ABSTRACT
Social cash transfers have become a key instrument in global efforts to tackle poverty and inequality in the Global South. As programs are extended to additional beneficiaries, the manual disbursement of cash is increasingly replaced with digital, financially inclusive payments through formal financial channels. Private payment providers have entered the sphere of social protection in search of profits at the so-called bottom of the pyramid. This chapter traces the manifestation of financialization in the design, implementation and impact of social cash transfer programs and identifies four inter-related stages of this new but increasingly common facet of financialization. Following the adoption and expansion of social cash transfer programs, governments and implementing agencies frequently adopt digital payment mechanisms which, in turn, necessitate the involvement of private financial companies to provide the required technology. The business case for these financial service providers usually extends beyond the provision of payment services and includes the cross-selling of additional financial products to beneficiaries. In its most advanced form, it can lead to the collateralization of social cash transfers for the provision of credit, opening the door to rising household debt and financial exploitation. South Africa’s experience with its former payment provider CPS/Net1 illustrates the manifestation of financialization in the sphere of social protection and highlights the adverse impact these processes can have on beneficiaries. The case study thus holds valuable lessons for other developing countries, many of which have already progressed through the early stages of financializing their social cash transfer programs.
