 Thank you. Welcome to this session. And for your interest in this session, a very important session, we are looking at the sources of long-term capital in Africa. Development is about people, it's about communities, it's about societies. To build healthy and develop societies, we need long-term assets, such as roads, to be able to take farm produce to the market. We need railways to be able to transport our goods in a more efficient way. Thank you. We need airports to be able to move from one place to the other. And also, more fundamentally, we need human development investment, such as in health and in education. All these are long-term expenditures. Consequently, for us to finance these long-term expenditures, we need long-term capital. And this is something that we lack in Africa, long-term capital, a capital that goes to 20, 30, 50 years, you know, because returns and for instance, on a railway line and I was just discussing with one of the participants about the SGR railway in Kenya that connects Mombasa to Nairobi, then it's supposed to connect Nairobi to Kampala, then from Kampala to DRC. We need long-term investment to do that, not 10-year loans or short-term capital. The same with industries. Industries take time to set up, you know, to break even, to give back. So we also need long-term capital for that. And how do we raise this long-term capital? This afternoon, we have several experts that are going to take us through that discussion of how we raise long-term capital for Africa. Good afternoon. Yes, now, I'm going to make a presentation. The presentation is based on working paper developed under savings book, which was supported by UNIWIDE. So this is work which has been going on in terms of how we mobilize savings in developing countries. So from that we came up with the working paper. And one of the things that is of concern is on pension funds. If you're talking about developing countries, then issues of pension becomes a prominent aspect, unlike the developed countries. And there are a number of reasons for that. One is the characteristics of the countries. They tend to be poorly developed. The income levels are very low. So that means automatically, savings would be low. So it essentially means then that if poverty levels are high, then you expect the elderly to suffer even more because they don't have any immediate source of income. So that's why this is key. Other than that, these countries have a financing need to support development, especially on infrastructure and the rest. So in most cases, they rely on loans, basically debt. It can be external debt or some financial support. But one way through which they can address this is through diverging on the pension funds, especially the pension funds market is well developed because this can be a source for long-term financing. So that is the basis for this study. So in terms of the outline, I'll just go to an introduction and then I'll brief on the pension funds and the role in resource mobilization. After that, I'll look at the performance of pension funds within the Sub-Saharan African context, looking at investments, returns, and the rest. And then the demographic studies of Sub-Saharan African countries, which is also key in terms of understanding how all the challenges facing pension funds. And then a few case studies. We do case studies in three countries, Chile, South Africa, which is a Sub-Saharan African country and Netherlands. And we derive some lessons from the case studies and then a brief on challenges pick up from the overall overview and then what we can do to boost pension savings in Sub-Saharan Africa. One aspect that is key is that the elderly people need support. And this mainly comes from the social pension problems. And this ensures them some basic income because at that point they're not employed. So they need some kind of fallback position or in terms of how they can support themselves. Pensions also social pension also for avenue for income redistribution among generations from the elderly generation and the long generation and also provides some form of insurance. The most common form of pensions for the elderly is the social protection. So we have a number of programs for social protections and pensions becomes one of them. And the statistics we get from the ILO, one social protection report is that about 78% of people above retirement age is in some form of old age pension. And this is what they rely on as an administrative source of income and not coming from the contributory aspect. Because if it's contributory then that means they have to support their future pension. The only challenge we have is that the statistics are not very good for Sub-Saharan African countries. For instance, on average globally we have about 33% of working-age population contributing to pension. But for Sub-Saharan African countries just about 6%. In terms of labor force contribution globally it's about 50%. But for Sub-Saharan Africa it's about 9%. So this shows the gap in terms of the development or contribution to social schemes in Sub-Saharan Africa country. Now the major characteristics we see in the pension schemes in Sub-Saharan African countries is that one, the coverage is very low. We are going to look at the statistics going forward. The cost of running this pension so tend to be high. Both administrative costs and the cost of setting them up. And then the nature of the pension schemes is that they are regressive. Because they only target the formerly employed. Meaning that they leave out the informal sector. And informal sector forms a