Being life expectancy around 50 years, African countries have always underestimated retirements phenomenon. You were born, you worked, and you died while you were still working. This has always been African life cycle.
Nowadays things are different, and they are likely to keep on changing. 85% of over-65 African population can’t benefit from a retirement plan. In sub-Saharan area only 10% of population earns a retirement pension.
The “retirements” phenomenon has never worried African countries, but now, as things are starting to change and life expectancy is getting longer, Africa would like to work to put some western pillars at the centre of its retirement plan: employment-based pensions, mandatory retirement and early retirement, to improve their performances.
Today only South Africa and, in some ways, Mauritius have a wide coverage plan, respectively 54% and 17%, while other countries have none.
Just to make a comparison, Italy, which is an old country, uses 15% of its GDP for retirement pensions, while USA uses a lower share, 7%, because they prefer individual retirement accounts – maybe because of the made-in-USA liberal attitude. Europe is around 11%.
The main question is whether African countries, receiving few taxes after the deduction of all existing illegal work, will be able to adequately face the challenges of the incoming massive demographic flow, with its old people – with a longer life expectancy – who could not work anymore and will have no retirement pensions.