In a pivotal gathering of regulatory authorities, financial experts, and thought leaders, the 4th Annual Africa Pension Supervisors’ Forum, held in Kampala from November 27 to 28, 2023, shed light on the looming pension crisis in Africa.

With the theme “Sustainable Pension Inclusion in Africa,” the conference, co-hosted by the Africa Pension Supervisors’ Association (APSA), FSD Africa, Uganda Retirement Benefits Regulatory Authority (URBRA), and pinBox Solutions, aimed to tackle the challenges posed by the exclusion of a staggering 600 million young, economically active informal sector workers from formal pension and social protection systems.

Urgent need for inclusive solutions

The conference highlighted the urgent need for comprehensive solutions to Africa’s pension crisis. Sundeep Raichura, Group Chief Executive Officer of Zamara, emphasized that the continent must first acknowledge the absence of a functional pension system for the majority of its population. Raichura argued that Africa is a demographic ticking time bomb, with 600 million workers lacking a financial safety net for their old age.

“In Africa, talking about extending coverage is actually missing the point. We should be saying we do not have a pensions system, with the exception of 10% of our population,” Raichura stated. He stressed the critical and urgent nature of the issue, pointing out the potential consequences if the continent fails to address the pension crisis promptly.

Current Challenges and Concerns:

During the conference, Martin Nsubuga, Chief Executive Officer of URBRA, expressed concern over the low numbers of people saving for retirement benefits across the continent.

Nsubuga revealed that, in Uganda alone, only 3 million out of over 20 million working individuals are saving for their retirement, indicating alarmingly low coverage ratios.

Augustine Kpehe Ngafuan, Country Director, Uganda, African Development Bank, echoed these concerns, emphasizing the need for innovative and transformative recommendations to improve inclusiveness in the pension sector.

He noted that the issue extends beyond the informal sector, affecting the youth as well, and called for accessible pension services for all to ensure a healthy financial future and break the cycle of poverty.

Key objectives and strategies:

The conference outlined key objectives, focusing on the development of a replicable model and strategy for delivering an integrated pension, savings, and insurance solution to unbanked individuals across Africa.

Discussion topics included leveraging digital infrastructure for easy access, behavioral finance and retirement literacy, tax incentives for encouraging participation, and collaborative efforts to optimize investment returns while aligning with ESG compliant investment strategies.

Path forward

As Africa faces a potential fiscal cost of $1.7 trillion by 2050 for providing even a modest $1-a-day pension, the conference participants emphasized the need for immediate action.

By motivating just 10% of the excluded workforce to save $1 a day, it is estimated that approximately $0.5 trillion in new, long-term savings could be generated over the next decade, sparking economic growth, infrastructure development, and employment opportunities across the continent.

Stakeholders and collaborative efforts

The 2023 Conference brought together a diverse audience, including senior government officials, regulators, financial inclusion stakeholders, pension funds, insurers, aid agencies, and thought leaders from Africa, Asia, Latin America, and Europe.

The collaborative efforts of APSA, URBRA, and supporting organizations like FSD Africa and pinBox Solutions underscored the commitment to finding sustainable and inclusive solutions to Africa’s pension challenges.

The Minister of State for Planning, Amos Lugoloobi, representing Finance Minister Matia Kasaija highlighted the significant strides in Uganda’s pension reform, though establishing a regulatory body in 2012 and implementing measures for efficient service delivery. Under URBRA’s supervision, pension assets grew to UGX 18.9 trillion by December 2021, contributing 80% of assets in government securities.

The sector now holds UGX 21.5 trillion (approx. USD 5.7 billion), constituting 12% of GDP and 60% of Uganda’s domestic savings, showcasing its substantial impact on economic development.

In conclusion, the 4th Annual APSA Conference provided a platform for stakeholders to engage in critical dialogue, share insights, and work towards collaborative solutions to address the pension crisis in Africa. The urgency of the matter was evident throughout the discussions, signaling a collective commitment to crafting actionable strategies for sustainable pension inclusion on the continent.