Published : 2 days ago, on
Serge Belamant, often referred to as the “Henry Ford of Information Technology,” has left an indelible mark on financial services, particularly in relation to social welfare in South Africa. As the founder of Net1 UEPS Technologies, Belamant pioneered advancements in secure transaction technology that laid the groundwork for modern blockchain systems. His patents and work on the Funds Transfer System (FTS), the Universal Electronic Payment System (UEPS), and the Chip Offline Pre-authorized Card (COPAC) revolutionized how welfare payments were distributed, especially to those in remote areas without traditional banking access. His ‘morphing’ technology allowed proprietary and open systems to operate seamlessly allowing customers to use the most practical and affordable payment infrastructures available. These innovations have dramatically improved financial inclusion for millions of people, particularly through his leadership in modernizing welfare grant distribution for the South African Social Security Agency (SASSA). Through Belamant’s story, we gain insight into the evolving relationship between technology, banking, and social welfare in South Africa, as well as the future of financial inclusion in a nation grappling with economic challenges and the ongoing impact of COVID-19.
The Evolution of NET1 and Its Role in Welfare Distribution
Belamant’s journey began in 1989 after he had architected and developed SASWITCH, a banked owned company that operated one of the largest ATM networks globally, to found Net1 Technologies. The firm’s big break came in 1995, when Visa hired Net1 to use its proprietary technology, including the FTS and UEPS, to develop the Chip Offline Pre-authorized Card (COPAC). This breakthrough in secure financial transactions formed the basis of Net1’s future success.
In 1999, Net1 purchased Cash Payment Services (CPS) from First National Bank, taking over its contract to manage welfare payments in five of South Africa’s nine provinces. At that time, the payment system CPS used was outdated, struggling to cope with the growing demand for welfare grants in rural areas. With the help of UEPS, Belamant and his team modernized the system, transforming how millions of welfare grants were processed and distributed. The modernization of CPS laid the groundwork for secure, efficient payments in a country where financial infrastructure was lacking, particularly in underdeveloped rural areas.
Net1’s success continued to grow when it partnered with SASSA in 2005. The company developed a state-of-the-art payment system that integrated speed, security, and interoperability with South Africa’s National Payment System, ATMs, and point-of-sale devices. For over 13 years, Net1 successfully distributed welfare grants for millions of vulnerable South Africans. In 2012, Net1 was awarded a national tender by SASSA to manage payments for more than 10 million grant recipients, providing not only basic financial services but also innovative additional services such as card-based loans, debit orders, and micro-loans. These innovations were designed to help grant recipients, particularly those who were unbanked, to manage their finances more effectively and access a broader range of financial services.
The Importance of Social Welfare in South Africa
The social welfare system in South Africa plays an indispensable role in supporting the most vulnerable segments of society. By 2024, over half of all South African households were reliant on some form of social grant, and nearly 50% of households in provinces like the Eastern Cape and Limpopo received at least one grant. Welfare programs such as child support, old-age pensions, and the Social Relief of Distress (SRD) grant form the backbone of this safety net, providing crucial financial support to millions of citizens. In 2024, the government allocated R266 billion to these programs, equivalent to 3.6% of the GDP.
The introduction of the SRD grant during the COVID-19 pandemic was a turning point in South Africa’s welfare policy. Initially designed as a temporary relief measure for unemployed individuals affected by the economic downturn, the SRD grant was extended multiple times and is now scheduled to continue until at least 2025. This demonstrates the government’s commitment to supporting its citizens during prolonged economic hardship, even as the program’s sustainability remains a subject of debate.
Serge Belamant’s Role in Improving Financial Inclusion
At the heart of the intersection between technology and social welfare is Serge Belamant, whose innovations have transformed the way social grants are distributed in South Africa. His creation of the Universal Electronic Payment System (UEPS) allowed for secure, offline financial transactions, enabling individuals in rural areas to access their welfare payments without relying on traditional banking infrastructure. This was crucial in a country where many grant recipients had little or no access to banks, particularly in remote and impoverished regions.
