Pensioner households in the pilot districts have become more productive, which helps explains their large increase in expenditure Stephen Kidd
A mark of a decent society is a guarantee that all citizens can enjoy income security once they reach old age. At least 56 countries worldwide now provide pensions to more than 90 per cent of older people and a growing number of low- and middle-income countries are following suit. Many, though, have still to make this commitment. Uganda is an example of a country at the crossroads.
Since 2011, an old age pension, known as the Senior Citizens’ Grant, has been piloted in Uganda with financial support from UK Aid and Irish Aid and, increasingly, from the Government of Uganda. It now reaches around 10 per cent of older people, most of whom are women. Despite strong support for national roll-out of the SCG from Uganda’s Members of Parliament, the Government has still to make a final decision on whether to get behind it.
Impact evaluation
A recent impact evaluation by two of my colleagues at Development Pathways – Bjorn Gelders and Diloa Bailey-Athias – provides further evidence of the benefits of the SCG, despite its modest transfer value of less than US$7 per month. In their research, they employed a novel and low-cost approach, examining recent national datasets, including the Uganda National Household Surveys of 2012/13 and 2016/17, the Demographic and Health Surveys of 2011 and 2016 and the national Census of 2014. They were able to take advantage of a natural experiment: since the SCG had only reached only a minority of districts, they constructed control groups in non-SCG districts which enabled them to measure differences between control and pensioner households. The paper can be found here.
The research shows that the SCG has had a significant positive impact on the wellbeing of pensioners and other household members. Average household expenditure increased by 33 per cent, which, in many households, is higher than the value of the pension itself, indicating the existence of multipliers, some of which are discussed below. Overall, there was a 19 percentage point reduction in the poverty rate among recipient households and an 18 percentage point reduction in the number of households classifying themselves as ‘poor’ or ‘very poor.’ Food security also improved as evidenced by a three percentage point increase in households consuming at least two meals a day.
There are strong indications that older people have used the pension to counteract the neglect and abuse that many are suffering, as shown in a recent situational analysis of older persons in Uganda. For example, many pensioners have used the cash to improve their appearance: there has been a 15 percentage point increase in the number of households in which everyone possesses at least two pairs of clothes and an 8 percentage point rise in the use of soap. Pensioners have also purchased more mobile phones, thereby enabling them to maintain contact with adult children who have migrated. This means that they are in a better position to request support, if required.
More productive
Pensioner households have also become more productive, which helps explains the large increase in expenditure noted above. There’s been a 5 percentage point increase in the likelihood of households possessing livestock, a similar 5 percentage point increase in the proportion of older people engaging in work, while participation in the labour force among working age adults living with pensioners increased by 3 percentage points. This may well be the result of pensioners being in a better position to care for their grandchildren, thereby allowing parents to work. It needs to be borne in mind that these impacts have happened despite almost 60 per cent of SCG recipients experiencing some form of disability.
As has been observed with pensions elsewhere in the world, the SCG is also helping some of Uganda’s most vulnerable children. The majority of older people live with children and these households experience disproportionately higher rates of poverty and stunting among young children. Yet, as a result of the SCG, there has been a 5 percentage point decrease in child labour and a 7 percentage point growth in the share of children who are full-time students, alongside a 17 per cent decrease in the proportion of children who have never attended school. Furthermore, the average number of grades completed has increased by 0.14. There are also strong indications that the SCG has reduced undernutrition among young children although the small size of the sample means that the results, which are very positive, are not statistically significant. Who needs a conditional cash transfer when pensions appear to deliver similar results?
Impacts on children
These positive impacts on children’s education contrast with the claim by Bastagli et al (2018) that the SCG had a negative impact on children attending formal education (as if pensioners would not have the best interests of their grandchildren at heart!). In reality, Bastagli et al used information from a flawed evaluation of the SCG undertaken by Oxford Policy Management (the challenges with this evaluation are discussed in the annex of this publication).
Bjorn and Diloa have shown, once more, the value of social pensions to African countries, as part of a broader inclusive, lifecycle social security system. It’s encouraging to see more and more countries in the Sub-Saharan Africa region establishing universal pensions, with the most recent in Kenya and Zanzibar. The level of investment needed is not high: for instance, it would only require 0.28 per cent of GDP for Uganda to offer the SCG to everyone aged 65 years and above (although it would be even better if the value of the transfer could also increase). Other African countries should also seriously consider whether to introduce universal pensions. The costs will be similar to those in Uganda, but the impacts will be large.
Let’s hope that the Government of Uganda listens to its Parliament – and its people – who are crying out for the SCG to be rolled out nationally. UK Aid and Irish Aid have done a great job in helping get the SCG to this point but it’s now time for Uganda to take full responsibility for the wellbeing of all of its citizens, once they reach old age. Elections are on the horizon and universal pensions are an election winner. So, politicians of Uganda: are you listening?
The impact evaluation, Quantitative Impact Analysis of Uganda’s Senior Citizens Grant, can be accessed by clicking here.