The Money You Can See: Cash-in-Transit

 

In 2022 I was part of a project with a financial services company that distributes social grants on behalf of the state. The project had us visiting ATMs on grant days to understand ATM usage and recipient spend behaviors. 

The money lands overnight. By the time the doors open, long queues have already formed at the ATMs, and they remain this way throughout the morning. The ATMs I was watching stood inside a Pick n Pay. Those who reached the ATM would withdraw the entire grant, walk into the same Pick n Pay, and spend a good part of it almost immediately. We basically watched a month's relief land and lift off again, almost in one motion.

Whatever was not spent in the shop went other places. Some paid a taxi fare, some bought daily supplies from a spaza, some went into a society contribution. But follow each of those a step further and the pattern holds. The taxi's takings went to petrol from an oil company. The spaza's went to restock brands made by listed manufacturers. The society contributions, once pooled, were deposited with one of the big-four banks. Wherever it was spent first, within a short while it was on a road out of the township.

That is the whole of this piece in one paragraph. The money was never really meant to remain in the township, it was just passing through. Cash in transit.

The last article in this thread was about money you can see: the branded fridge, the free delivery truck, the billions in corporate "empowerment" the liquor industry has poured into taverns for forty years, and how the terms attached to that money kept the tavern a tenant in its own business. The argument there was that access to capital was only ever half the story. The other half, the half that decides whether money builds anything, is how it is deployed, and on whose terms.

This is money you can see too, just coming from a different direction. Not corporate capital reaching down into the township, but government money flowing in the form of grants, public-sector wages, and infrastructure spend. You can watch exactly where it goes. And where it goes, overwhelmingly, is out.

None of this is a new observation. That money leaks out of townships instead of circulating inside them is well-worn ground, and people have been pointing at it for years. What watching it up close did was sharpen the worry into two harder questions. Just how bad is the leak, really? And how long can a government keep paying to refill a bucket with a hole in it? So I decided to dig into it properly.

What the research found

The most detailed map I found of how money actually moves through a township is the World Bank's Social Accounting Matrix for Diepsloot ¹. Almost all of the income there, about ninety-five percent, comes from outside: wages people earn at jobs somewhere else and bring home, plus grants and pensions. Only about three percent of it comes from businesses inside Diepsloot itself.

According to the study, households spend something like R2.3 billion a year, but the amount put back into anything productive (e.g. equipment, growing a business, developing a skill), is around R3 million ¹. The estimate is that three-quarters of what comes in leaks straight back out again ².

The people who champion the township economy like to call it an engine. A near-trillion-rand engine, on the most-cited figure: some R900 billion of activity a year, built from the ground up by people the formal system mostly shut out ³. It's a great story, and the grit behind it is real. But look closer and very little of that activity is production: across South Africa's townships, only about two percent is any kind of manufacturing ³. An engine makes its own power. What these numbers describe is a belt. It carries power made somewhere else, and it carries it straight through.

Follow one grant

You can watch the belt turn most clearly on the R350 Social Relief of Distress grant introduced during the pandemic. It reaches around nine million people and costs the state about R34 billion a year ⁴. When the government asked, ninety-three percent of recipients said they spent it mainly on food ⁵. Keep that fact close, because nothing that follows is an argument against feeding people.

Now here's the belt in action. The market researchers at NielsenIQ noticed that the busiest shopping week of the month used to fall just after the 25th, when salaried workers are paid. Once the grant arrived, the peak moved to the first of the month, because that is when the grant lands and it is spent almost at once ⁶. And over the grant years the big consumer companies grew in a way the wider economy did not. While real GDP crawled along at about one percent a year ⁷, Shoprite's revenue rose seventy-eight percent ⁸, Mr Price's eighty-six ⁹, the Foschini Group's seventy-seven ¹⁰, Pepkor's fifty-six ¹¹. The grant lands in a township account on the first of the month, and within days a large share of it has passed through the tills of retailers like Shoprite and Pepkor ⁸, and on to their shareholders as dividends and share buybacks ¹².

