Need To Plan, Prepare For Retirement

Across the African continent, a silent crisis is unfolding: the rise of retirement poverty. Only a few individuals enjoy retirement security.
In Africa, retirement is becoming less a time of rest and more a significant economic concern for the elderly, characterised by an over-dependence on children and increasing poverty.

Despite decades of service, countless Africans reach old age without savings, a reliable pension, or the means to meet basic needs. This presents a worrying concern. In Nigeria, for instance, rising living costs have worsened the retirement outlook since the beginning of the COVID-19 pandemic in 2020. This trend of retirement poverty has become more visible than ever in Nigeria, mirroring the experiences of many African nations.

In countries like Kenya, Ghana, and Uganda, pension coverage remains low, and the quality of life for the elderly is declining, especially after their years of commendable service and business management.
While many factors contribute to this retirement poverty crisis, one significant issue is the lack of cash flow. A steady and predictable income during retirement is crucial; without it, individuals face poverty in old age. Retirement poverty refers to the situation where people lack sufficient financial resources to maintain a decent standard of living after retiring. The opposite of this is retirement security, which is increasingly elusive as advancing age often corresponds with dwindling income options, while savings are seldom adequate.

Recently, many individuals in small businesses find themselves working well into old age—trading, hawking goods, performing manual labor, or, in some cases, resorting to street begging. The informal sector contributes over 60 percent of Nigeria’s GDP and employs more than 80 percent of its workforce. However, the pension schemes available in the country barely cater to this segment, particularly informal micro and small businesses.

In 2019, Nigeria’s National Pension Commission (PenCom) launched the Micro Pension Plan (MPP) to extend coverage to informal workers, but uptake remains low due to a lack of awareness, poor financial literacy, a general distrust of financial institutions, and pervasive irregular cash flows.

Dr. Timi Olubiyi, an entrepreneur and business management expert, emphasised that the core issue behind retirement poverty is cash flow and savings. Daily earners and small business owners in Nigeria frequently experience unpredictable cash inflows, making consistent savings challenging, if not impossible. With inflation currently hovering in double digits in Nigeria, it erodes whatever small savings many manage to accumulate.

“For most people, survival takes precedence over long-term planning,” he noted. Retirees in the informal sector largely depend on adult children or extended family networks for support. However, the erosion of traditional family structures, rural-urban migration, and economic hardships among younger generations have weakened this safety net.

“Considering the cost of living, rent, and transportation in places like Lagos, there seems to be no way a retiree can live comfortably without external support in the form of a constant cash flow. As food prices, fuel costs, and rent increase unpredictably, any available cash is quickly consumed by immediate needs. The challenge of retirement poverty in Nigeria and indeed the rest of Africa fundamentally boils down to a cash flow problem at the individual, institutional, and national levels.”

Olubiyi explained that in Africa’s most populous country, daily survival takes priority over long-term financial planning or retirement.

“Workers, especially those in informal sectors like retail, farming, trading, transport, and artisanry, earn irregular incomes, often paid in daily cash, with no access to structured savings or pension schemes. When income is uncertain and living expenses are rising, saving for retirement becomes a luxury that only a few can afford. Chronic cash flow issues have turned retirement into a period of anxiety for millions, and this trend continues to grow without any relief in sight.”

“Without urgent intervention, the golden years risk becoming one of a generation’s greatest fears. Retirement security in Nigeria is not just about pension policies. When cash does not flow reliably into the hands of citizens, it cannot flow out to support them in old age.

“When individuals lack a consistent income, they cannot make consistent contributions to retirement funds. And when contributions are irregular, future retirement income becomes uncertain or non-existent. Therefore, addressing retirement poverty and improving retirement security in Nigeria and Africa demands direct and meaningful intervention—such as expanding pension schemes and financial access for informal workers, along with providing social interventions.”

Moreover, it is crucial to strengthen awareness of pension schemes and their benefits, as well as to improve financial literacy across the population.