One year on: lessons from Zanzibar’s universal old-age pension

Pensions have made a big difference in the lives of Zanzibar’s elderly men and women. HelpAge/Courtesy

Kombo Mohamed, then aged 72, was the first person in Zanzibar to receive the new old-age pension introduced in April 2016. “My whole family has benefited,” he says, “I can pay my daughter’s school fees and transport to school and our diet has improved as we eat more fruit and vegetables.”

The value of the pension is modest at only 20,000 Tanzanian shillings per month, or just under $10. The age threshold for eligibility is high at 70 years. Nonetheless, over the past year Zanzibar’s new pension has brought some material comfort and dignity to elderly men and women on this island territory off the east African coast.

Zanzibar’s pension programme is a pioneer in East Africa. It is universal, meaning that it is paid to every older man and woman. There is no “means test” – a test of income or wealth – or requirement of past contributions. It is funded fully through the budget of the government of Zanzibar, without any direct funding by foreign aid donors.

Most of the countries in Africa with universal or near-universal pension programmes are middle-income countries like Mauritius, South Africa, Botswana and Namibia. Their pension programmes cover all elderly men and women, except for the rich (in the South African case). The cost ranges between 0.3 and 2.2 percent of GDP, depending on the generosity of benefits.

Governments in poorer African countries (including Tanzania) have been reluctant to introduce similar programmes, usually citing concerns over “affordability” – meaning that pensions are not a priority. Care for the elderly is left to kin, who more and more often fail to provide.

The case of Zanzibar shows that, given certain political conditions, even low-income countries in Africa can introduce and pay for a universal pension programme.

Responsibility, not dependency

Zanzibar is a semi-autonomous part of the United Republic of Tanzania. It comprises an archipelago of islands with a total population of about 1.3 million people, almost all Muslim. Poverty remains widespread. Social change has rendered older people especially vulnerable, with very few people able and willing to support older relatives.

The “revolutionary” government of Zanzibar has long professed to be pro-poor. Since colonial times, the state administered a system of poor relief, making minimal payments or allowances, called posho, to the most destitute people. The government’s preference, however, was to rely on Muslim religious charity called zakat. In the past few years, a World Bank-driven programme began to operate a conditional cash transfer programme for poor families with children. But this did not cover older people, many of whom were compelled to continue working despite infirmity.

As across much of Africa, pensions – and other forms of social protection – were put on the policy agenda in Zanzibar by international agencies. In 2009, HelpAge International, a non-government global network, combined with Zanzibar’s Department of Social Welfare to produce a report on the needs of older people in Zanzibar.

HelpAge had recently become enthusiastic advocates of old-age pensions. The report on Zanzibar recommended a universal pension of the equivalent of about $9 per month, from the age of 60. The report costed this at 0.85 percent of GDP. Zanzibar’s president endorsed the general proposal when he spoke at the report’s launch.

The Zanzibari state did not yet have any capacity to implement the proposal. It began work on a social protection policy, established a social protection unit, and sent officials to related specialist courses. In 2013 a group of government officials and politicians toured Mauritius, which has had a universal old-age pension for decades.

The study tour to Mauritius had a huge effect. As one participant put it:

Seeing is believing. We saw the enthusiasm of their leaders. They showed us how the system works. The way they told us about their experiences, we were motivated.

When the draft Social Protection Policy was presented to the Cabinet in early 2014, however, some ministers expressed concern over the cost of a universal pension in light of tight budget constraints. President Ali Mohamed Shein referred the proposal to an inter-departmental team. The team quickly agreed that pensions should be universal and benefits should be set at about $10 per month, but could not agree on the age threshold.

Eventually it recommended an age threshold of 65, which would cost 0.7% of GDP. But it added that, if resources did not permit this, the threshold should be 70, which would cost only 0.5 percent of GDP. In March 2015 the President and Cabinet agreed to introduce pensions, but with the high age threshold. After a further year of preparations, the first pensions were paid out in April 2016.

The context in Zanzibar was favourable to the introduction of a pension in several respects. Firstly, there was a clear need for financial assistance for older people. This is especially given the decline of agriculture and fishing, and the erosion of kinship obligations.

Secondly, Zanzibar had traditions of both public responsibility and religious charity for the poor, through posho and zakat. These traditions made it easier for advocates of pensions to represent their proposals as improvements of existing policies. The dominant discourse in Zanzibar was one of responsibility, not of dependency.

The political situation also facilitated the reform. In the 2010 presidential election, the incumbent party’s candidate Shein defeated the opposition candidate very narrowly. Following his election, Shein proceeded to bring the opposition into a Government of National Unity, which resulted in more constructive political debate and policymaking. The backdrop of close-fought elections probably also inclined Shein to be sympathetic to popular reform.

Making a big difference

Zanzibar’s case indicates that low-income countries can choose to introduce reforms such as old-age pensions. But its experience suggests also that successful reform requires a careful process of coalition-building beyond the Ministry for Social Welfare. This includes a willingness to deliberate and compromise with those parts of the government that are anxious about the cost. External actors, such as HelpAge in this case, can play important support roles. But it is crucial that local officials and politicians own the initiative.

Reports from Zanzibar indicate that the pensions have made a big difference in the lives of elderly men and women. They have allowed them not only to purchase basic necessities but also to invest in the education of their children or grandchildren, and in income-generating activities.

The Zanzibar model might well become more general. In 2017, the Kenyan government announced a similar scheme would be introduced, also with an age threshold of 70.