We could be stumbling into a digital welfare dystopia, says Open Secrets

Who would have thought the Covid-19 pandemic would current a potential gold mine for corporations specialising within the harvesting and promoting of information?

Apple’s market cap, now $2.6 trillion, is up 136% for the reason that onset of Covid. If it had been a nation, Apple would be the eighth largest on the planet, simply after France and India, with GDPs of $2.8 trillion and $2.7 trillion respectively.

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Microsoft’s market cap, at $2.5 trillion, is up 116% for the reason that onset of Covid. Google’s holding company Alphabet’s market cap is $1.9 trillion, up 138% over the identical interval. Facebook’s market capitalisation is up 135% to $853 billion for the reason that Covid crash of March 2020, and is now the world’s seventh most useful company.

Data is the ‘new oil’ and books like Life After Google by George Gilder and The Age of Surveillance Capitalism by Shoshana Zuboff clarify how these tech corporations have grow to be the richest corporations on the planet by harvesting our personal information and promoting it to advertisers and others.

Social grants as a revenue alternative

A brand new report by analysis organisation Open Secrets referred to as ‘Digital Profiteers – Who profits from social grants?’ explains how the Covid pandemic created but new alternatives for revenue by tech corporations as individuals migrated to an internet world for buying, info and well being care companies.

It’s not as if South Africans haven’t been uncovered to the uglier facet of information harvesting earlier than.

In 2012, the SA Social Security Agency (Sassa) contracted with Cash Paymaster Services (CPS) to deal with social welfare funds. Under the banner of ‘financial inclusion’, CPS launched into a large enrolment drive, accumulating information on 17 million beneficiaries and opening financial institution accounts for 10 million grant recipients.

CPS’s father or mother company Net 1 UEPS Technologies had unrestricted entry to this database and used its subsidiaries to promote monetary merchandise to grant recipients.

It made extra money from promoting monetary merchandise than from distributing grants.

The Constitutional Court discovered the Sassa contract illegal and ordered CPS to repay illegal earnings reckoned to be greater than R500 million.


Net1 accused of overstating monetary losses in Sassa price negotiation
CPS has nonetheless not revealed how a lot revenue it constructed from social grants contract

In April 2021, the ConCourt ordered CPS, which has been combating the case, to open its books to unbiased scrutiny to find out how a lot it should pay again.

Here we go once more?

Which brings us again to the most recent marketing campaign to enroll hundreds of thousands of South Africans for Covid grant aid, which began in April 2020.

It was at this level that Open Secrets began to question the digitalisation of the welfare state. Its newest report focuses on GovChat, a comparatively small SA tech company, although Sassa’s most seen accomplice in its digitalisation drive.

In early 2020, GovChat provided its companies without spending a dime to arrange a WhatsApp platform for the Covid-19 Social Relief of Distress (SRD) grant application course of.

An SRD grant was made accessible to alleviate poverty and unemployment, and was awarded to seven million individuals from 12 million candidates between April 2020 and April 2021. The grant was reinstated in August 2021, and this time was awarded to eight million individuals from 13 million candidates.

‘Inadequate scrutiny’

“Globally, there has been inadequate scrutiny of how companies are profiting from their access to personal data gathered through government contracts under the auspices of providing public services,” says Open Secrets.

Though no declare of wrongdoing on the a part of GovChat is made, Open Secrets says a absolutely automated grant application course of presents a rare alternative to build a database of about half the nation’s inhabitants, if one considers the present 18 million grants paid by Sassa to 11 million beneficiaries, plus the 13 million candidates for SRD grants.

“The plan to digitise has opened up the likelihood that this information will be accessible to a number of private and non-private actors.

“Access to the data of more than 30 million people would constitute the kind of big ‘data play’ that financial and technology firms dream of,” says Open Secrets.

Moneyweb requested report creator Michael Marchant whether or not GovChat, which Open Secrets admits has not been discovered responsible of any wrongdoing, is being ‘pre-crimed’, as within the movie Minority Report the place the police use clairvoyants to detect crimes earlier than they occur.

‘Potential for abuse’

“It’s a valid question, but I think it is equally valid to draw attention to the potential for abuse and hopefully get some discussion going around ownership of our private data, which is protected under the Protection of Personal Information Act [Popia], who gathers this information and how it is monetised.”

Open Secrets says GovChat could have supplied its companies to Sassa without spending a dime in a time of want, however that places it in a perfect position to learn from future contracts linked to the distribution of social help.

It says “it is apparent that GovChat has been granted a significant advantage without the normal legal requirement of a competitive procurement process, and the public scrutiny that such a process provides”.

‘Innuendo and the inferences’

Perhaps understandably, GovChat has taken offence to the affiliation with Net 1 and CPS.

Eldrid Jordaan, CEO of, responds that any social gathering that engages with authorities ought to be topic to affordable stage of scrutiny and may conduct itself in accordance with all acceptable legal guidelines and laws.

“Our objection was to not the scrutiny, [as] we have now nothing to cover and the Open Secrets report and their reporters have admitted that they’ve discovered no impropriety at GovChat.

“Our objection lies in the innuendo and the inferences the report makes by reference to Net 1 and CPS, entities and organisations that have been judicially determined to have acted inappropriately.”

Threads of connection

GovChat acquired R20 million in fairness funding for a 35% share from JSE-listed fintech Capital Appreciation (Capprec), which in flip counts African Rainbow Capital amongst its shareholders.

Capprec in flip owns three subsidiaries – Synthesis, African Resonance and Dashpay – all of that are targeted on promoting technological options to monetary and banking purchasers.

Another side to the case entails the Competition Tribunal, which final month prolonged a March order interdicting Facebook (proprietor of WhatsApp) from kicking GovChat off the messaging app.

Facebook had argued that GovChat was violating its phrases of service and was in a position to mixture information with out checks and balances, giving it an unfair benefit over different business options suppliers.


Facebook information breach: what occurred
WhatsApp fined $266m over information transparency breaches

GovChat argued that to off-board it from WhatsApp would materially prejudice its business.

Says Jordaan: “[Regarding] the Competition Tribunal’s decision, it is a decision which extends its prior determination and allows the Competition Commission’s inquiry into WhatsApp’s anti-competitive conduct to be completed. We are hopeful that the Competition Commission will conclude that WhatsApp’s conduct is anti-competitive and refer the matter to the [Competition] Tribunal for full adjudication.”

Open Secrets factors out that Facebook has been discovered to violate customers’ privateness and promote their information with out consent – the newest case incomes it a R4 billion superb by Irish authorities for violating the EU’s information privateness legal guidelines. Facebook’s response to tighter regulatory scrutiny has been to throw money at lawmakers “and push back against more effective regulation,” says the report.

“Given this track record, Facebook’s appetite for contracts with South African government departments and private sector actors to Hoover up more data must be watched closely by regulators and civil society. Open Secrets will certainly be doing so.”

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