By Victor Ahiuma-Young
NATIONAL Pension Commission, PenCom, has called for the development of a robust pension and social security system to cater for old age to address the fallout of aging population that will emerge from the projected population explosion in Africa in the nearest future.
Speaking a the just concluded 3rd World Pension Summit, WPS, ‘Africa Special’, that took place in Abuja, Nigeria, Director- General of PenCom, Mrs Chinelo Anohu-Amazu, noted that the commission was also interested in the exchange of ideas and experiences on innovative practices in pensions and social security could advance the African agenda of addressing economic and social challenges.
The theme of this year’s Summit was “Pension Innovations: The African Perspective”.
According to her, Africa was at a critical turning point in history and a long period of faltering economic performance, had been resurgent growth over the last decade, with the Continent recording, on the average, a 5% increase in GDP.
“This renaissance has been, among other things, essentially sustained by unique African entrepreneural and innovative spirit; the success stories of emerging industries, and smaller innovative initiatives such as the portable irrigation technology helping Sub-Saharan small holder farmers grow crops out of season. These innovations undoubtedly provide the foundations for transforming the continent over the next decades”, she said.
Mrs Anohu-Amazu, recalled that a recent World Bank report on Africa’s Demographics which was published in 2015 stated that countries in Sub-Saharan Africa had experienced impressive and sustained economic growth and development over the past 15 years.
She explained that “Child mortality has dropped in most countries and infertility rates have reduced significantly for educated women living in urban areas. This has resulted in a rapidly growing population, with estimates showing that the region will become a much larger part of the global population with a projected 2.8 billion people by 2060.
This exponential milestone is expected to translate to a population of healthy, educated and empowered labour force that would engender sustainable economic growth and poverty reduction. Africa would, therefore, need to address the issue of aging population that will emerge as the demographic transition comes to an end, by developing robust pension and social security system to cater for old age income.
“Then again, cutting-edge infrastructure is critical for economic growth and social progress. Extant indices show that Africa’s infrastructure remain by far the most deficient and costly amongst developing countries. In many cities, the challenge of urbanization and the need for modern infrastructure is already evident. One-third of urban residents in Sub-Saharan Africa are located in 36 cities, each with more than one million inhabitants. The United Nations estimated that by 2025, the population in Lagos and Kinshasha would reach 18.9 million and 14.5 million, respectively. To put this in context, it would be the equivalent of combining the current populations of London, Berlin and Madrid, which stand at 15.42 million based on 2015 population figures.
“Bridging Africa’s infrastructure deficit will require sustained spending of about US$93 billion per annum, which translates to about 15% of Africa’s GDP. This huge challenge, I believe, can be surmounted by a coordinated, multifaceted approach to development and the integration of domestic funding sources such as pension funds, and foreign institutional investors. The forgeoing interplay of events to a great extent influenced the choice of this year’s theme, which I believe would resonate with delegates and is meant to provide a platform for the exchange of ideas and experiences on innovative practices in pensions and social security to advance the African agenda of addressing economic and social challenges.”
Food for thought
The PenCom Director General added by seeking to know among others, “how do we build deep and efficient capital markets and financing models that would enable institutional investors such as pension funds to invest in Infrastructure? How can pension fund managers in Africa mainstream Environmental Social and Governance, ESG, principles in their investment decisions with a view to promoting sustainable impact investments? How do pension fund managers and regulators leverage technology to stimulate the impact of pensions on socio-economic systems? What specific action steps can be taken today to begin the process of developing these practices?