key part of the population of the labor force in the developing countries. So given this, the statistics we have is that less than 10% of older population in Sub-Saharan African countries have contributed schemes. Meaning that over 90% or about 90% do not contribute to any pension. And this is where the problem comes in. Because if you're not contributing to a pension then there's need for support especially going forward. And the reason for this is that most of the labor force in the informal sector. Now statistics generally available shows that about 85% of Sub-Saharan African countries are employed in the informal sector. So that means if in the informal sector you're not also contributing to a pension then there's likely to be a problem as you come up to pass the retirement year. Around 65 years of age. Now the problem with this is that the informal workers, especially the elderly one, face a lot of shocks. And one of the studies done by our first 2021 showed that the informal workers, the older informal workers who did not have any social protections were affected more during the pandemic by COVID-19. So this shows the vulnerability of this group of population. Another thing for the Sub-Saharan African countries is the demographic structures. They have a youthful population. The population growth rate also tends to be high. Dependence ratios are low. If you look at it then you may say that if dependence ratio is low then that may be a good thing. But it's because of the demographic structure. More youth than the elderly people. So it means that over time the aging population will be increasing and this will need more support going forward given the high fertility rates and the bigger size of the informal sector. Another aspect is the multigenerational nature of the households. The interdependence so that older generations depend on younger generation. But the problem is that given the change in the demographic structures, the household sizes are becoming much smaller. And households are also becoming less interdependent so that there's no support for older generations. So that means then as people age then over time they lose this source of social support, which brings in a key issue. But then why do we need pension funds? So why do we have to look at the pension funds issue? There are four aspects. One is because the livelihood, it's the main source of livelihood especially for the elderly. So it provides them income security and this covers issues of consumption smoothing. That means they can be able to get income to support their consumption expenditure. It's also us as a forms of risk sharing. Among the elderly issues of poverty also comes in redistribution of income. The second is the issue of addressing social inequality. Because without pensions inequality will be high especially between the older and the young. And we can address this using the pension and reduction of poverty gap pressure among the elderly. The third is the protection of the issues of socioeconomic risk which we protect using the pensions. And lastly is the role of pension in providing resources especially for long-term investments given their long-term nature. Briefly let's look at the extent of social protection in Sub-Saharan Africa. We've already said that less than 20% of the population above the pension age receive a pension any time within Sub-Saharan Africa. But if you go to specific countries in Kenya we have a ratio of about 70% who get regular income from pension. That is based on the Kenya Integrated Also Budget Survey. And from the Fin Access Survey 2021 only about 11% for the population use pension schemes. So these are people who save in a pension scheme. For Zambia the ratio is about 8.2% uptake and for Uganda it's about 18% of the working population. So this shows the gap that is still there. And if this can be addressed then other than addressing the socioeconomic needs then there's also a way of mobilizing the successful development. Now the characteristics of the Sub-Saharan Africa countries also comes in. One the savings rates are low. So the question is how do we improve the savings rate? Secondly we have low financial interest levels which is a concern and has been identified by many studies. Financial inclusion also tends to be low though recently this has been addressed by the issue of technology using the mobile banking and the rest. And then the huge informal sector low incomes and high dependency rates. So these are factors which affect the level of pension development in Sub-Saharan Africa countries. Now the graph there shows the figure basically shows a basic cross-sectional analysis between a benefit level of social pension and economic development. And we find a positive association. It's not about cross-section but association so that a more developed pension system may inspire economic development through provision of financial second development. But we also expect that if our countries were developed then the social pension system will also be likely to be developed. So this is just to infer the relationship between the two. So let's look at the pension funds and resource mobilization. One of the things that Sub-Saharan countries face is high levels of social economic challenges. So these challenges means that they need to be financed from some. But the problem is that these are an issue with mobilization of resources and capacity constraints on learning to infrastructure projects. So though there are avenues through which funds can be raised but raising these funds also becomes a challenge. Now it's estimated