin” and the hollowing out of state capacity

Net1’s exploitation of SASSA beneficiaries is only part of the story. This is also about multidimensional governmental failure stemming from SASSA’s outright dependence on CPS. As academic Keith Breckenridge has written, the Net1/SASSA relationship involves “vendor lockin,” a situation in which “the state must confront large, perhaps unsustainable, switching costs to break free of its dependence on the company for grant delivery and data processing.” There are at least three key dimensions of this lockin dynamic which were explored in the conversation:

• SASSA outsourced both cash transfer delivery and program oversight to CPS. CPS’s “foot soldiers” wore several hats: the same person might deliver grant payments at paypoints, field complaints as local SASSA representatives, and sell loans or airtime. Commercial activity and benefits delivery were conflated.
• The program’s structure resulted in acute regulatory failures. Because CPS (not Grindrod Bank) ultimately delivered SASSA funds to recipients via its payment infrastructure outside the National Payment System, the payments were exempt from normal oversight by banking regulators. Accordingly, the regulators were blind to unauthorized deductions by Net1 subsidiaries from recipients’ payments.
• SASSA was entirely reliant on CPS and unable to reach its own beneficiaries itself. Though the Constitutional Court declared SASSA’s 2012 contract with CPS unconstitutional due to irregularities in the procurement process, it ruled that the contract should continue as SASSA could not yet deliver the grants without CPS. In 2017, Net1 co-founder and former CEO Serge Belamant boasted that SASSA would “need to use pigeons” to deliver social grants without CPS. While this was an exaggeration, when SASSA finally transitioned to a partnership with the South African Post Office in 2018, it had to reduce the number of paypoints from 10,000 to 1,740. As Lynette observed, SASSA now has a weaker footprint in rural areas. Therefore, rural recipients “bear the costs of transport and banking fees in order to withdraw their own money.”

This story of SASSA, CPS, and social security grants in South Africa shows not only how outsourced digital delivery of welfare can lead to corporate exploitation and stymied access to social rights, but also how reliance on private technologies can induce “lockin” that undermines the state’s ability to perform basic and vital functions. As the Constitutional Court stated in 2017, the exclusive contract between SASSA and CPS led to a situation in which “the executive arm of government admits that it is not able to fulfill its constitutional and statutory obligations to provide for the social assistance of its people.”

March 11, 2021. Adam Ray, JD program, NYU School of Law; Human Rights Scholar with the Digital Welfare State & Human Rights Project in 2020. He holds a Masters degree from Yale University and previously worked as the CFO of Songkick.

TECHNOLOGY & HUMAN RIGHTS

Digital Paternalism: A Recap of our Conversation about Australia’s Cashless Debit Card with Eve Vincent

On November 23, 2020, the Center for Human Rights and Global Justice’s Digital Welfare State and Human Rights Project hosted the third virtual conversation in its “Transformer States: A Conversation Series on Digital Government and Human Rights” series. Christiaan van Veen and Victoria Adelmant interviewed Eve Vincent, senior lecturer in the Department of Anthropology at Macquarie University and author of a crucial report on the lived experiences of one of the first Cashless Debit Card trials in Ceduna, South Australia.

The Cashless Debit Card is a debit card which is currently used in parts of Australia to deliver benefit income to welfare recipients. Vitally, it is a tool of compulsory income management: the card “quarantines” 80% of a recipient’s payment, preventing this 80% from being withdrawn as cash and blocking attempted purchases of alcohol or gambling products. It is similar to, and intensifies, a previous scheme of debit card-based income management, known as the “Basics Card.” This earlier card was introduced after a 2007 report into child sexual abuse in indigenous communities in Australia’s Northern Territory which identified alcoholism, substance abuse, and gambling as major causes of such abuse. One of the measures taken was the requirement that indigenous communities’ benefit income be received on a Basics Card which quarantined 50% of benefit payments. The Basics Card was later extended to non-indigenous welfare recipients, but it remained disproportionately targeted at indigenous communities.

Following a 2014 report by mining magnate Andrew Forrest on inequality between indigenous and non-indigenous groups in Australia, the government launched the Cashless Debit Card to gradually replace the Basics Card. The Cashless Debit Card would quarantine 80% of benefit income on the card, and the card would block spending where alcohol is sold or where gambling takes place. Initial trials were targeted, again, in remote indigenous areas. The communities in the first trials were presented as parasitic on the welfare state and in crisis with regard to alcohol abuse, assault, and gambling. It was argued that drastic intervention was warranted: the government should step in to take care of these communities as they were unable to look after themselves. Income management would assist in this paternalistic intervention, fostering responsibility and curbing alcoholism and gambling through blocking their purchases. Many of Eve’s research participants found these justifications offensive and infantilizing. The Cashless Debit Card is now being trialed in more populous areas with more non-indigenous people, and the narrative has shifted. Justifications for cards for non-indigenous people have focused more on the need to teach financial literacy and budgeting skills.

