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An assessment of the impact in Zanzibar is still ongoing, but initial discussions with older people suggest that the scheme is having a substantial positive impact on older people and their families.

For the vast majority of sub-Saharan Africans, receiving any kind of pension in old age remains an unlikely prospect. In most countries, pension coverage is limited to a small minority of older people who have spent their lives working in the informal sector. Fewer than 1 in 10 people in the labor force are contributing to a pension—meaning that, without a major change in policy, the situation will remain the same for future generations.

Kombo-Mohamed-Kombo--first-receipient.JPGIt might well be assumed that meaningful steps toward an effective pension system are simply out of reach for low-income African countries. A recent development in Zanzibar, a semi-autonomous region of Tanzania, however, throws those assumptions into question and sheds light on a broader shift in thinking about the role of old-age social protection in developing countries. In April 2016, the government of Zanzibar began making payments of 20,000 Tanzanian shillings (US$9) to all people over the age of 70, regardless of their income status. Unlike various other cash transfers across the continent, the scheme is fully financed by the government budget, costing roughly 0.24 percent of the country’s GDP.

So, how did this come about? Far from an instinctive populist move, the decision to introduce the pension was the result of a policy process dating back many years. The idea of a universal pension initially arose in 2008; it gained broad endorsement in the process of developing a national Social Protection Policy, which was adopted 2014. A universal pension was seen as a way to address the greater vulnerability Zanzibaris face when they grow older. With age, work tends to become more challenging, meaning that older people are increasingly forced to look to their family members for support, many of whom are struggling with poverty themselves.

Following the adoption of the policy, a cross-ministerial task team was convened to discuss the parameters of the scheme, which was eventually announced in mid-2015. Whether the scheme should be universal or means tested was a hot topic throughout the deliberations. The final choice of a universal scheme was influenced by concerns about the significant targeting errors associated with means testing and the advantages of the simplicity of universality, in terms of lower administrative burden and cost. 

Zanzibar’s pension makes the country something of a pioneer, being the first universal cash transfer in East Africa to be fully funded by government. Nevertheless, the development is also emblematic of a bigger global trend of increasing investment in social protection. Over the past two decades, a growing number of countries have introduced or expanded different kinds of cash transfers aimed at reducing the population’s vulnerability to shocks and stresses. Rather than a luxury for rich countries, these schemes are increasingly being seen as a fundamental piece in the puzzle of successful social and economic development.

Pensions have been an important part of the picture—in particular, tax-financed “social” pensions like the scheme in Zanzibar, in which eligibility does not depend on previous pension contributions. The past two decades have seen a rapid rise in the number of countries introducing social pensions; of the approximately 100 countries that have social pensions today, half of these schemes were introduced since 1990 and nearly a third since the year 2000. Most of these newcomers have been low- and middle-income countries that vary in context: for example, Bolivia, Mexico, Nepal, Thailand, Timor-Leste.

Zanzibar also joins a collection of countries in southern Africa that have been pioneers in the extension of social pensions. Botswana, Lesotho, Namibia, South Africa, and Swaziland all have universal (or near universal) social pensions that form a core pillar of their social protection systems. The island of Mauritius was one of the earliest countries to introduce a universal pension in the 1950s, when it was a low-income country. The scheme, which is still in place 60 years on, is considered to have contributed to the country’s “economic miracle” and has been an important inspiration and reference point for Zanzibar. In the meantime, other countries in the region, including Kenya, Uganda, and Zambia, are all experimenting with social pensions, although most still remain small in coverage.

As social pensions have become more widespread, a growing evidence base has developed, documenting their potentially transformative impacts on older people and their families. Social pensions in Mexico have increased older people’s access to health services and reduced reported levels of depression, in part because these individuals are able to assume a larger role in household decision making. Yet the impacts extend beyond older people to the families they share their lives with—and particularly to their grandchildren. In Bolivia, Brazil, and South Africa, research shows how social pensions have increased school enrollment, improved child nutrition, and reduced levels of child labor, thus contributing to wider efforts to improve children’s well-being. An assessment of the impact in Zanzibar is still ongoing, but initial discussions with older people suggest that the scheme is having a substantial positive impact on older people and their families.

Despite this major advance in Zanzibar, the scheme still has its limits. For example, the age of eligibility is still high for a country with a life expectancy of 66 years, and the benefit level (roughly 12 percent of average income) is modest. In the meantime, for the 1.3 million older people ages 70 and over on the Tanzanian mainland, there is no social pension in place, although there have been promises that the government there will adopt the approach.

Implementing a scheme of this nature in a low-income context is also not without its challenges. Administrative systems need to accommodate a population with very low levels of literacy, and many individuals face mobility issues and visual impairments that make it harder to reach a pay point. In order to support the effective implementation of the scheme, HelpAge International, with support from the German government, is supporting groups of older people in order to monitor the implementation of the scheme. This is helping to shed light on important issues.

One particular challenge in Zanzibar is that many older people lack adequate identity documents to prove that they have reached the age of eligibility. Despite the scheme being universal on paper, monitors found that six months after the inception of the scheme, around one in five people over age 70 were still not getting the pension. For two-thirds of those not receiving it, issues related to identity documents were the main cause. In fact, for countries with weak civil registration systems, these issues are not uncommon in the early years of implementing such a policy. The experience of a country such as Bolivia—which also has a universal pension—shows that, with adequate support, these issues can be ironed out over time.

Although work still needs to be done, the introduction of the universal pension in Zanzibar marks a major achievement in expanding social protection. It also provides an example to other low-income countries in Africa that—with political will—it is not too early to start building a pension system that supports all citizens in aging with dignity. 

 

about the author

Charles Knox-Vydmanov is Social Protection Policy Advisor at HelpAge International. His work involves direct technical support to government, and supporting HelpAge offices and network members to advocate for better pension policy. His nine years at HelpAge has included policy engagement and research in countries including Bangladesh, Belize, Kenya, Indonesia, Lao PDR, Malawi, Mozambique, Myanmar, Peru, the Philippines, Tanzania and Zambia.

 
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