How is South Africa's welfare algorithm failing the poor?

• South Africa's unemployment rate stands at 33%
• Research finds flaws in system to allocate social grants
• Appeal system rejects many of nation's poor

JOHANNESBURG - South African street vendor and widow Brenda Mtshali is furious that an automated message on her phone means she will have to skimp on food for her six children.

She is one of an estimated 10 million eligible South Africans excluded from welfare payments due to administrative obstacles, including problems with an algorithm-based income verification check, recent research has found.

Mtshali, who sells tomatoes in the Soweto township, had her online application for a Social Relief from Distress (SRD) grant rejected more than half a dozen times, receiving an automated message that said "means income source identified."

She said the automated means test - which scans bank accounts for a poverty line threshold of 624 rand ($34.53)-  likely took into account money she was occasionally loaned by family members, which does not qualify as monthly income.

But sometimes she was rejected when she had no extra funds in her bank account.

She has travelled to her local branch of the South African Social Security Agency (SASSA) several times to query her rejection, only to be told to lodge her appeal online.

"We don't want to speak to a computer or an automatic message ... it's like shouting into an empty room and only hearing your echo," Mtshali, 58, said.

Responding to emailed questions, SASSA told Context that people who were rejected could appeal online to the Department of Social Development (DSD).

DSD did not respond to requests for comment.

From Britain to Togo, algorithms are being used to help distribute social grants and welfare payments, but digital rights experts warn they can be inaccurate and biased in some cases.

The SRD grants are vital in South Africa, where unemployment stands at about 33%, one of the highest rates in the world.

"We know the extent and depths of poverty in the country," said Kelle Howson, a social scientist at the Institute for Economic Justice and co-author of the research on SRD grant exclusion.

"There needs to be a move from this restrictive poverty targeting to a system that's much more inclusive," Howson said.

'Failing to reach those in need'

The SRD grant program was rolled out to support unemployed and working-age South Africans during the COVID-19 pandemic in May 2020. It is worth 370 rand ($20.80) per month.

In April 2022, a formal means test was introduced that involved monitoring potential beneficiaries' bank accounts to see if they had more than the minimum threshold of 624 rand.

After the new means test was introduced, some 8 million beneficiaries were approved, down from 10.9 million in 2020, according to the IEJ report.

This is despite there being an estimated 17 million to 18 million eligible people, the report said.

The IEJ surveyed 900 people and found only 10.3% of eligible respondents received the grants - an erroneous exclusion rate of 89.7%.

Eighty percent of all rejections were based on the bank verification test, which the IEJ said should only cover 24% of cases.

It said all financial inflows - including child maintenance, loans, one-off donations, funds held for others - were incorrectly classified as "means."

In May, the national treasury made SASSA's operating budget conditional on the means tests being applied to all social grants, including child support and pensions, the IEJ said.

The Ministry of Finance in emailed comments said: "In the age of large data, it is increasingly necessary to build social security registries and cross-checks across multiple databases to avoid incorrect payments and double dipping where it is inappropriate."

It also said no grant rejection is permanent, and clients are called in to "verify their income and explain the situation" to ensure public funds are appropriately spent.

Applying the means tests so broadly could cause "catastrophic harm to vulnerable groups," the IEJ said, describing bank account surveillance, flawed government data and biometric profiling as "invasive" verification methods.

The IEJ report also found only 5% of those surveyed had successfully appealed over two years. Data from SASSA shows 98% of 10 million appeal applications were unsuccessful in the 2024 financial year.

With the SRD grant system fully online, "even if you walk into an office for help, you will be redirected to use their online system to appeal," said Kgothatso Sibanda, a Helpline manager with the Black Sash human rights charity that assists grant applicants.

Surveillance and survival

Howson said data collection was also a rights concern as regulations stipulate that any grant applicant must allow government agencies to verify eligibility through algorithmic checks.

This means government agencies can cross-check personal information with credit bureaus or banks, said Howson.

"So basically you sign away all your rights to privacy and data protection by applying for a grant," she said.

SASSA said its actions were governed by the Social Assistance Act and that "checks and balances are a prerequisite to ensure that we safeguard (the) public purse."

The IEJ report said applicants should be allowed to submit supporting documents and means tests should be done over a longer period to rule out inconsistencies.

Sibanda said "beneficiaries do not fully understand what they are consenting to" and argued that a hybrid system - online and in-person - would help people with limited digital literacy.

"Yes to digitisation, but no to leaving people behind, and this system is leaving people behind," said Sibanda.

In January, the High Court in Pretoria ruled that some SRD regulations were unconstitutional, but the government has lodged an appeal.

In the meantime, Mtshali, her brother and her working-age children, all of whom were rejected, are stuck.

They cannot afford to travel to job interviews or print their CVs. When funds are low, Mtshali feeds her family from her stock of tomatoes.

"It's now just about getting food on the table, it's about survival," she said.

(Reporting by Kim Harrisberg; Editing by Ellen Wulfhorst.)