Hope rising for Africa on back of pension awards

About this time next year, African pension professionals, God willing, would gather again to review the goals they set for themselves at the just concluded Africa Pension Awards (APA), held in Abuja, Nigeria’s seat of power between September 27 and 28, this year.

Specifically, they will be looking at the innovations in corporate governance, deployment of innovative practices to facilitate wide coverage and inclusion, socio-economic impact of the pension or social security system, innovations in risk management, innovations in information, communication and technology platforms for improved customer service delivery.

These were the criteria on which the 2016 APA Awards were won and lost. At the event which was a part of World Pension “Africa Special” package,  African pension practitioners covering the whole gamut of regulation and operation gave a scorecard of their performance in their entries for the awards, and during the session  on“ Regional Reports:  Revolutionary Strides in Pensions by African Countries”.

Speaking on impact investing which was a major discussion leading to the regional reports, Catherine Duggan, a professor of management and political economy and vice dean for strategy and research, ALU University, Rwanda, said  that understanding  those needs that keep people  awake  all  night will make  you understand why they do what they do, and by extension finding solution to the basic needs of the people like housing and other high-impact infrastructure.

Breaking it down to its basic everyday meaning, Chinelo Anohu-Amazu, director general, National Pension Commission (PenCom) said at the APA

Awards that one of the areas of investment for the pension fund to achieve huge impact will be in the provision of functional and affordable housing for pension contributors.

According to Anohu-Amazu “we have seen that when people have a roof over their head, it lowers the need to engage in unwholesome practices. We are trying to prevent things that lead people into unethical practices by ensuring that housing, which is a critical survival requirement for every family is provided through pension contribution”.

The next 12 months many watchers of the African pension landscape would be watching out on how the practitioners apply impact investing in solving Africa problem with a home-made (African) solution to distribute the benefits of the contributory pension. Needless to say that this is the whole essence of the awards.

Impacting investing, according to experts, is an investment approach intentionally seeking to create both financial return and positive social impact that is actively measured.  The adoption of impact investing by Africa pension practitioners will also bring the need for the application of the Environmental, Social, and Governance (ESG) criteria.

Africa’s housing and infrastructure challenges are enormous.

In Nigeria alone, the Federal Mortgage Bank of Nigeria says it needs N56 trillion to fund Nigeria’s  17 million housing deficit, and Kayode Fayemi, minister of steel and mines, earlier in the year says  the country needs $3.05 trillion to fund huge infrastructure needed to oil the nation’s economic development.

Experts are of the view that the success or failure of the Africa

pension practitioners would be determined by whether these needs would

be realized. It also speaks to the issue of poverty eradication or the prosperity of the African.

In a number of studies carried out by scholars, it has been firmly established that participation in pension scheme whether contributory or non-contributory reduces poverty in old age. In a widely applauded research carried out by Armando Barrientos of the Institute for Development Policy and Management , University of Manchester and which was published in the Chronic Poverty Research Centre’s Working Paper No 33, the author proves that “ A multivariate analysis of the impact of non-contributory pension programmes on the probability of a member of a household being poor finds that belonging to a household with a pension recipient reduces this probability by 18 percent for the Brazil sample and 12.5 percent for the South African sample.”

Ousmane Faye, CREPP, HEC Management School, University of Liege, while

investigating the correlation between basic pension and poverty reduction in Sub-Saharan Africa submits that “Simulations indicate dramatic poverty reductions amongst households with elderly in the different scenarios considered. And these impressive poverty reductions also translate into large decreases in aggregate poverty measures.”

As more firms get complied with the pension scheme, it is believed that more people will be taken out off poverty.

Many observers of the Africa pension landscape are watching out for growth in the industry in terms of the number of new contributors enrolled, compliance level and the safety of pension assets.

They will also look out for the capacity of the pension industry in Africa to apply pension assets to fund housing, roads, airports, power, deepening the capital market and investment in the real sector, among other critical needs of the continent.

These would be measured by` how innovative, how technology will be deployed, where they are investing  pension assets and the effect on the people and how many new people were made financially inclusive by the time APA 2017 holds again in Abuja.

John Osadolor

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