Collateral damages: Cash transfer and debt transfer in South Africa

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.