Was home affairs minister Leon Schreiber out of line last week when he attacked TymeBank co-founder Coenraad Jonker for criticising his decision to hike the fees for accessing a critical government service by as much as 6,500%?
Schreiber went on the offensive after TymeBank last week published an open letter from Jonker, now CEO of Tyme Group, in which he strongly criticised the minister — a senior member of the DA in the GNU — for huge hikes in the fees companies must pay to verify client IDs against the national population register database.
Schreiber has increased the fees from as little as 15c per query to as much as R10 (or R1 for offline, overnight batch processing), saying this is necessary to end corporate subsidies, fund the IT costs associated with providing the service and ending home affairs’ legendary “system offline” problems.
The move will make South Africa one of the most expensive markets in the developing world for this service, Jonker said. It also favours the established banks, which have the branch infrastructure to support cheaper batch processing — and is probably one of the reasons Capitec, somewhat surprisingly, sprang to the minister’s defence last week.
This might sound like an argument over esoteric back-end processes that affect only big companies, but that’s not the case here: online identity verification checks form a cornerstone of South Africa’s efforts to fight fraud and other crimes.
“This decision threatens financial inclusion, digital transformation and national compliance efforts. The move is a crippling blow to financial inclusion and digital progress in South Africa,” Jonker wrote to Schreiber, apparently only after the minister ignored multiple requests for further engagement.
“This is not just a policy shift — it’s a regressive tax on the most vulnerable South Africans. It undermines the progress we’ve made towards digital inclusion, weakens the financial sector’s ability to comply with anti-money-laundering laws and risks reversing efforts to exit the FATF [Financial Action Task Force] greylist,” Jonker wrote.
This is not just a policy shift — it’s a regressive tax on the most vulnerable South Africans
— Coenraad Jonker
He warned that the pricing structure will make it commercially unviable to serve low-income South Africans. Fintechs such as TymeBank, which is backed by Patrice Motsepe, have been working to bank South Africa’s unbanked through low-cost, tech-driven financial solutions.
Jonker isn’t alone in his criticism. South Africa’s six largest telecoms operators, including Vodacom and MTN, have also voiced their unhappiness about the fee hikes through their industry body, the Association of Comms & Technology, saying the increases cannot be justified. Industry grouping MicroFinance South Africa called on Schreiber to suspend implementation of the fee hikes.
The minister hasn’t taken the criticism lying down, posting on social media that it was “shocking” that TymeBank had relied on taxpayers to “subsidise the rest of the actual cost while you profited”, even accusing Jonker of dishonest dealings. “Take your faux outrage somewhere else and stop putting profiteering over people,” he raged on X.
Schreiber accused Jonker of approaching a “political party from the shadows after the comment period closed to try to apply pressure” on him to reverse his decision. Could politics be the reason he hit back so hard at TymeBank?
What’s clear is that Schreiber wants corporate South Africa to help fund home affairs’ digital upgrades. Yet South Africans, including corporate citizens, already shoulder a hefty tax burden.
If the minister needs money to fund his IT projects (capital he has shown he deserves to get), surely it would be more equitable to approach the National Treasury for a disbursement?
Admittedly, the Treasury is keeping a tight rein on spending (and admirably so). But if taxpayers were asked to fund every government department’s IT upgrades, the burden would quickly become overwhelming.
There’s also a good argument to be made that the online ID verification service should be subsidised, given the impact financial inclusion has on economic growth and development around the world.
Schreiber is doing good work at home affairs. He’s an impressive minister who is poised to play a pivotal role in the long-overdue overhaul and digitalisation of government services in South Africa. On this issue, though, I fear hubris may be getting the better of him. R10 per real-time query is too much. Who is really profiteering here?
McLeod is editor of TechCentral
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