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.