Governor John Rwangombwa from the Central Bank stated that while the improvement in life expectancy is a positive factor, it also calls for increased pension penetration.
He spoke during the 3rd Africa Pension Supervisor Forum which started on Thursday, July 14.
The forum was launched in 2019 and provides a platform for pension regulators to share ideas, information and discuss reform issues that are facing the sector in Africa.
Discussions include performance of the pension sector –globally and on the continent, digitization in the pension sector, enhance cyber resilience and pension sector sustainability.
The life expectancy at birth in Africa has increased gradually to 64 years in 2020, from 48 in 1980. Rwangombwa explained that this means that the ratio of retired people will continue to grow, which is expected as economies and healthcare systems develop.
“We are, therefore, called upon to do better as a continent and it is paramount that most, if not all, of the labour force is covered by formal pension schemes.”
He said that while the benefits of a well-developed and inclusive pension industry are undeniable, it is regrettable to note the low level of pension penetration in Africa compared to other parts.
“For instance, only 6.3 per cent of Sub-Saharan Africa’s labour force is covered by contributory pension schemes, a trivial level when compared to high-income countries whose coverage is close to 100 per cent.”
Rwangombwa stated that it was important to open up private pension schemes that would come up with better customization of products and services especially targeting the informal sector which makes up about 80 per cent of African labour force.
Alfred Ouma Shem Chief Manager of Research and Strategy Department Retirement Benefits Authority of Kenya said that while Africa has a young population currently, it will change in the near future.
“We are going to have a bulge at retirement and probably we will not have accumulated enough savings to fund their lives. It is a challenge we need to deal with while they are still working,” he said.
He also stated that vehicles to expand coverage among the working-age population are now available.
Rwangombwa, however, said that “as we seek better coverage we should also seek better preparedness for unforeseen shocks such as the Covid-19 pandemic to ensure resilience and sustainability of the sector.”
akagina@newtimesrwanda.com
Source: rnewtimes
