The expertise’s unalterable digital path would cut back fiscal leaks and stop large-scale corruption draining the general public purse. Photograph: Provided
The latest revelation that R240 million was siphoned from the South African Social Safety Company (Sassa) by its personal workers has as soon as once more uncovered the vulnerabilities within the nation’s public finance programs.
On the identical time, experiences point out that R318 million has been recovered from legislation corporations that defrauded the Street Accident Fund (RAF), highlighting the extent to which fraud drains public funds meant to help weak residents.
These circumstances are half of a bigger sample of economic mismanagement and corruption that continues to plague state establishments. With out vital reforms, these fiscal leaks will persist, eroding public belief and diverting assets from those that want them most.
Blockchain expertise provides an answer that would stop such fraudulent actions by guaranteeing an incorruptible, clear and traceable document of economic transactions. Not like conventional monetary programs, which depend on centralised databases that these with entry can manipulate, blockchain operates as a decentralised ledger the place each transaction is completely recorded and can’t be altered with out detection. This may make it considerably more durable for corrupt people to siphon off public funds, as each transaction would go away an unalterable digital path.
A key characteristic of blockchain is its append-only construction, which means that, as soon as a transaction is recorded, it can’t be deleted or modified with out producing a clear log of the tried change.
Within the case of Sassa, each social grant fee would have been logged on an immutable ledger, permitting authorities to trace the motion of funds in actual time. Any try and redirect or duplicate funds would have been flagged instantly, making it straightforward to establish fraudulent actions and their perpetrators.
Equally, within the RAF case, fraudulent claims submitted by legislation corporations might have been cross-checked in opposition to an immutable blockchain database, guaranteeing that solely official claims had been processed and paid out.
Past transparency, blockchain expertise might incorporate good contracts to implement strict fee guidelines. These self-executing digital contracts would be certain that funds are solely disbursed when particular, verifiable circumstances are met.
For example, social grants might be linked to biometric verification of recipients, stopping unauthorised third-party entry to funds. Within the case of RAF claims, funds might be launched solely after automated checks verify that every one crucial documentation has been submitted and verified in opposition to blockchain data, stopping fraudulent authorized claims.
By eradicating human discretion from key monetary processes, good contracts would eradicate alternatives for handbook tampering and unauthorised transactions.
South Africa is already exploring blockchain expertise by the South African Reserve Financial institution’s Challenge Khokha, which exams blockchain-based fee programs. Increasing this initiative past monetary establishments and into public sector fee programs could be a logical subsequent step.
Blockchain might be used to safe Sassa funds and RAF claims, eradicate ghost workers in authorities payrolls, guarantee transparency in public procurement and monitor healthcare funding. Since blockchain-based monetary infrastructure is already being developed and examined, implementing it throughout authorities programs wouldn’t require constructing a brand new system from scratch however fairly modifying and increasing present frameworks.
As a substitute of growing separate blockchain networks for various authorities companies, South Africa might set up a nationwide blockchain infrastructure with sector-specific sub-blockchains. This may enable for real-time verification of presidency transactions throughout departments, guaranteeing that funds aren’t fraudulently duplicated or misallocated. By integrating blockchain expertise throughout public finance programs, South Africa might considerably cut back fiscal leaks and stop large-scale corruption.
One concern typically raised about blockchain adoption is its power consumption, significantly in programs that depend on proof-of-work mining. However a authorities blockchain system wouldn’t require such an energy-intensive strategy. The system might stay safe whereas working with minimal power consumption by utilizing proof-of-authority or different environment friendly consensus mechanisms. As well as, renewable power sources might be used to energy blockchain-based authorities providers, aligning with South Africa’s broader sustainability objectives.
The fraud circumstances involving Sassa and RAF aren’t remoted incidents however signs of a broader systemic failure in monetary oversight and accountability. The identical weaknesses have allowed ghost workers to persist within the public sector payroll, the place non-existent staff proceed to obtain salaries on the taxpayer’s expense.
Equally, the Nationwide Pupil Monetary Assist Scheme (NSFAS) has struggled with ghost beneficiaries — college students who both don’t exist or don’t qualify however nonetheless obtain funding. These schemes are bleeding thousands and thousands from the general public purse and standard auditing strategies have did not curb the abuse.
Blockchain provides a approach to transfer past reactive responses and as an alternative construct a system the place large-scale fraud is structurally unattainable. With its capacity to offer real-time verification of transactions, biometric-linked funds and tamper-proof data, blockchain might be a robust instrument in eliminating ghost workers, fraudulent authorized claims and unauthorised grant or pupil support funds.
The expertise is already right here and the infrastructure is already being examined. If the Reserve Financial institution can combine blockchain into its monetary programs, there isn’t any motive why authorities companies like Sassa, RAF and NSFAS can’t comply with go well with. Implementing blockchain in public finance programs is now not a query of feasibility; it’s a necessity for guaranteeing transparency, accountability and the safety of public funds.
Yonela Faba is a PhD pupil and author with blockchain, finance and coverage evaluation experience. He has a background in academia and banking. Join on Linkedin: Yonela Faba.