World pension summit seeks informal sector inclusion in Africa’s contributory pension

The panelists at the ongoing World Pension Summit in Abuja Tuesday called for the inclusion of the informal sector in the contributory pension scheme in Africa.

Panel Chairman, Timi Austen-Peters, Principal Partner at Austen-Peters & Co, said the continent had a large pool of pension funds available that could be invested in infrastructure.

Austen-Peters noted that the continent was no longer faced with the problem of pension funds deficit, but what to do with the large pool of pension assets.

According to him, pension reforms in Africa started in 2004 when Nigeria inaugurated its Pension Reform Act.

He said that following the introduction of the act, other African countries keyed into it, adding that it had yielded positive results in a short period.

“Now it is not the question of whether it is working or not working, it is fantastic because we have this large pool of money, the question is what we do with it.

“However, how can we extend it to other people because today we have about 25 billion dollars which is 25 times bigger than our Sovereign Wealth Fund.

“Can we invest this money in critical sectors?’’ he asked.

Clairette Ah-Hen, the Chief Executive Officer, Financial Service Commission of Mauritius, said that it was important for anyone that was working to have some savings as an investment for the future.

Ah-Hen said that if more power was given to pension regulators and private investors, pension funds would be properly managed in Africa.

She said that Mauritius had a voluntary pension scheme where those in the informal sector could make contributions to save for their future.

According to her, if the private regulators do not have confidence in the scheme, the pension reforms will not work.

“Before we introduced these pensions in Mauritius, we found out that the best investment parents can make for their children is pension because I am one of those who benefited from it,’’ she said.

Also, Edward Odundo, the President, International Organisation of Pensions Supervisors (IOPS), said that Kenya had incorporated the informal sector into its pension scheme.

Odundo said that the Kenyan pension regulators encouraged the informal business operators in the country to ensure that they contributed a minimum of 25 pence a day using mobile phones.

According to him, the formal sector constituted about 15 per cent of the country’s population which accounted for 20 per cent of its Gross Domestic Product (GDP).

Chinelo Anohu-Amazu, the Acting Director-General, National Pension Commission (PenCom), said that Nigeria had started the process of incorporating the informal sector into the pension scheme.

Anohu-Amazu added that the country was exploring the opportunity of the availability of mobile phones to achieve the objective.

NAN