Beyond the humiliating underlying stereotypes, the Cashless Debit Card itself leads cardholders feeling stigmatized. While the non-acceptance of Basics Cards at certain shops had led to prominent “Basics Card not accepted here” signs, the Cashless Debit Card was intended to be more subtle. It is integrated with EFTPOS technology, meaning it can theoretically be used in any shop with one of these ubiquitous card-reading devices. ETPOS terminals in casinos or pubs are blocked, but these establishments can arrange with the government to have some discretion. A pub can arrange to allow Cashless Debit Card-holders to pay for food but not alcohol, for example, thereby not excluding them entirely. Despite this purported subtlety, individuals reported feeling anxious about using the card as the technology was proving unreliable and inconsistent, accepted one day but not the next. When the card was declined, sometimes seemingly randomly, this was deeply humiliating. Card-holders would have to gather their shopping and return it to the shelves under the judging gaze of others, potentially of people they know.

Separately, some card-holders had to use public computers to log into their accounts to check their cards’ balance, highlighting the reliance of such schemes on strong digital infrastructure and on individuals’ access to connected devices. But some Cashless Debit Card-holders were quite positive about the card: there is, of course, a diversity of opinions and experiences. Some found that the card’s fortnightly cycle had helped them with budgeting and thought the app upon which they could check their balance was a user-friendly and effective budgeting tool.

The Cashless Debit Card scheme is run by a company named Indue, continuing decades-long trends of outsourcing welfare delivery. Many participants in Eve’s research spoke positively of their experience with Indue, finding staff on helplines to be helpful and efficient. But many objected to the principle that the card is privatized and that profits are being made on the basis of their poverty. The Cashless Debit Card costs AUD 10,000 per participant per year to administer: many card-holders were outraged that such an expense is outlaid to try to control how they spend their very meager income. Recently, the biggest four banks in Australia and government-owned Australia Post have been in talks about taking over the management of the scheme. This raises an interesting parallel with South Africa, where social grants were originally paid through a private provider but, following a scandal regarding the tender process and the financial exploitation of poor grant recipients, public providers stepped in again.

As an anthropologist, Eve’s research takes as a starting point the importance of listening to the people affected and foregrounding their lived experience, resonating with a common approach to human rights research. Interestingly, many Cashless Debit Card-holders used the language of human rights to express indignation about the scheme and what it represents. Reminiscent of Sally Engle Merry’s work on the ‘vernacularization’ of human rights, card-holders invoked human rights in a manner quite specific to the Aboriginal Australian context and history. Eve’s research participants often compared the Cashless Debit Card trials to the past, when the wages of indigenous peoples had been stolen and their access to money was tightly controlled. They referred to that time as the “time before rights”; before legislative equal citizen rights had been gained. Today, they argued, now that indigenous communities have rights, this kind of intervention and control of communities by the government is unacceptable. As one of Eve’s research participants put it, the government has through the Cashless Debit Card “taken away our rights.”

December 4, 2020. Victoria Adelmant, Digital Welfare State & Human Rights Project at the Center for Human Rights and Global Justice at NYU School of Law. 

TECHNOLOGY AND HUMAN RIGHTS

Seeing the Unseen: Inclusion and Exclusion in Kenya’s Digital ID
System

On October 28, 2020, the Digital Welfare State and Human Rights Project held a virtual conversation with Nanjala Nyabola for the second in the Transformer States Conversation Series on the topic of inclusion and exclusion in Kenya’s digital ID system. Nanjala is a writer, political analyst, and activist based in Nairobi and author of Digital Democracy, Analogue Politics: How the Internet Era is Transforming Politics in Kenya. Through an energetic and enlightening conversation with Christiaan van Veen and Victoria Adelmant, Nanjala explained the historical context of the Huduma Namba system, Kenya’s latest digital ID scheme, and pointed out a number of pressing concerns with the project.