To be fair, it's a stretch to suggest that those companies grew on grant money alone. They opened stores, won customers, raised prices, and some earn well beyond SA borders. The fact remains that the formal economy is built to catch almost all of a grant aimed at relieving the very bottom of the market within days. Public money leaves the Treasury to feed a hungry family, and a week later it's sitting in a corporate account waiting to be paid out into someone's share portfolio.

How long can government keep paying?

Which brings me back to the second question: how long can the state keep refilling a bucket that leaks this fast?

The plain answer is: only until it falls into a debt trap. A debt trap is what takes hold when a government has to borrow simply to meet the obligations it already carries. Those obligations keep growing, so the borrowing grows to match, and the cost of servicing what has already been borrowed grows along with it. Every year starts deeper in the hole than the last.

The leak keeps feeding that machine. Because the money drains out instead of circulating and building within the township, the grants never get things to the point where less is required. Poverty stays put, the state spends more and the national accounts take the strain.

The current numbers show how far down this road South Africa has already gone. Government debt has climbed from under a third of the economy in 2009 to more than three-quarters of it today ¹³. Servicing that debt now costs about a billion rand a day, twenty-two cents out of every rand government collects ¹⁴. And the bill is growing faster than the budget around it ¹³, while poverty hasn't eased at all: close to 63% of South Africans still sit below the upper-middle-income poverty line, about 1.8 million more than before the pandemic ¹⁵.

A familiar African story

The debt trap is no stranger to the continent. Through the 1980s and 1990s, one African government after another borrowed to fund its budget, then borrowed again to cover the gap the earlier loans had not closed. The obligations grew, so did the borrowing, and the cost of servicing it grew fastest of all. Eventually several countries just couldn't pay, and started defaulting. Those debt crises hollowed out economies across Africa, and many have still not fully recovered.

South Africa is different in one important way: the currency its debt is written in. About nine out of every ten rand the state owes is borrowed in rand, from local banks, pension funds and insurers ¹⁶. Debt you owe in your own currency, is far safer. A foreign lender cannot call it in, and a weaker rand does not blow up what you owe. That is the protection the countries that defaulted in the 1990s did not have.

But it is slipping. The share of government's borrowing that is in foreign currency has been climbing, and in 2025/26 it passed twenty percent ¹⁷. Every foreign-currency bond chips away at that protection. The advantage is real, but it is shrinking, and right now it is moving the wrong way.

The tool in the drawer

I believe that there is a way to actually turn the township economy into the engine that it is so often described as. It starts with a simple aim: make some of the money stay.

Part of that is work on the grant itself, turning a payment that only ever gets spent into one that also builds something, a little savings, an asset, a skill, a way into a job, without taking a cent of the support away. I plan to come back to that another day.

The bigger lever is one South Africa already has, but isn't being used properly. Broad-Based Black Economic Empowerment (BBBEE) is twenty-five years old. After all the money that has passed through it, black South Africans directly hold only about 1.2% of the shares in the fifty biggest companies on the JSE ¹⁸. On that statistic alone, it is easy to see why so many people say it has failed.

I could not disagree more. What has failed is not the instrument, but the way it has been used. In my own experience, the disappointing outcomes come down to a handful of things. Companies have treated the pillars as a score to be passed rather than a real plan to build anything, and have gone about it without much deliberate intent. A whole industry of deal structuring, consulting and accreditation has grown up around the codes and the actors rent-seek their way along the value chain. Underneath all of it sit fronting and a long list of (accounting) sleights of hand. None of that is a flaw in the idea. It is a flaw in the execution.

Used properly, deliberately and in a structured way, the pillars of BBBEE can do exactly what this problem needs. They can channel real investment back into the townships, money that stays there and builds, and turn the township into a genuine growth engine for the South African economy.

That is the argument I want to make next, in what I hope will be the last piece in this thread. It will lay out a framework I worked with on that grant-distribution project, a practical way to implement BBBEE differently. It will also return to the work I did in the tavern trade, to paint a vision of how an entire industry could be transformed with the very same levers.

