Zanzibar’s Noncontributory, Govt-Funded Pension Scheme Turned Role Model In Africa

Zanzibar introduced last year a unique first government-funded pension scheme for all the elderly above the age of 70. It turned to be a role model for other East African countries.

The scheme is noncontributory and each elderly gets a monthly sum of 20,000 shillings, which is about $9. In the African region it is the first fully-funded government pension scheme and after a year of its implementation it turned to be a great success.

Pensions have significant impacts on reducing poverty in the East Africa. A OCED report in 2009 revealed poverty gap ratio was reduced by 13 percent in South Africa after pension schemes. The data also showed the income of poorest increased by 5 percent.

About half of the South African population lives in poverty.

Pensions have played pivotal role in the Sub-Saharan Africa where the head of the family is usually the elderly. A study finds children of those grandparents attended schools who received pensions.

Majority of the Zanzibar population lives in poverty and pension scheme has served as providing a stable income source for such elderly who are beyond working age and fails to generate incomes from other sources.

Many of the pensioners have said the new scheme has helped them in meeting their basic needs and also has added to a valuable source of capital in investing in small businesses.

More than 200,000 families have been entitled to the pension and this is about 80 percent of all private households. Grandchildren are most benefited as the pension income is often used to pay school fees and buying uniforms or supplies.