Kenya’s new digital identity system, known as Huduma Namba, was announced in 2018 and involved the establishment of the Kenyan National Integrated Identity Management System (NIIMS). According to its enabling legislation, NIIMS is intended to be a comprehensive national registration and identity system to promote efficient delivery of public services, by consolidating and harmonizing the law on the registration of persons. This ‘master database’ would, according to the government, become the ‘single source of truth’ on Kenyans. A “Huduma Namba” (a unique identifying number) and “Huduma Card” (a biometric identity card) would be assigned to Kenyan citizens and residents.

Huduma Namba is the latest in a long series of biometric identity systems in Kenya that began with colonization. Kenya has had a form of mandatory identification under the Kipande system since the Native Registration Ordinance of 1915 under the British colonial government. The Kipande system required black men over the age of 16 to be fingerprinted and to carry identification that effectively restricted their freedom of movement and association. Non-compliance carried the threat of criminal punishment and forced labor. Rather than repealing this “cornerstone of the colonial project” upon independence, the government instead embraced and further formalized the Kipande system, making it mandatory for all men over 18. New ID systems were introduced, but always maintained several core elements: biometrics, the collection of ethnic data, and punishment. ID remained necessary for accessing certain buildings, opening bank accounts, buying or selling property and free movement both within and out of Kenya. The fact that women were not included in the national ID system until 1978 further reveals the exclusionary nature of such systems, in this instance along gendered lines.

While, in theory, these ID systems have been mandatory such that anyone should be able to demand and receive an ID, in practice, Kenyans from border communities must be “vetted” before receiving their ID. They must return to their paternal family village to be “vetted” by the local chief as to their community membership. Given the contested nature of Kenya’s borders, many Kenyans who may be ethnically Somali or Masai can face significant difficulty in proving they are “Kenyan” and obtaining the necessary ID. The vetting process can also serve to significantly delay applications. Nanjala explained that some ethnically Somali Kenyans who struggled to gain access to legal identification and therefore were excluded from basic entitlements had resorted to registering as refugees in order to access services.

Given the history of legal identity systems in Kenya, Huduma Namba may offer a promising break from the past and may serve to better include marginalized groups. Huduma Namba is supposed to give a “360 degree legal identity” to Kenyan citizens and residents; it includes women and children; and it is more than just a legal identity, it is also a form of entitlement. For example, Huduma Namba has been said to provide the enabling conditions for universal healthcare, to “facilitate adequate resource allocation” and to “enable citizens to get government services”. However, Nanjala also emphasized that Huduma Namba does not address any of the pre-existing exclusions experienced by certain Kenyans, especially those from border communities. Nanjala noted that the Huduma Namba is “layered over a history of exclusion,” and preserves many of the discriminatory practices experienced under previous systems. As residents must present existing identity documents in order to obtain a Huduma Card, vetting practices will still hinder border communities’ access to the new system, and thereby hinder access to the services to which Huduma Namba will be tied.

Over the course of the conversation Nanjala drew on her rich knowledge and experience to highlight what she sees as a number of ‘red flags’ raised by the Huduma Namba project. These go to the need to properly examine the true motivations behind such digital ID schemes and the actors who promote them. In brief, these are:

• The false promise of the efficiency argument, being that “efficient’ technological solutions and data will fix social problems. This argument ignores the social, political and historical context and complexities of governing a state, and merely perpetuates the ‘McKinseyfication’ of government (being an increasing pervasiveness of management consultancy in development). Further, there is little evidence that such efficient solutions will actually work, as was seen in relation to the Integrated Financial Management Information System (IFMIS) rolled out in Kenya in 2013. Such arguments detract attention from examining why problems such as poor infrastructure, healthcare or education systems have arisen or have not been addressed. Nanjala noted that the ongoing COVID-19 pandemic has made the risks of this clear: while the Kenyan government has spent over $6million on the Huduma Namba system, the country has only 518 ICU beds.
• The fact that the government is relying on threats and intimidation to “encourage” citizens to register for Huduma Namba. Nanjala posited that if a government is offering citizens a real service or benefit, it should be able to articulate a strong case for adoption such that citizens will see the benefit and willingly sign up.
• The lack of clear information and analysis, including any cost benefit analysis or clear articulation of the why and how of the Huduma Namba system, available to citizens or researchers.
• The complex political motivations behind the government’s actions, which hinge primarily on the current administration’s campaign promises and eye to the next election, rather than centring longer-term benefits to the population.
• The risks associated with unchecked data collection, which include improper use and monetization of citizens’ data by government.