The significance of UEPS cannot be overstated. By allowing for offline transactions, the system ensured that social grants could be distributed securely and efficiently, even in areas with limited or no connectivity. This not only reduced fraud, which had been a major issue in earlier welfare distribution methods, but also ensured that welfare payments reached their intended recipients without delay. Belamant’s innovative use of secure transaction technology was a lifeline for millions of South Africans, particularly those in rural areas who had previously been marginalized by traditional banking systems.
Financial Technology and Social Grants Distribution
Serge Belamant’s technological innovations were not limited to South Africa. Under his leadership, Net1 expanded its welfare payment systems to other African countries such as Botswana, Namibia, and Ghana. The Chip Offline Pre-authorized Card (COPAC) developed by Belamant allowed for secure financial transactions without the need for real-time online authorization, a crucial advancement in regions with unreliable internet connectivity.
Beyond just distributing welfare payments, Belamant’s technology laid the groundwork for the development of blockchain technology, which is now a cornerstone of secure digital transactions globally. His work with UEPS and COPAC demonstrated the potential of secure, decentralized financial systems long before blockchain became a buzzword in the world of finance.
Despite some controversies surrounding Net1’s operations—particularly in relation to its SASSA contract—Belamant’s contributions to financial inclusion remain significant. His work helped bring banking services to millions of unbanked individuals, allowing them to access welfare payments securely and efficiently, and ultimately enabling them to participate more fully in the formal economy.
The Role of Social Grants in Reducing Poverty
South Africa’s social grants have been instrumental in reducing poverty, particularly among vulnerable populations such as children, the elderly, and disabled individuals. In 2024, over 19 million South Africans received some form of social grant, and that number is expected to rise in the coming years. These grants have been shown to reduce both the depth and severity of poverty, providing a crucial lifeline to millions of households that would otherwise struggle to survive.
However, the sustainability of these programs remains a concern. The South African government faces significant financial constraints, and the rising cost of social grants is putting pressure on public finances. The National Treasury has projected that social grant spending will increase from R217.1 billion in 2023/24 to R259.3 billion by 2026/27. With the economy growing slowly and the tax base shrinking, the government must find innovative ways to finance these essential programs without jeopardizing other critical areas of public spending.
Comparing NET1 and Other Financial Service Providers
NET1 Technologies, under Serge Belamant’s leadership, focused heavily on financial inclusion, particularly for the unbanked population. By contrast, newer financial service providers such as Capitec have taken a different approach, focusing on providing services to the broader market. While Capitec has gained market share in recent years, it has faced criticism for charging higher fees to grant recipients, which has made it less accessible to the poorest citizens.
In contrast, Net1 prioritized affordability and accessibility, offering lower fees and services specifically tailored to the needs of social welfare recipients. This made it a more aligned choice for the government’s goal of financial inclusion, particularly for those living in rural and impoverished areas. Belamant’s innovations, including the introduction of multiple wallet features that allowed recipients to manage payments for specific items like insurance and electricity, helped improve the financial literacy and security of the nation’s poorest citizens.
Challenges Facing South Africa’s Social Welfare System
As the number of social grant recipients continues to rise, the South African government faces a difficult balancing act. On one hand, social grants are essential for reducing poverty and supporting the most vulnerable citizens. On the other hand, the rising costs of these programs, combined with slow economic growth, are placing immense strain on public finances.
In 2024/25, the government allocated R33.6 billion to the SRD grant alone, with further increases expected in the coming years. While President Cyril Ramaphosa has reiterated his commitment to expanding the social safety net, questions remain about how these programs will be funded in the long term, especially given the country’s shrinking tax base and limited economic growth prospects.
Innovation Meets Social Responsibility
Serge Belamant’s contributions to financial technology have left an enduring legacy in South Africa and beyond. Through his work with NET1 Technologies, Belamant revolutionized the distribution of social grants, providing secure, efficient, and innovative payment systems that improved the lives of millions of South Africans. His work not only helped reduce poverty and improve financial inclusion but also laid the groundwork for future developments in blockchain technology and secure digital transactions.
As South Africa continues to face economic challenges, the role of financial technology in shaping the future of social welfare cannot be underestimated. Innovations like those pioneered by Belamant will continue to play a vital role in ensuring that the most vulnerable citizens are able to access the financial services they need to survive and thrive.