Photo: Gates Foundation
In a recent report ( 1), the International Labour Office (ILO) stated that “universalizing old-age pensions and child benefits for school children and orphans could reduce poverty by as much as 40 per cent” in Africa. And such cash transfers offer a mechanism to raise disposable income in support of local economic growth.
All UN Members have signed up to the eight MDGs. The goals cover poverty reduction, gender equality, disease reduction, guarantee of education and environmental sustainability and the initial target date to achieve the objectives is 2015. See < http://www.un.org/millenniumgoals/>.
This confirms the role of social security as not only a reactive instrument that responds to needs but a proactive mechanism for social and economic development.
Coverage has improved dramatically in a number of countries
The challenge in many countries is how to put into place a social security system when resources are limited and infrastructure is under-developed. In Mozambique, where over 50 per cent of the elderly population is considered to be in poverty, improving social security coverage is now a priority as witnessed by the adoption in 2010 of a five-year National Strategy for Basic Social Security. The number of beneficiaries under certain programmes has doubled in less than five years, with two-thirds of all recipients being women. With benefits making a real difference to the lives of beneficiaries, the Mozambique experience shows that with efficient operational and administrative measures in place, an effective social protection system can be built. Other recent examples of effective extension of coverage include:
Where health systems have been formalized and coverage improved, there have been significant reductions in out-of-pocket (OOP) health expenses, which weigh particularly heavily on the poor and vulnerable. Not only do OOP expenses create barriers to access but delayed access to care can exacerbate health problems and increase the eventual cost of treatment. Formalizing coverage through a social security framework has led to a large reduction in OOP expenses, an improvement in health outcomes and a strengthening of the functioning capacity of an economy. For example, Ghana’s National Health Insurance Scheme covers two-thirds of the population and has cut OOP expenses by some 50 per cent.
Extending coverage is cost effective and enhances the productive capacity of the economy
The ILO estimates that extending old-age pensions and child benefits to reach universal coverage would cost just 3.5 per cent of GDP in many African countries.
Indeed the net cost may be much lower; a number of studies have shown how the introduction or extension of coverage has led to positive economic effects. In a survey of the effect of social transfer schemes in 30 countries, the ILO found that 40 studies showed a positive link between the introduction or extension of schemes and subsequent increased entrepreneurial activity.
The ILO has reported that between 1994 and 2001, Namibia increased old-age pension coverage from 48 per cent to 95 per cent. This has reduced pensioner poverty and led to other positive outcomes, such as reducing gender inequality and improving the status of pensioners. It is estimated that between 25 per cent and 50 per cent of pensioner income is invested in productive enterprises thereby facilitating economic benefits. The benefit has also improved family cohesion and has helped to facilitate school participation and has consequently improved child education levels.
There are a still a number of challenges. In a sample of 25 African countries studied by the ILO, less than 20 per cent of the elderly population receive a pension. However, many countries on the continent are now putting in place innovative measures to extend effective and sustainable coverage and recent history shows that through the coherent use of multiple financing mechanisms, coverage can be extended rapidly. The Yaoundé Declaration (see Box) has also provided a road map for putting in place a Social Protection Floor – i.e. a minimum level of social security – in Africa.
In October 2010, the “Yaoundé Tripartite Declaration on the implementation of the Social Protection Floor” was adopted. This recognized the need and associated benefits for African countries of putting in place a minimum level of social protection for their populations. The declaration had a major influence on the 100th International Labour Conference in June 2011, which concluded that a new instrument, in the form of an ILO Recommendation, to support this objective should be discussed at the 101st ILC in 2012.
The putting in place of an effective administration and operational structure is a common feature of recent positive developments in coverage extension in Africa. The ISSA recognizes this and has selected the extension of coverage, alongside enhancing the adequacy and quality of benefits, furthering operational and administrative efficiency and effectiveness, and supporting proactive and preventive approaches in social security, as one of the four key priorities for the triennium 2011-2013. The ISSA project on coverage extension includes the publication of an extension handbook with good practice examples and an associated training module for its member organizations.
(1) See ILO, 2011: Success Africa III. Realising a New Era of Social Justice through Decent Work: Success Stories from Africa . Geneva, International Labour Office. < http://www.ilo.org/wcmsp5/groups/public/---africa/---ro-addis_ababa/documents/genericdocument/wcms_166733.pdf> (accessed on 14.12.2011).