that the annual infrastructure gap is between 68 billion dollars and 180 billion dollars. That is as of 2018. But this is expected to expand even going further. So this then calls for the need to find alternative ways to raise funds to meet these financing needs. And one of the ways that this can be addressed through the long-term investment coming from pension funds. And other institutions which you can also help these for instance insurance and the rest if they can mobilize enough resources then this can help be the gap. And this is because these institutional investors have long-term investment horizons. So essentially then if pension resources can be taken to finance investment in infrastructure then this can open avenues for the justification of this for the institutional investors like pension funds and help them cover against inflation risk which also tends to be higher in developing countries and the interest rate issues. But other than that pension also plays an important role in development of capital markets because they support liquidity in these markets and hence if that happens then we'll have expansion to develop capital markets as well. Now the figure we are showing just shows the relationship between pension funds and interest structure. How pension funds are leads to development in some of these countries. So we have three channels through which pension funds can support growth. One is through the financial channel which happens through the capital markets. So if pension funds develop then that improves liquidity in the capital markets. As liquidity improves then there'll be funds to finance infrastructure projects. And then the social feedback mechanism from infrastructure to capital market development. The second is through the labor market pension funds brings avenues for formalization of labor markets and improve efficiency labor market. If that happens then that can support growth and the pension for the same time. And then through fiscal sustainability of the fiscal channel is where countries will now have alternative resources to finance development activities. So instead of relying on debt then they can finance using the long-term funds coming from the pension funds. So this will lead to fiscal sustainability and improve growth. So this is what I summarize in this slide. So basically the financial channel, fiscal channel and the labor market channel. So that means we have a direct linkage from the development field for pension funds and performance of this economy. So if this can be enhanced then we know that we can be able to get funds and develop this country. So that's the interlinkages. So let's briefly look at the performance of the funds and we look at the three issues. One is asset base. We look at the extent to which these funds have asset and the allocation of these assets. Secondly we look at the investment and here we mainly focus on the areas where they invest or the products that they have and the returns and then the membership and contribution. So basically what we find is that most of the assets that these funds invest in are the assets they invest in are mainly in the financial, mainly government securities. And what this means then is that they are limited in terms of what they can get out of that because they are running away from the risk. So that means the return generated from investment in these assets is not enough to support the pension benefits upon retirement. And in terms of distribution these are different in terms of asset allocation. We look at southern African countries. There are many inequities. West African, East African million government bonds or fixed income assets. So this shows the extent to which these countries also invest and the asset classes in which they go into. So the table just shows the retirement savings plans in terms of the value in terms of US dollar millions and high investment is in South African Namibia. We are basically a southern African region and maybe Nigeria. But if we look at the returns on investment which is the next the next slide, total savings in terms of percentage of GDP. South Africa has a ratio of about above 80 percent followed by Namibia. The others the proportion is very long showing that the still room for expansion of these pension funds. Now investments, most of the funds as I said invest in short-term assets. So this creates a mismatch between investments made and the nature of these funds because pensions are basically long-term savings. And secondly, it also affects the returns. So if it affects the returns then the benefits that are close to pension at the end will also be affected. So if the nominal returns are low then the real returns also expected to be much lower given the high inflation rates that Sub-Saharan countries have. So in terms of the returns, Malawi has the highest nominal return, averaging about 26 there, but has been going down followed by Zampia and then Nigeria. Others have a bit lower return rates. And in terms of where they invest, this is defined by regulation in this country. So this is just a table showing what happens in Kenya over time. And you'll find that most of the investment goes to government securities. So the last column shows the allowable limit by regulations, but you'll find that it's concentrated government securities and quoted equities essentially. And a movie property. So that means there's no diversification of investment of pension funds and this affects the returns that they get. Membership also looks at the extent to which people are covered by pensions, especially