Cash, Children or Kind? Developing Security for Low-Income People in Old Age in Africa
This paper focuses on the African experience of developing old age security for low-income people. It examines:
- How people prepare/save for old age?
- Does microfinance have any role to play in securing them during their old age?
As per the paper, the Africans in general do not consciously plan for their future and there is no culture of saving up for future needs. However, some traditional practices that double up as support mechanisms for old age are:
- Investment in:
- Assets which reduce costs or help earn cash;
- Children's education and vocational training;
- Parallel business while being employed.
- Save cash:
- In banks;
- At home.
- Informal financial groups popularly known as merry go-rounds or Rotating Savings Associations.
The paper stresses on the need to educate the poor on why one needs to save and on developing the habit of saving for old age. It also dwells on the desirable features of an ideal savings product using the 8 Ps of marketing.
The paper concludes by suggesting a contractual saving product for the poor with an optimum mix of risk, return and liquidity. The savings thus mobilized can be suitably invested to provide the security required in old age.