“STOP THE DEBT TRAP – social grants are for food and basic needs!”

These words have been sounding the alarm about a serious problem facing very poor South Africans. They appear on posters printed by the human rights organisation, Black Sash. It is running a campaign called, ‘Hands off our grants’. So, what is going wrong with our system of social grants? Whose hands are grabbing money meant for poor people to buy food and pay rent?

Let’s first look at what social grants are for. Most modern democratic governments support people who cannot work, or who are very poor. Since the end of apartheid, our government too has set up a social welfare system. This is essential in a caring society, and it helps to share out the wealth created in our country. So, one legal responsibility of our government is to use tax-payer’s money to help people who cannot earn money for themselves.

Chapter 2 of our Constitution, the Bill of Rights, says in section 27:

27. (1) Everyone has the right to have access to …

(c) social security, including, if they are unable to support themselves and their

dependants, appropriate social assistance.

(2) The state must take reasonable legislative and other measures, within its available resources, to achieve the progressive realisation of each of these rights.

These grants support certain groups of poor people who cannot work: old people like Gladys in our story, Debt Trap; children of unemployed people; people who take on foster children; people with disabilities; and war veterans.

To get a grant you apply to the Social Security Agency of South Africa (SASSA), which is overseen by the Department of Social Welfare. SASSA finds out if you qualify, according to how little income and/or property you have.

Four million people received grants in 1994, and by 2015 the number had shot up to almost seventeen million. This is a lot of people, out of a total population of almost fifty-five million. And yet there are still many people who need grants who do not know about them, or do not live near pay-out points so cannot register.

Note that you cannot get a grant if you are healthy and between the ages of 15 and 60 – even if you have no income. This seems unfair because we have a very high unemployment rate: there are way fewer jobs than people looking for work. But can the country afford to just give unemployed people money? That is open for debate.

The amounts of money that are given out are small, but the grants have had a very positive effect. At this time a child care grant is only R350 per month, and an elderly poor person gets R1 500 per month. Yet studies prove that these amounts have greatly reduced hunger, and improved the quality of life for poor families and communities. Plus they have had other good effects, such as better health of families, and more children going to school regularly. This is very important, because getting a job is almost impossible if you have not at least finished school.

Let’s go back to the problem shown in the story, Rude Awakening; the problem that Black Sash and organisations like the Legal Resources Centre are fighting. When you are very poor, it is extremely hard, or impossible, to save money for emergencies, or for expenses such as school fees, or funerals, or buying furniture or making home repairs.

And so, many people take loans from a money-lender, or buy on credit. They can pay the amount back over time, but have to pay some more (interest) to the business who lent the money. Many poor and old people had little schooling so are hardly able to read or work out figures. Plus they may be desperate for money. And, they have to sign documents that are usually in difficult English, which often is not their home language. Therefore it is easy to persuade them into taking a ‘legal’ loan that they believe they can repay.

Along with the growth in social grants has grown a network of greedy businesses that lend money to poor people and charge high interest rates. Often they are right at SASSA pay-out points. These businesses are supposed to be responsible and make sure that the person borrowing does not already have other loans, and is able to pay back the money. Often the businesses do not – and the borrower ends up with serious money problems. When people are ‘tricked’ like this we say that they have not given their ‘informed consent’. Sometimes, the deductions are just fraudulent (illegal).

The story shows up another very serious problem. The company SASSA uses to give out social grants (Net1 and its subsidiary Cash Paymaster Services), is closely linked to the special bank (Grindrod) that sets up the accounts grants are paid into. And also, they have loan and bill-payment companies (such as Moneyline), used by pensioners too! These companies all want pensioners to take out loans and pay them interest. By law, only funeral insurance can be taken from a social grant before it is paid. But, once the money is in the SASSA account, the holder can give permission for other debits. So pensioners can give permission for, e.g. Moneyline, to deduct money for loans taken, debts, and bills, e.g. for airtime.

Debt Trap illustrates a further problem. When beneficiaries like Gogo go to Moneyline – in the story this lender is called EasyLoans – they are made to sign up for a new card. In the story it is called ‘EasyPay Everywhere’. Their social grant then is automatically moved from their SASSA account into this new EasyPay Everywhere account. It works like a SASSA account, but without being under any SASSA rules. The person’s EasyLoans payment is deducted from this new account, plus any other loans that the beneficiary might have.

Like Gogo, many people have ignorantly, or in desperation, taken out so many loans that now they are left with almost nothing. They must then go to yet another mashonisa.

Sometimes family members or other people have got hold of the pensioner’s details and organised the deductions, including illegal ones. In the story, Noluthando uses her grandmother’s EasyPay card to buy airtime bundles.

As Debt Trap illustrates, it can be very difficult, and expensive on airtime, for the borrower to find out the details of these loans, and whether they are all legal.

(The companies say that they are doing nothing wrong and charge less interest than other ‘loan sharks’ or mashonisa.)

Civil rights organisations have had some success in stopping all this. The evidence they presented forced the Minister of Social Development to order an investigation. In 2014 the Department accepted that a new system must be set up; one that doesn’t allow “unlawful and immoral debit deductions”. Plus, now, if there is a problem the account holder can fill in a query form. SASSA then has to find out if they agreed to a deduction.

The Department has also promised that from 2017, SASSA will run its own payment system. This means that a commercial company cannot make profits from a government service that is intended for poor people. This decision has been welcomed by organisations like the Black Sash.

To report or find out about a social grants problem you or a family member are having, you can call the SASSA Hotline on 0800 60 10 11. Or you can use one of the organisations listed below under ‘Contacts’.