Alice is one of a growing band of Ugandan entrepreneurs. In 2011 she started a small business selling traditional, handmade baskets, shopping bags and jewellery, and today, business is booming.
Alice hasn’t had a bank loan or fundraised on Kickstarter to get starting capital, she’s a 76-year-old widow who started her business when Uganda’s Senior Citizens Grant came to her community. Today, Alice’s pension and business support her and her five grandchildren who live with her.
The Ugandan government has been rolling out its Senior Citizens Grant – a form of social pension – in selected districts across the country[1]. In 2011 a pilot pension was distributed in 15 districts and has now been rolled out to 47 districts; there is a push within the Ugandan Parliament to make the grant available for older people across the whole country.
Social pensions are payments that provide modest income support to older people. Alice, for example, receives 25,000 shillings (around £5) a month. But social pensions are being recognised as a key part of social protection in many developing countries. A recent report on the state of global social protection by the International Labour Organization highlights the increasing number of developing countries that are expanding social pensions[2]. There is increasing evidence that social pension systems benefit local and even national economies, and can help many people in the community, as well as their direct recipients.
Like many recipients of the Senior Citizens Grant, Alice invests much of her money into activities which bring in higher income for her household, in her case traditional handicrafts. Using the regular income from her pension, plus profits from the business, Alice has now moved her family from a makeshift shelter into a more secure concrete house. She’s also able to pay for her grandchildren to go to school.
In addition to the wider benefits for the households who receive it, studies show that there is also a so-called ‘multiplier effect’ – a corresponding boost to local economies[3]. In the districts where the Senior Citizens Grants are distributed, the multiplier effect has resulted in a six per cent increase in employment and an 80 per cent growth in median wages[4].
This comes about in a number of ways. Some pensioners choose to invest their money in hiring manual labour, for example to manage land to grow maize or bananas. In this way the pension provides employment and income for younger people.
Another group of people benefitting significantly from the ‘Grey Shilling’ are market traders. Distribution day has become the biggest market day[5], as pensioners buy everyday items such as soap, beans and oil as well as so-called luxury items like meat and fish.
Whilst it is more difficult to attribute any changes at a national level to the Senior Citizens Grant, there are indications that investing in social protection contributes to the health and growth of the national economy[6].
Many children live with or are supported in other ways by older relatives in Uganda[7]. By spending money on their grandchildren, older people are investing in the future of their country with potentially far-reaching impacts.
Research shows that Uganda’s Senior Citizens Grant has contributed to a 10 per cent increase in the number of meals eaten each day by children aged 0–5 years[8]. Better nutrition combats stunting in children and improves attentiveness in school, helping the next generation of Ugandans to become healthier and better educated – two key drivers for lifting them out of poverty.
With regards to more immediate effects on the national economy, the injection of extra capital for older people leads to increased consumption and demand, which can help to stimulate growth. Social protection schemes such as the Senior Citizens Grant may also help to reduce inequality, viewed by many as barrier to national economic growth[9].
Whilst the primary aim of pension schemes is to support older people to live safer, healthier and more dignified lives, the benefits of a social pension go much further. Benefits are felt by the household, the local community and even the national economy. As the Ugandan government looks to expand the reach of their Senior Citizens Grant, they should be confident that this is an investment in the future of their country for people of all ages.
Sources
[1] Since 2011, the Senior Citizens’ Grant has been implemented in Uganda on a pilot basis. By 2016, there were 125,000 beneficiaries. The Government of Uganda collaborated with the UK’s DfID and Irish Aid to pilot the pension for everyone over 65 years of age (over 60 years in the Karamoja region) in the selected districts.
[2] World Social Protection Report 2017-19: Universal social protection to achieve the Sustainable Development Goals www.ilo.org/global/publications/books/WCMS_604882/lang--en/index.htm
[3] Kidd S, Tran A, Social Pensions and their Contribution to Economic Growth http://socialprotection.go.ug/wp-content/uploads/2017/11/Social-pensions-and-their-contribution-to-economic-growth.pdf
[4] As above
[5] Brook S, Jones E, Merttens F. Evaluation of the Uganda Social Assistance Grants for Empowerment (SAGE) Programme. Oxford Policy Management, Economic Policy Research Centre, Department of Anthropology and Sociology, University of Makerere,170(February) (2016).
[6] Kidd S, Tran A, Social Pensions and their Contribution to Economic Growth http://socialprotection.go.ug/wp-content/uploads/2017/11/Social-pensions-and-their-contribution-to-economic-growth.pdf
[7] As above
[8] Brook S, Jones E, Merttens F. Evaluation of the Uganda Social Assistance Grants for Empowerment (SAGE) Programme. Oxford Policy Management, Economic Policy Research Centre, Department of Anthropology and Sociology, University of Makerere, 170(February) (2016).
[9] Kidd S, Tran A, Social Pensions and their Contribution to Economic Growth http://socialprotection.go.ug/wp-content/uploads/2017/11/Social-pensions-and-their-contribution-to-economic-growth.pdf