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By Marecia Damons, GroundUp
In an effort to crack down on fraud in the social grant system, the government is currently investigating beneficiary eligibility. However, according to a recent analysis by the Institute for Economic Justice (IEJ), most fraud cases reported involved government officials and contractors.
The IEJ argues that the government’s anti-fraud measures risk unfairly excluding vulnerable people from the grants they rely on.
The analysis, discussed during a webinar by the IEJ, is based on public data, government reports, news reports and testimony from beneficiaries affected by fraud investigations.
Researchers found that around 75% of welfare fraud cases investigated by the police from 2014 to 2025 – a total of 2,658 – involved civil servants, contractors or other officials. Over the same period, only 590 beneficiaries were reported for fraud – around 54 people a year. These figures are based on information provided to parliament by the Department of Social Development (DMO) and the South African Social Security Agency (Sassa).
“Against the background that approximately 28 million people received grants last year, our fact sheet shows that the resources spent on combating beneficiary fraud are excessive in relation to the problem, and especially given its negative consequences, cannot be justified,” said Dr. Kelle Howson, researcher at the IEJ, said.
Recent anti-fraud efforts focus on stricter verification processes for payees. New measures include stricter monitoring, biometric controls, bank income verification and large-scale cross-referencing of databases. Beneficiaries identified through these systems may be required to report in person to Sassa offices for assessment.
(Graphic: Lisa Nelson/GroundUp)
The measures form part of new conditions that the national treasury has attached to Sassa’s budget. The agency must now submit quarterly reports showing how many grants have been revised, suspended or canceled and what savings they have produced.
In his budget speech, Finance Minister Enoch Godongwana said that intensified fraud detection led to the review of about 292,000 grants, of which about 34,600 were cancelled.
However, researchers say a suspended grant should not necessarily be considered fraud.
“Fraud is often used very broadly to refer to people illegally accessing social grants. But it is a specific legal concept,” said Howson. “To fall within the legal definition of fraud, there must be misrepresentation or deception.”
She says this means that someone knows they are misrepresenting their circumstances in order to gain financial advantage.
Beneficiaries identified by automated systems often have to travel to Sassa offices for verification, which can be difficult for the elderly, people with disabilities or people who live far from service centres.
“Even if you turn up and it is found that you no longer qualify for a grant because your income is above the threshold, it does not mean you have committed fraud,” said Howson.
The analysis suggests that many grants are canceled because beneficiaries do not complete the review process, rather than because fraud is proven.
The IEJ also had concerns about the accuracy of the digital systems used to detect possible fraud. Government databases are often outdated or inaccurate, while bank checks cannot distinguish between different types of money transactions, for example child support, gifts or loans.
These systems can therefore wrongly flag beneficiaries as suspicious, Howson said.
In addition to fraud by beneficiaries, researchers have also highlighted other forms of malpractice in the system. These include fraud schemes targeting beneficiaries, fake websites posing as Sassa’s to obtain personal data, moneylenders using grants as security and unauthorized deductions for funeral policies.
Abby May, researcher at Open Secrets, said the state has increasingly outsourced key aspects of the infrastructure for administering grants, including systems for applications, reviews and payments.
“A consequence of this is that much of the knowledge on how to deal effectively with social grant recipients no longer rests with the state, but with private companies that built the infrastructure. This entails risks.”
Private companies involved in these systems can gain access to large amounts of sensitive beneficiary data, she said.
She warned that access to this data could enable exploitative marketing practices.
- This reported was originally posted on GroundUp and is used with permission.