The back story

This article was really hard to write because the opinion goes against the dominant rhetoric about the opportunity in townships. Unfortunately after almost 17 years of doing work in and around the township economy, the evidence I've seen has been overwhelming. I've had the pleasure of sitting in employer and client boardrooms while working on township growth and penetration projects. I've gotten to experience the economy on the ground while working on employer and client projects. I've spent time in spazas and mid-sized wholesalers as part of work done with my Somali business associates. I've also attempted to launch technology solutions into townships. What I've experienced just does not fit the engine narrative.

Perhaps the guts to write and publish this article at this time has been driven by two things. The first is the ongoing turmoil about how immigrants are taking (township) opportunities from locals. I wish I could get on a loud speaker and point out the systems that actually deliver the unwanted outcomes. Not a great idea in this climate - so the article is my only outlet. The second was a trigger from the news that Pepkor has bought a fintech called Shop2Shop and will be merging it with Flash to create a R21 billion rand business to go after the township opportunity. I laughed when I saw it. Flash was already one of the biggest players in township distribution - making good money from selling airtime, data, electricity and other digital goods. Shop2Shop has come out of "almost" nowhere to become a dominant force offering payment and cash-in-transit solutions to township retail businesses. I say "almost" nowhere because the founder of Flash also founded Shop2Shop. Wouldn't it be amazing if mobile operators distributed airtime and data through local businesses directly instead of large corporates? I mean it's a digital product delivered to a phone whose number the operator has and knows. It would be so easy and would put billions into the township economy overnight...I'm even laughing as I write this because I know it's a pipe dream in a world where mobile operators are currently busy defending why airtime and data can expire.

The point is, these two things triggered the article. I do silently pray that it lands well. Foreigners wading into local matters doesn't always land as planned in any land.

Research. The deep research was done with Kimi Deep Research and NotebookLM. Current figures were checked with Claude (Opus 4.8) and Gemini.

Writing. Drafted and edited with Claude (Opus 4.8), then taken through a humanising pass to keep it in my own voice. I wrote a fair amount myself due to the sensitivity of the topic.

Images. The data charts were built in matplotlib (Python). The hero image was made with Nano Banana Pro (Google Gemini 3 Pro Image) on kie.ai, run through an n8n workflow. Some charts were redrawn with Claude

A caveat worth stating plainly: everything here describes patterns at the level of communities and the economy as a whole, not individuals. No trader, founder or family should read themselves into it. People inside this structure are, overwhelmingly, doing the sensible thing given the structure. The argument is with the structure, and none of it is a case for spending less on people who need the help; it is a case for changing where the money is allowed to go.

References

1. World Bank, Social Accounting Matrix for Diepsloot (UNU-WIDER Working Paper 2016/26).
2. Standard Bank, Township Informal Economy Report (2025).
3. World Bank, Diepsloot SAM analysis (value leakage ~75%); see reference 1.
4. Parliamentary Budget Office, Pre-Budget Brief on the SRD grant (February 2025).
5. Department of Social Development / DPME–GTAC, Rapid Assessment survey of the SRD grant.
6. NielsenIQ South Africa, State of the Retail Nation.
7. Statistics South Africa / National Treasury.
8. Shoprite Holdings, integrated annual report.
9. Mr Price Group, integrated annual reports.
10. The Foschini Group (TFG), integrated annual report.
11. Pepkor Holdings, integrated annual report.
12. JSE / company SENS announcements (share buybacks). jse.co.za.
13. OECD, Economic Surveys: South Africa 2025.
14. National Treasury, Budget Review 2025.
15. World Bank, Poverty & Equity Brief: South Africa (2025).
16. National Treasury, national government debt statistics (~90% rand-denominated). Analysis; Treasury.
17. National Treasury, 2026 Budget Review (Chapter 7).
18. B-BBEE Commission / the dtic. bbbeecommission.co.za; PMG