The Electronic Food Coupon System – an African Success Story

When the Ministry of Local Government issued out a tender in 2007 calling for a paper-based food coupon system which would be used to replace the existing defective food basket system no-one could have predicted that an electronic food coupon system would be implemented which would revolutionize the way in which more than 60 000 social grant beneficiaries would receive a monthly food grant, providing the country with a practical example of how technology can be harnessed to greatly improve service delivery and to provide choice and restore dignity to so many people. No-one could have predicted that in the short time span of three years more than 60 000 people would have been given access to financial services – people who previously had no exposure to anything but hard cold cash were now using the smart card as a financial tool. 60 000 people banked in such a short space of time? Yes.

Smart Switch Botswana was awarded the tender based on a highly technical solution which would require an extensive implementation as well as a complete change of mind-set for all players from the previous system. The tender had two main goals – it required the new solution to provide choice to the beneficiaries (under the old food basket system beneficiaries had no choice as to what food they were given, when they could collect their food, where they could collect their food) The second goal of the tender was to restore dignity to the beneficiaries (under the old system a real stigma had developed and beneficiaries, who often all queued together on the hot sun with wheelbarrows which were loaded with food were sneered at.

In addition, beneficiaries were often taken advantage of by merchants who provided them with out-of-date food, lower quality food and even rotten food.) CHOICE and DIGNITY were absolute goals of the new system. Three years later both goals had been achieved and have changed the way social beneficiaries live in Botswana for good. Beneficiaries now purchase their food using a fancy biometrically driven smart card so there is no way of identifying them as food allowance beneficiaries

Council administrative workers no longer process invoices from merchants, freeing the administrative officers up to do more useful and productive work and relieving them of the boredom Merchants now all receive their money in their bank accounts within 48 hours of making each sale – this has revolutionized their businesses and improved their cash flows

Due to the increased competition merchants no longer exploit the situation of the beneficiaries as they will lose business by doing so. Beneficiaries now all have access to a financial tool (bank account on a smart card) which allows them to keep their allowance on the card in a safe manner (nobody can use the card other than the beneficiary due to the biometric access to funds on the card). Beneficiaries earn interest on all balances left on the card – this is what access to financial services is all about.

The second phase is to educate the card holders to start using the card as a savings tool and as a fully-fledged banking product which will allow them to make deposits onto the card, perform withdrawals at merchant stores, do money transfers to other card holders and even make 3rd party bill payments as well as use the card for buying prepaid airtime, prepaid power and a range of other cash-in services which will shortly be available throughout the network.