In the past six months, France has seen an uproar of aggravated workers who have taken to the streets to protest the government's new pension reform. In April, France's Constitutional Council, which plays a similar role to the US Supreme Court, approved the most controversial part of the reform - raising the retirement age from 62 to 64.
On May 1, International Workers Day, around 112,000 people participated in the largest protest since the start of 2023. For many in France, the pensions system is viewed as the bedrock of the state's responsibilities and relationship with its citizens, and it is embedded in various laws and regulations. But while more than 90% of France's population has a retirement plan secured, according to OECD statistics, things could not be more contrasting across Africa.
According to a recent report by the International Labour Organization (ILO), less than 10% of the workers in sub-Saharan Africa save for old age, the lowest rate for any region globally. The staggering number implies most breadwinners today won't be able to support themselves or their families after retirement. As the continent's population growth continues to be the highest in the world, expected to more than double itself by 2050, future poverty and hunger become that much more disturbing.
Thanks to sustained high fertility and improving mortality rates, Africa's population will double - or more - by 2050. The continent will then be home to at least 25% of the world's population, compared with less than 17% in 2023.
Nigeria alone is forecast to have 400 million people, meaning it will overtake the United States as the world's third-most-populous country. Now, imagine a reality where most of these families and communities cannot financially support themselves or their young. The number of dependents in sub-Saharan African countries is increasing at the highest pace in the world, and over time the number of older adults needing social support will also rise.
According to a Bill and Melinda Gates Foundation report, extreme poverty is becoming heavily concentrated in sub-Saharan African countries. By 2050, 86% of the extremely poor people in the world will be living in the region.
The Conversation Africa attributes poor pension schemes in sub-Saharan Africa to low contributions due to low earnings, high informality, high financial illiteracy levels, and a lack of proper information about the benefits of adequate contributions for future pension withdrawals.
The fact that 85% of Sub-Saharan Africa is informal (according to the ILO) is another critical factor. Undoubtedly, the situation needs an immediate, scalable action plan.
There are many actions that local governments can and should take to tackle the lack of pensions and savings. Yet, alongside increased government pension participation, service bundles, and new regulatory frameworks, attention to basic infrastructure can nip the problem in the bud.
The solar-based, distributed infrastructure solution
Solar-based infrastructure solutions, like solar home systems, are becoming more prevalent across the continent, especially in rural, underserved communities. The highly affordable systems that can be installed everywhere, no matter how remote, have become a go-to solution for the electrification of hundreds of millions still living without electricity access. The solution's benefits, alongside the light and electricity it provides, directly influence a family's ability to save for a rainy day.
With the light, smallholder farmers (who account for most of the current customers) can sort their crops after dark, lose less produce, and make more money. Solar-based irrigation pumps give another boost, increasing yields by up to three times. Small shop owners, who account for most customers after smallholder farmers, can offer their clients cooled beverages and phone charging stations, increasing their incomes.
Household expenditure on energy drops massively with the use of solar home systems, as they make expensive battery-operated torches and kerosene lamps redundant.
Electricity and light also contribute to education on multiple levels. For the kids already in school, they can do their homework after dark, adding valuable time to their daily routine and increasing motivation to study and succeed.
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Across the SSA region, users have been reporting higher grades in school and national exams. For girls and women in last-mile communities, often in charge of procuring wood and coal and charging phones in journeys that take hours from their daily routine, time becomes more available, and they can go to school or open new businesses. The added income driven by the systems is often used to send girls to school. Higher education levels can lead to more young people getting jobs in the formal sector, where pension plans are more secure and prevalent.
Africa's pension problem is massive and should be treated on all possible levels. While regulations and policy changes can take care of the upper level of the pension scheme, dealing with infrastructure is essential in addressing the core issues of constructing the financial reality of hundreds of millions. Distributed solar infrastructure is an affordable, scalable, available solution. Governments must combine it in their plans to tackle future poverty.
The writer is an entrepreneur and investor, leading sustainability-driven innovation across Africa.
