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Collateral damages: Cash transfer and debt transfer in South Africa

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  • Torkelson, Erin

Abstract

Over the past decade, two development programs–cash transfer and financial inclusion–were bundled in global development discourse. Despite differences in their purported objectives, cash transfers are increasingly delivered via financial inclusion infrastructures and technologies. One important yet under-appreciated consequence of this bundling is the possible transference of credit and debt to cash transfer recipients. In this paper, I explore how the South African cash transfer program incorporated recipients into a highly coercive and monopolistic financial system predicated on proprietary technologies. The proliferation of such technologies enabled cash grants to be transformed into collateral for credit and encumbered by debts to private companies. Specialized payment technologies encouraged recipients to accept loans and ensured that they could not default, making cash transfer a site of nearly risk-free profit. My work is informed by over two years of ethnographic fieldwork, hundreds of qualitative interviews, and archival data from the South African Parliament and Constitutional Court. My study finds that while grant payment technologies promise to mitigate the contradictions between providing cash transfers for basic needs and offering profitable financial products, in practice, they can worsen indebtedness. By focusing on the materiality of financial inclusion technologies, I demonstrate how the efficacy of cash transfer programs can be undermined, when debts as well as grants are passed on to recipients.

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  • Torkelson, Erin, 2020. "Collateral damages: Cash transfer and debt transfer in South Africa," World Development, Elsevier, vol. 126(C).
    • Handle: RePEc:eee:wdevel:v:126:y:2020:i:c:s0305750x19303596
    DOI: 10.1016/j.worlddev.2019.104711
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    Cited by:

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    2. Minh T.N. Nguyen, 2021. "Portfolios of Social Protection, Labour Mobility and the Rise of Life Insurance in Rural Central Vietnam," Development and Change, International Institute of Social Studies, vol. 52(2), pages 316-339, March.
    3. Siu, Jade & Sterck, Olivier & Rodgers, Cory, 2023. "The freedom to choose: Theory and quasi-experimental evidence on cash transfer restrictions," Journal of Development Economics, Elsevier, vol. 161(C).
    4. James, Deborah, 2021. "Life and debt: a view from the south," LSE Research Online Documents on Economics 106517, London School of Economics and Political Science, LSE Library.
    5. Scully, Ben, 2023. "South Africa's response to the Covid-19 pandemic: The crisis in the context of the history of South African capitalism," IPE Working Papers 220/2023, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    6. Alf Gunvald Nilsen, 2021. "Give James Ferguson a Fish," Development and Change, International Institute of Social Studies, vol. 52(1), pages 3-25, January.
    7. Ruth Castel‐Branco, 2021. "Improvising an E‐state: The Struggle for Cash Transfer Digitalization in Mozambique," Development and Change, International Institute of Social Studies, vol. 52(4), pages 756-779, July.
    8. Webb, Christopher, 2021. "Giving everyone a fish: COVID-19 and the new politics of distribution," LSE Research Online Documents on Economics 110525, London School of Economics and Political Science, LSE Library.

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