the working aid population. And we find that the performance is better in countries where membership continues to add proportion of the working age. And this happens in countries where you have universal pension systems. Mainly for most of them and southern African countries. For instance, if you look at that table, then you have Namibia, South Africa, puffing a bit, much better. Now, I don't know if I got one back. Okay. So a number of countries have come up with policies to address this. And they're coming up with innovative ways to do this. One of them is the Kenya where we have a mobile pension plan. It's a mobile-based contributory scheme targeting informal workers. Then you have the Rwanda case where we have a Johezer, a government-sponsored voluntary scheme, defined contribution scheme, open to all citizens. So the idea is that this tends to be all inclusive because the informal sector and those who are not working within the framework. Demographic statistics will go a bit faster given the time challenge. First, we have a young population which is growing because we have the fertility rates also higher. So the issue with this, that depend on increasing at a faster rate. And the number of older population meetings that need social support is also increasing. If you look at the annual rate of population changes, sub-Saharan Africa is about 2.62 percent, which tends to be among the highest compared to other regions. So if the 15th rate is high and the projected growth of older persons is about 3.2 percent, that means the growth in the elderly population is much higher than the population growth rate. So essentially over time we love higher number of elderly people who need support. So with the low levels of pension coverage and population growth rates, what we see is that this crisis is a concern for these countries. And what we have in this is that only about 20 percent of people pensionable age receive old-page pension in southern Africa. Global average is about 78 percent. So this shows the gap that is there. The youth unemployment rate also tends to be higher. So the population is growing, but the unemployment rate is also higher. So this limits the ability to save for retirement and also the bigger size of the formal sector. So these are the challenges which affect growth of the informal sector. So though the old age dependence ratio tends to be much lower, about 5 percent in southern Africa, but this is expected to grow going forward. So that's the concern that is there. For instance, compared to Europe, where we have about 22 percent dependency ratio, in terms of population above certain pension age, southern Africa is the lowest rate of about 20 percent. But then we have high variance across the regions, mainly highest in southern African countries. Now, let me go to the case studies. We are looking at Hille, South Africa, Netherlands. Hille was among the first countries to introduce social insurance schemes. So that's why it's a key important case. South Africa is among the oldest and advanced pension systems in southern Africa, and they have done a number of reforms. Another one is among the countries with the best performing pension institutions in the world. And what we pick from these are about five lessons. One is that there's a need for a mix of composite and contributory social pension, cut off for the low earners and contributory schemes. This will be able to take care of all the population. Second is that the contributory pension schemes need to be bundled with other products because this gives an added value, for instance, group insurance curve, to improve the uptake of pension schemes. And then third is that pension funds should be indexed to prices to protect against higher rates of inflation and hence the return that people get at the end of the day. Another one is that withdrawal of pension benefits should be based on annuity rather than lump sum withdrawals. Because this preserves the fund enables the elderly people to sustain usage of the funds over time. And then we also need incentives on pension fund contributions through favourable capital consideration. So given this, what are the challenges of pension funds? One is the low pension participation rate, which we've seen comes from the high levels of unemployment and formality and the rest. Second is the low contribution rates. Low contribution rates arises from low earnings, because if you're earning less, you can't contribute more. And then this limits savings and pension receipts upon retirement. Then there's low coverage, which basically arises from low participation and no returns. And then there's the regulatory environment. Some of the countries have not reformed their pension system. So this limits the extent to which pension uptake can take place. And then financing of pension becomes an issue because most social pension are financed through taxes. And since they're facing fiscal challenges, then this cannot be sustained for long. So what can be done? We have about four things that can be done. One is increasing pension participation and coverage by including those in the informal sector than employed within the pension system. So that means we need a mix of universal pension and contributory scheme and the contributory scheme. Second, we need to enhance pension benefits to help us build this by battling pension with other products, and then leverage and advances in digital technology, especially mobile technology, which has been prevalent in developing countries. And then the last reforming the legal regulatory framework. Thank you.