What Does Retirement Mean In Africa?

Retire From Work, But Not From Life. - M.K. Soni

A quick Google search of the question “What Does Retirement Mean in Africa?” does not yield much, although so do many other things concerning the continent. Adding to the fact that Africa comprises 54 or 55 countries (depending on who you ask), this is not surprising. Thus, in my endeavour to answer this question, I have to do some anecdotal research. So bear with me in this post, as I do not have much data nor primary sources to ascertain what I say; I would really love to hear your thoughts on what you think retirement means in Africa.

Before we delve into retirement, let's take a moment to explore what it means in the Western ideal. Retirement has different meanings for different people. The most common concept of retirement is "withdrawing from one's position or occupation or from active working life"(Merriam-Webster) much like completing the NPC (Non-Playable Character) lifecycle. This involves living within a pre-defined set of rules and expectations, much like being stuck in the Matrix, where one's actions and life paths are seemingly scripted by societal norms until retirement offers an exit to your "Golden Years."

In my opinion, and as I wrote here, retirement isn’t about a number in your bank account; rather it is about achieving freedom: the freedom to choose how you spend your time. Why should our Golden Years be towards the latter end of our lives?

The Matrix is one of the best movies of all time

Retirement as a government policy gradually spread to other countries in the early 20th century. Until then, most people worked until they died or became unable to work. The concept of retirement began in 1889 when German Chancellor Otto von Bismarck proposed a pension system for workers aged 70 and older.

Now, let's talk about retirement in Africa. When I first thought about this topic, I looked at the people I know who are retired in Africa or about to retire. From what I understand, retirement in Africa means spending more time with family, hosting events for big celebrations, working on personal passion projects, assisting the community, and watching television.

Financially, many retirees are partially or fully funded by family, usually their children, reflecting the collectivist nature of African societies. Unlike in Western societies, where individualism prevails, retirement homes remain a foreign concept in Africa, leading to common multigenerational living arrangements. Traditionally, children support their parents through monetary gifts, food, and other essentials regularly. Yet, as urbanization and globalization advance, these deeply rooted family support systems face challenges, with more individuals moving away from their home countries.

However, I can’t say this paints the whole picture of retirement in Africa, partly because I am not from every African country and partly because my anecdotal experience, even within my own country (Benin) and other countries that I know may be limited due to my social circle and the like. That being said, after talking with people, it seems that the standardized definition of retirement seems to be a relatively novel concept in Africa as people tend to essentially never retire. This is due to the fact that they don’t have the means to stop working nor have they financially planned for retirement. Essentially, the prerequisite to retirement is old age. Guess that’s a problem across the board everywhere in the world eh?

This is exacerbated in Africa as many countries on the continent do not have adequate pension systems. Only workers in the formal sector receive pensions, and those pensions are not always distributed properly or enough to cover a retiree’s life. Less than 10% of the workers in sub-Saharan Africa save for old age, the lowest rate for any region in the world. That implies most of the breadwinners today won’t be able to afford basic items after retirement. Only 19.8% of people above statutory retirement age receive a pension in sub-Saharan Africa, and just 8.9% of the labour force is covered by pension schemes. This is much lower than the global average where 77.5% of people above statutory age and 53.7% of workers have pension coverage. And since the overwhelming majority of Africans (83%) work in the informal sector of the economy, they do not have access to any sort of social retirement funds and thus cannot retire from work unless supported by family. This situation particularly affects women since their husbands are usually the sole breadwinners. If their husbands pass away or become unable to work, women and children are often left in financially precarious circumstances. As a result, it is common in some parts of the continent for grandchildren to stay with their grandparents or for grandparents to live with their children to provide mutual support.

Currently, there isn't much focus on addressing the financial situation of older people and retirement in Africa, mainly because the elderly population is very low, and the majority of the population works in the informal sector. However, this is likely to change in the future as Africa is the youngest and fastest-growing continent, and its young population will eventually grow old. In time, the growing aging population will have to be addressed, and policies will need to be put in place to support them financially.

The importance of financial literacy in Africa cannot be overstated. It is crucial that individuals are educated about financial management and planning so that they can make informed decisions about their savings, investments, and retirement. This begins with education, where we need to promote more practical education tailored to the needs of the unique African society.

Striking a balance is essential: Emulating the Western pension system isn't a one-size-fits-all solution for Africa, given our unique socio-economic landscapes and cultural values. Our approach to retirement should reflect this uniqueness. Instead of solely adopting Western models, we have an opportunity to draw from our rich pre-colonial traditions, which offer alternative, community-based support systems. These practices can provide a blueprint for sustainable retirement planning that resonates more deeply with our communal ways of life. Such an approach not only aligns with our cultural heritage but also addresses the specific needs of those in the informal sector, who are most vulnerable under conventional pension schemes. By redefining retirement within our own cultural and economic context, we can create a system where the 'Golden Years' aren't just a reward after decades of labor but a continuation of a life enriched by community, purpose, and autonomy. This not only benefits individuals by ensuring their later years are lived with dignity and without financial worry but also contributes to the broader economy.

This issue is not unique to Africa but is relevant to many other countries around the world. Relying solely on a pension or government benefits for retirement is not a sustainable solution. Instead, we need to encourage more entrepreneurship and help people achieve financial independence. It's important to note that receiving a pension or government benefits is great, but it should not be the only source of income for retirement.

As urbanization and globalization reshape our traditional support structures, it's essential to pivot towards creating a resilient and self-sustaining economic environment. Instead of solely relying on pension schemes, which may not be feasible for the vast informal sector, there's a pressing need to cultivate a culture of entrepreneurship and innovation. By encouraging the development of jobs and careers that resonate with the unique needs and opportunities of our local communities, we can lay the groundwork for a more prosperous future. For instance, Technical and Vocational Education and Training (TVET) programs, such as the one illustrated by the 'Igba Boy' initiative, showcase how targeted education and skill development can empower young Africans to create sustainable businesses tailored to their communities' needs.

African countries are projected to add more people to the global workforce in the next ten years than the rest of the world combined. However, there simply aren't enough jobs for these young people. Expanding the aforementioned initiatives could serve as a catalyst for widespread economic growth and societal well-being, aligning with our vision for a redefined Golden Age in Africa.

This is where financial literacy (aka Diaspora Dollars) can play a critical role in empowering individuals to create their own opportunities and build a secure financial future.

I would love to hear your thoughts and experiences on the subject. Do you think retirement is a significant concern for Africans? How do you envision the concept of the Golden Age being realized in your personal life and community?

For more on the pros and cons of retiring in Africa, feel free to peruse through my substack: