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Circle of life: pension reform in Africa
13 February 2012
Sub-Saharan Africa capital markets are benefiting from an influx of cash resulting from the widespread establishment of pensions systems. Annabelle Palmer reports
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sub-Saharan Africa
pensions
While saving for a pension may seem like a luxury in much of sub-Saharan Africa, government reform has created a symbiotic relationship that is boosting economic growth and supporting the development of capital markets.
While a relatively young continent, Africa too is aging. According to Help Age International, by 2050 one in five people in developing countries will be over the age of 60. And, in South Africa, it found that pensions have reduced the poverty gap ratio by 13% and increased the income of the poorest 5% by 50%, providing clear motivation for governments to implement reform.
A wave of pension reform has emerged in the region in the past decade with the dominant objective of expanding savings pools through financial inclusion, innovation and tax incentives. The resulting injection of pension fund cash into local economies is turning the wheels of economic growth and helping to create more liquid,...
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