The 31st of March 2017 marked a great step forward for Kenya with the announcement of a social pension for all older persons. Cabinet Secretary Henry Rotich – the Minister of Finance – presented the 2017/18 Budget to both Houses of Parliament which included measures to address poverty through social protection.
The most eye-catching part of his announcement was that, from January 2018, everyone over the age of 70 years, will be entitled to a pension fully funded by the state. This benefit will be provided through a monthly cash transfer payment to older individuals as an entitlement, as part of the efforts of the Government of Kenya to realise the right to social security for all citizens that is set out in the National Constitution. The government of Zanzibar, a semi-autonomous part of Tanzania, introduced a similar scheme last year for its citizens and it has been a tremendous success. Other countries in Sub-Saharan Africa have also invested in universal pension schemes including Namibia, Mauritius, Lesotho and Botswana. A tax-financed pension on a national scale in Kenya is affordable. It would cost the equivalent of 0.27 percent of GDP if paid at a value of KES 2,000 (US$20) per month (which would make it one of the lowest cost universal pensions in the world). Given that approximately 35% of those aged 70 years and over already receive some form of pension, the universal pension would require additional funding each year of only KES 8.5 billion (contrary to the KES 18 billion which has been reported by some of the media).
This announcement by the government shows its commitment to ensuring that older Kenyans can live their later years in dignity and security. Global evidence shows that universal schemes are the best means of reaching older persons living in poverty. Kenya’s current poverty targeted social pension has the disadvantage of excluding many older persons living in poverty (this, of course, happens across the world, whenever countries decide to target their pensions at the poor). Fortunately, Kenya has taken a big step forward by proposing to establish a much more effective and inclusive option. The State Department of Social Protection needs to be congratulated for promoting the universal pension for all citizens.
The universal pension will be transformative. Older persons in Kenya are often carers of orphans and vulnerable children and, with pension support, they will be able to provide children in their household with basic needs such as food, educational support and health care, while maintaining a decent standard of living. Pensions will also enable people to invest in livelihood activities while the cash injection into local economies will offer a significant stimulus to local business as older people spend their cash within their communities. Importantly, the pension will ensure that every citizen of Kenya will be able to access a guaranteed minimum income in old age.
Analysis undertaken by Development Pathways for the State Department of Social Protection – with support from WFP and UNICEF – has indicated that the universal pension will reduce the poverty rate among households with over-70s by a minimum of 16% and the poverty gap by 29%. These are very significant impacts. The budget announcement by the Cabinet Secretary also included a commitment to provide basic health insurance cover under the National Hospital Insurance Fund (NHIF) for all beneficiaries of the universal pension. This will be a further very important benefit as older Kenyans may face greater health needs.
The introduction of the pension is an important milestone in the journey to build a national social protection floor in Kenya and complements continuing investment in a number of other social protection schemes in the country. Some people have expressed the concern that there were no budget figures attached to the universal pension by the Cabinet Secretary, but I am convinced that, as the country develops its National Social Protection Strategy in the next 2-3 months, the budgetary requirements will become clear and the funds will be made available.
The future looks bright for older persons in Kenya and it is my hope that the government will progressively fulfil its mandate to realise the rights of, not only older persons, but all citizens to social security. As a Kenyan, I am proud to see a government that cares for the elderly who have contributed to society throughout their lives, and can now live their later years with respect, dignity and security.
Krystle Kabare is a Social Protection Specialist with Development Pathways in Nairobi, Kenya. She is currently supporting the Government of Kenya’s Social Protection Sector Review, development of a National Strategy and Investment Plan. This work will contribute to developing a comprehensive and Inclusive Social Protection Framework that gives coherence to the sector and provides a roadmap for reducing economic and social vulnerability in Kenya.
Follow Krystle on Twitter: @Chrystalle7
Also published on Medium.