Report: Africa Not Prepared for Aging Population

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November 23, 2011

A new report says African governments are ill prepared to handle the growing number of people over age 65. The African Development Bank is raising concerns over the lack of health insurance and pensions.

The report says the population in Africa, as in other parts of the world, is getting older. Currently, there are 36 million people on the continent 65 years and above. That's 3.6 percent of the population, up from 3.3 percent 10 years ago. That could rise to 4.5 percent by 2030 and 10 percent by 2050.

No safety nets

The African Development Bank says, "Aging is highly linked with long-term physical and mental disability and a number of long-term chronic conditions."

"Africa is not well prepared to care for its aging population right now. But...it needs to prepare for this phenomenon," said Professor Mthuli Ncube, the African Development Bank's chief economist.

African nations spend far less on healthcare than developed nations do -- about $26 per person per year.

"Not so many countries have well developed medical aid schemes for the elderly, whether they are privately provided schemes or indeed government schemes. And number two, if you look at the pension schemes, the pension industries, (they're) not well developed in some of the countries. And here one is talking of a pension industry where both the employer and employee, while the employee is at a working age, contribute. These types of industries are also not well developed," he said.

The bank's report says "contributory pension plans" cover very few people due to the nature of many jobs and livelihoods. Most of the population works in the informal or agricultural sectors that offer little, if any, social security protection.

The report adds that households headed by older Africans are among the poorest. For example, in Kenya and Tanzania, such households have a poverty rate over 20% higher than the national average.

Time to act

Ncube said African governments failed to take action on health insurance and pensions because they were busy with economic reforms.

"If you look at what happened in Africa in the 80s, which is when quite a bit of the reforms were done, it was about economic structural adjustment. It was about macroeconomic stability. But now it's time to move to the second phase, which is regulatory reforms. It's about deepening capital markets, unleashing new institutions. All things that are regulatory need to be put in place as the second level of institution building," he said.

Another challenge for Africa is the decline of informal systems of social protection. That is, cash and support from both the extended family and community sources.

"The extended family issue is still embedded in the African culture. But over time, it's going to get eroded as middle class values set in, as urbanization accelerates. We estimate that the urban population will grow from something like 40 percent currently to closer to 75 percent in 50 years time. All of that erodes the extended family culture and systems and all of that," he said.

As the extended family erodes, he said, the nuclear family will become dominant. A nuclear family is defined as a mother, father and children sharing living quarters.

The African Development Bank recommends governments help implement health insurance and pension plans.

"Even at the current level of population of just over a billion people, there is a burgeoning middle class. The middle class are naturally living longer. Even people who are in the rural areas are also beginning to live longer. So over time, the next 50 years, the issue of the elderly will become a problem," said Ncube.

What's more, there are fewer caregivers because of the millions who've died from HIV/AIDS. This can be seen in South Africa, Botswana, Lesotho, Zimbabwe and Swaziland.

Ncube said African governments don't have to handle the health insurance burden alone.

"Not only is it an imperative," he said, "but also it's an opportunity for the private sector to add its bit in this regard, you know, the launch of privately owned companies, health care insurance, medical insurance and all of that. All these are private sector opportunities that are there to be taken."

The report also recommends that African governments consider providing access to both free and subsidized health services, medications and long-term health care facilities for the elderly.