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Future uncertain
Social pensions in Southern Africa


By: Stephen Devereux
Institute of Development Studies, June 2002

Only three countries in sub Saharan Africa - South Africa, Namibia and Botswana - provide non contributory social pensions for their elderly citizens. In South Africa there are over 1.6 million social pensioners, each receiving R600 (about 39) per month. Namibia's 85,000 social pensioners receive a much lower N$250 (about 16), comparable to Botswana's 110 Pula (about 12), which is paid to 80,000 social pensioners each month.

Despite their long history and important social and economic impacts, remarkably little is known about these programmes. In February 2002, The Economist mistakenly accredited South Africa's ANC government with introducing the social pension, when in fact it dates back to 1928 in South Africa and 1949 in Namibia (South Africa occupied and administered Namibia - then South-West Africa - from 1920 to 1990). Originally motivated by a combination of welfarist and political objectives, including controlling African urbanisation and 'winning hearts and minds' during the apartheid era, the social pension nowadays has explicit anti-poverty objectives. It sustains over a million poor South Africans and Namibians, and is having a comparable impact in Botswana, where it was introduced in 1997.

Social safety net
In all three countries, the social pension injects substantial volumes of cash into poor households and communities. It has stimulated trade and marketing infrastructure, helped stabilise rural food supplies, and reduced vulnerability by providing a 'safety net' against livelihood shocks such as drought. Surveys in South Africa and Namibia have found that pension-dependent households are better off than small farmers. Since eligibility is activated by an age milestone rather than retirement, the incomes of the poor actually increase on reaching 60 years of age. The social pension even lifts many households out of poverty altogether.

Apart from pensioners themselves, the social pension supports unemployed adults, young grandchildren and other relatives. It has also contributed to high numbers of 'missing middle generation' households in rural communities. Typically, young adults move to town in search of work, leaving their parents to care for their children in the village, where the cost of living is lower. A strikingly high percentage of social pension income is spent on schooling expenses. Increasingly, the pension is providing vital support to relatives affected by HIV/AIDS, with many elderly people fostering AIDS orphans. A positive consequence is that the pension makes elderly relatives economically independent and valuable family members, contradicting the widespread perception that they are financial burdens on their offspring

 

Rising costs
During the apartheid years, white South Africans and Namibians received substantially higher social pension payments than blacks, but these racially discriminatory practices were declared unconstitutional after both countries' transition to democracy in the 1990s. The equalisation of social pension payments, together with extended coverage in the former bantustans (small pockets of land the apartheid government set aside for the black populations where they were given limited self-government), the introduction of a high-tech computerised mobile delivery system and pressures to raise the real value of the pension, have all contributed to rising programme costs. The World Bank has recently raised concerns about its fiscal sustainability. The social pension costs the South African government R7 billion (600 million) per annum, and amounts to 4.8% of total government spending in Namibia.

Monthly social pension payment rates in Namibia, 1989-1999

  On the other hand, decisions about how to allocate public spending are political choices, not technical imperatives. In this light, a more pertinent question is whether political commitment to the social pension is diminishing. Namibia's Minister for Health and Social Services has denounced the social pension as 'nothing but a subsidy to liquor stores' and, in South Africa, the social pension risks being subsumed into an 'integrated' social welfare system. Therefore, despite their impressive achievements, the future of social pensions in southern Africa is uncertain.


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