While much of the conversation addressed clear concerns with the Huduma Namba project, Nanjala also discussed how human rights law, movements and actors can help bring about more positive developments in this area. Firstly, this year’s decision by the Kenyan High Court, which was brought by the Kenyan Human Rights Commission, Kenya National Commission on Human Rights and Nubian Rights Forum, held that the Huduma Namba scheme could not proceed without appropriate data protection and privacy safeguards, was an inspiring example of the effectiveness of grassroots activism and rights-based litigation.

Further, this case provided an example of how human rights frameworks can enable transnational conversations about rights issues. Nanjala reminded us to question why it is that the UK can vote to avoid digital ID systems while British companies are simultaneously deploying digital ID technologies in the developing world, that is, why digital ID might be seen to be good enough for the colonized, but not the colonizers. And as digital ID systems are being widely promulgated by the World Bank throughout the Global South, Nanjala identified the successful south-south collaboration and knowledge exchange between Indian and Kenyan activists, lawyers and scholars in relation to India’s widely criticized digital ID system, Aadhaar. By learning about the Indian experience, Kenyan organizations were able to more effectively push back against some of the particular concerns with Huduma Namba. Looking at the severe harms that have arisen from the centralized biometric system in India can also help demonstrate the risks of such schemes.

Digital ID systems risk reducing humanity to mere data points, and so, to the extent that they do so, should be resisted. We are not just data points, and considering data as the “new” gold or oil positions our identities as resources to be exploited by companies and governments as they see fit. Nanjala explained that the point of government is not to oversimplify or exploit the human experience, but rather to leverage the resources that government collects to maximize the human experience of its residents. In the context of ever increasing intrusions into privacy cloaked in claims of making life “easier”, Nanjala’s comments and critique provided a timely reminder to focus on the humans at the center of ongoing debates about our digital lives, identities and rights.

Holly Ritson, LLM program, NYU School of Law; and Human Rights Scholar with the Digital Welfare State and Human Rights Project.

TECHNOLOGY AND HUMAN RIGHTS

Human Rights in the Digital Age: Can they Make a Difference?

This event brought together international policymakers, human rights practitioners, leading academics and representatives from technology companies to discuss the relevance of the international human rights law framework in a world increasingly dominated by digital technologies.

In only a few decades, we have witnessed tremendous change through digital innovation, from personal computers, a globe-spanning Internet, and ubiquitous smartphones, to rapid advances in Artificial Intelligence. As we express ever more of ourselves digitally, the economy is built around the data generated, which is then used to predict and nudge our future behavior. Surveillance capitalism (Zuboff, 2019) is being matched by the digitization of government, whether in national security, policing, immigration or court systems. And postwar welfare states are rapidly becoming digital welfare states (Alston & Van Veen, 2019).

The speed, magnitude and complexity of these developments have left little or no time for reflection let alone resistance on the part of most of those affected.  Only now is the world waking up to the value-choices implicit in embracing many of these technological changes. And many of the initiatives designed to curb the excesses of the digital age are entirely voluntary, based in malleable conceptions of ethics, and themselves reliant upon technological solutions promoted by the very Big Tech firms these initiatives are supposed to regulate.

This event focused on the role of law, democratic institutions and human rights in the digital age. Can the societal impacts of digital technologies be meaningfully addressed in the language of rights? What difference does it make to insist on applying the lens of human rights law? What difference can international and domestic human rights accountability mechanisms make in the technology debate? Whose voices and issues are neglected in this debate and how can human rights law empower those on the margins of society?

The keynote speaker was Michelle Bachelet, United Nations High Commissioner for Human Rights; and the panel moderated by Ed Pilkington, Chief Reporter, Guardian US, featured:

• Philip Alston, United Nations Special Rapporteur on extreme poverty and human rights and John Norton Pomeroy Professor of Law, New York University School of Law
• Michelle Bachelet, United Nations High Commissioner for Human Rights
• Chris Hughes, Co-founder of Facebook and Co-Chair of the Economic Security Project and Senior Advisor, Roosevelt Institute
• Kumi Naidoo, Secretary General, Amnesty International
• Shoshana Zuboff, Charles Edward Wilson Professor Emerita, Harvard Business School and author of The Age of Surveillance Capitalism: The Fight for a Human Future at the New Frontier of Power (2019)

October 17, 2019. This event was co-hosted by the UN Special Rapporteur on extreme poverty and human rights, the Center for Human Rights and Global Justice at New York University School of Law and Amnesty International with the Guardian as a media partner.