South Africa struggles with social welfare fraud

GRAHAMSTOWN, South Africa, June 5 (UPI) -- The South African government plans to introduce biometric security systems to combat massive welfare fraud that has, in the past year, cost taxpayers one-quarter of all social security payouts.

The scale of the problem is massive, as more than 33 percent of South Africans receive a total of 15 million social grants per year, reports the South African Social Security Agency. In the past year, South Africa lost the equivalent of 3 cents out of every dollar, to social welfare fraud.

The new biometric-based payment system, already in use by countries including Australia, Canada and Japan, employs fingerprint and voice verification technology to positively identify social grant recipients, reports the U.S. National Biometric Security Project.

Previously, recipients had only to present an identification booklet and enter an identification number at a bank or designated pay point to receive monthly allotments. But those documents are easily lost, stolen or exchanged, in which case the money can be fraudulently collected by someone else, said Francine Mwepu, a social worker in Grahamstown, a city of nearly 100,000 people in the Eastern Cape province. Mwepu assists and monitors social grant beneficiaries.

Beneficiaries who are involved in grant fraud use monthly payouts to buy alcohol or to pay debts, Mwepu said. Others continue to collect grants from accounts of deceased relatives.

In the first strike of the new anti-fraud initiative, the government started taking fingerprints, conducting voice verification and issuing magstripe cards to new welfare recipients and Sekulula beneficiaries on March 1. Sekulula is a debit card transactional account that allows grant recipients to access grants electronically at automated teller machines. Existing beneficiaries will be enrolled in the new system this month.

Some recipients, however, said they fear the transition could endanger their existing benefits or make it more difficult to collect funds. In a news release in February, Social Development Minister Bathabile Dhlamini assured the nation that the introduction of the new payment system will be smooth and efficient.

“We want to allay the fears of our people and assure them that their grants will not be cut," Dhlamini said in the release.

The Department of Social Development has deemed the Eastern Cape a “hotspot” for welfare fraud. The province has the second-highest number of social welfare litigation cases in the country.

Fraud has become so ubiquitous “there is a local word to describe it," Mwepu said. "They call (grant fraud) ‘scholar.'"

“Parents who receive the disability grant on behalf of their disabled children, for example, sometimes use the money for themselves, disregarding the child’s needs,” she said.

Thembela Maneli, a foster mother to three children who also cares for her cousin’s disabled sister, receives monthly care dependency and child support grants. She said she can't grasp what motivates some to misuse the money.

“I do not understand why people involve themselves in (grant fraud)," she said. "My children need food, (diapers) and toys and the grants helps to pay for this."

One possible reason for the fraud: Unemployment is rampant in Grahamstown, with about 60 percent of the city unemployed. That's more than three times the average rate of other South African provinces. Social welfare grants range from $36-$155 per month, which is about one-quarter of the average monthly income for local residents.

And the fraud problem in the Eastern Cape might be underreported. Security officials largely rely on social workers to report suspected incidents of fraud, either in writing or via a fraud hotline.

This approach to detection has been criticized by some beneficiaries for being too passive.

“(Security) does not send anyone to Grahamstown to monitor the situation,” Mwepu said. “There is no follow-up.”

While cheating the system is a problem, critics say the agency has its own wrinkles to iron out.

For example, applicants whose children have chronic illnesses or permanent disabilities are often turned away by the social security agency when they first apply for social grants, said Agata Runowicz, representative for the Eastern Cape Association for the Physically Disabled.

“Such conditions do not disappear with age,” Runowicz said. “(Social security) is supposed to then at least award the mother with a temporary grant.”

Lulama Skeyi is one caregiver waiting for her child dependency grant application to be approved.

“Sometimes mothers like me cannot find work but we still have to buy medicines which are expensive," she said.

Skeyi’s daughter was born with mitochondrial liver disease, for which there is no cure.

But caregivers who are unemployed cannot support themselves without the grant and may not speak out against the system, Runowicz said.

“(Recipients) are just grateful to receive anything that will assist them financially,” she said.