Win-win if grants bring back mobile money
Mobile money could make a resurgence if network operators’ talks with the South African Social Security Agency (Sassa) progress well. If the technology does get the go-ahead, the use of mobile money to distribute grants would probably be a winwin for operators and beneficiaries. It could reduce fraud, cut costs, save recipients from having to travel long distances to collect cash and, importantly, it could help to formalise the informal economy.
Mobile money largely disappeared from the South African market in 2016 when Vodacom and MTN pulled the plug on their offerings. But a Sassa representative told Business Day the technology “is under consideration for future use, and consultations are under way”.
Vodacom has confirmed that it is in talks with the agency, which is looking for new ways to distribute grants when its contract with Cash Paymaster Services comes to an end.
Mobile money could be used to facilitate trade in the informal economy — much the same as the M-Pesa platform in Kenya. The technology can also operate on the most basic of handsets, which makes it highly accessible and efficient.
Johan Meyer, CEO of Cape Town-based Wallettec, which says it pitched the idea to Bathabile Dlamini when she was minister of social development, said Sassa could build a network of approved shop owners and merchants. That would provide the ability to control what the state’s grants are spent on, Meyer says. For instance, it could bar purchases of alcohol using grant money.
If Sassa can agree on sound terms with mobile operators, using this technology would seem to be a no-brainer.
The R10bn investment by Mercedes-Benz Cars in its East London factory stimulates an entire value chain. This should please the government, especially the Department of Trade and Industry, as it speaks to the beneficiation of raw materials in SA, including iron ore used for making steel.
Renai Moothilal, executive director of the National Association of Automotive Component and Allied Manufacturers, says the investment is “excellent news”. Local component manufacturers awarded business for the next-generation C-Class vehicles will greatly benefit. Mercedes will also transfer technology and skills that add to SA’s competitiveness.
But new US trade tariffs might potentially affect the sale of vehicles made in SA and exported there. There are local component manufacturers that export directly to the US that are likely to see their products rendered less competitive.
Moothilal suggests that contracts will be lost in future, “which will have a devastating impact not only on those assemblers but right across the supply chain”. For now, though, the outlook for SA’s vehicle industry is optimistic, after investments by original equipment makers such as Volkswagen and Toyota.
Moothilal says the government’s Automotive Production and Development Programme is playing a valuable role in this respect, but product localisation has not been optimal so far. To this end the state’s yet-to-befinalised Automotive Masterplan from 2020 on needs to address this, while maintaining a business case for vehicle assembly.