Africa’s Pension Overhaul: A New Era for Informal Workers
Africa is undergoing a significant transformation in its pension systems, aiming to include the majority of its informal workers in retirement savings schemes. This historic shift is being driven by digital micro-pension platforms that cater to those without formal employment contracts or predictable incomes.
The decision was made during the All-Africa Pension Summit held at the Speke Resort Convention Centre in Kampala. Representatives from pension funds, governments, and multilateral institutions gathered to discuss how to make pension access more inclusive. They agreed that the focus should no longer be solely on investment returns but rather on expanding coverage to those who have been excluded.
According to data presented by Ahunna Eziakonwa, Assistant Secretary-General of the United Nations Development Programme (UNDP), Africa holds between $700 billion and $1 trillion in pension assets. However, only 6.1 percent of working-age Africans and 8.9 percent of the continent’s entire labor force contribute to a pension scheme. This makes Africa the least pension-covered region globally, despite its youthful and growing workforce.
Eziakonwa emphasized that informal workers—such as market traders, boda boda riders, small-scale farmers, and domestic workers—are not excluded because they lack the desire to save, but because traditional pension systems are designed for people with fixed monthly salaries. She proposed new pension models that align with the reality of informal workers, whose earnings fluctuate and often rely on mobile money transactions.
Digital micro-pension platforms can allow these workers to save flexible amounts at any time through their phones. According to UNDP estimates, such systems could unlock between $10 billion and $14 billion annually from informal-sector savings.
Another challenge highlighted during the summit is the lack of diversity in how pension funds are invested. In some markets, over 80 percent of assets are invested in government bonds instead of higher-impact sectors like infrastructure or climate-related projects. Eziakonwa pointed out that African pension funds hold long-term capital but are underutilized due to low contributions.
Pension assets are concentrated in a few countries, with South Africa alone accounting for between 40 and 50 percent of Africa’s total pension assets, valued at around $347.2 billion. Nigeria, Kenya, and Botswana follow closely behind. Globally, pension funds hold about $60 trillion in assets, meaning Africa contributes less than two percent of global pension capital.
Uganda’s Minister of Finance, Planning and Economic Development, Matia Kasaija, stressed the importance of expanding pension access as a development strategy. He mentioned that Uganda is transitioning its public service pension scheme into a contributory system to ensure sustainability and widen access to self-employed and informal workers.
Kasaija also highlighted that pension reforms align with Uganda’s National Development Plan IV, which focuses on industrialization, job creation, science, technology, and innovation. Uganda reported real GDP growth of 6.3 percent in the 2024/2025 financial year, with inflation remaining below 5 percent and the poverty rate projected to fall from nearly 60 percent in 2020 to 56 percent.
Ugandan President Yoweri Museveni challenged African governments to stop relying on foreign financing and instead use domestic resources to fuel development. He pointed out that Africa has always had land and labor but lacked capital. Museveni cited Uganda’s National Social Security Fund (NSSF) as an example of how pension money can be used for development, such as investments in renewable energy and housing projects.
During the summit, Eziakonwa highlighted ongoing reforms in several countries. South Africa introduced a “Two-Pot” pension system allowing contributors to access part of their savings before retirement. The Public Investment Corporation has invested over $800 million in renewable energy. Nigeria’s pension fund reforms have accumulated over ₦22.8 trillion ($14.2 billion), enabling investments in infrastructure, power generation, and healthcare. Kenya has introduced micro-pension schemes that allow informal workers to save via mobile-based platforms.
All commitments and outcomes were captured in the Kampala Declaration, a framework outlining shared priorities across African pension authorities. The declaration includes adopting digital pension platforms, expanding coverage to informal workers, and harmonizing regulations that restrict cross-border investments.
An Implementation Working Group and a monitoring system were established to track progress. Eziakonwa emphasized that the success of these reforms depends on political will. She urged the creation of systems where retirement security fuels national prosperity.