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The developmental impact of social pensions in Southern Africa

EU/ILO/Government of Portugal World conference: Social Protection and Inclusion HelpAge International and Save the Children UK side event “Breaking the poverty cycle: Securing rights to cash benefits for older people and children through national commitments and community action”.

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The developmental impact of social pensions in Southern Africa

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  1. EU/ILO/Government of Portugal World conference: Social Protection and Inclusion HelpAge International and Save the Children UK side event “Breaking the poverty cycle: Securing rights to cash benefits for older people and children through national commitments and community action” The developmental impact of social pensions in Southern Africa 4 October 2006, Lisbon Michael Samson msamson@epri.org.za

  2. Five countries in Africa have non-contributory social pensions • Universal or means-tested pensions to older people • Non-contributory • Protects against age-related poverty • Successes in Latin America, Asia and Africa Botswana Namibia Mauritius South Africa Lesotho

  3. Growth lessons from Mauritius • A social pension since 1950 • Universal take-up • Costs 2% of GDP • One of the fastest growing African countries • Social pensions represent a social contract that lays a foundation for stability, growth and development Mauritius

  4. Lessons from Botswana • A social pension since 1996 • Universal take-up • Costs 0.4% of GDP • Social transfers reduce inequality in one of the world’s most unequal societies— helping to stabilise conditions that promote economic growth. Botswana

  5. Social transfers in South Africa support economic growth along multiple dimensions • Sub-Saharan Africa’s oldest social transfer programme • Costs 3% of GDP • Substantial impact on poverty reduction • Extensive studies of growth outcomes • Human capital • Labour markets • Macroeconomics South Africa

  6. South Africa’s social pension reduces poverty and destitution substantially

  7. Impact of the social pension on employment and labour force participation SOURCE: Statistics South Africa Labour Force Surveys and EPRI calculations

  8. Spending shares vary by income group—and social transfers redistribute income and restructure the composition of spending An illustration from South Africa Source: Statistics South Africa Income and Expenditure Survey 2000

  9. Labour market lessons from Namibia • A transformed pension system since democracy in 1990 • Near-universal take-up (85%) • Costs 0.7% of GDP • Supports local economic activity and labour market participation, particularly for women Namibia

  10. Composition of rural households in Namibia which include older people receiving pensions Male head Female head/ spouse Son Daughter Grandson Granddaughter SOURCE: Devereux 2005

  11. Lessons from Lesotho • The world’s newest universal social pension, implemented in 2004 • Formal evaluations still in progress • Costs 1.4% of GDP • Supports children increasing living with older people Lesotho

  12. Social protection and growth: the transmission mechanisms Social Transfers risk human well-being assets human capital economic growth equity employment Fiscal sustainability macro- economy

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