African pension funds can contribute to realise the SDGs

The sustainable development goals (SDGs) are grossly underfunded in most developing countries and international development finance will not be able to close this gap. It is therefore increasingly understood that domestic finance should play a bigger role. Taxation has received much attention, but our knowledge about other forms of finance is limited. This Evaluation Study:Domestic pension funds in Africa: can they finance the SDGs?analyses the potential of African pension funds.

The main purpose of pension funds is to provide social security for older persons. However, in countries where contributions to funds are bigger than payments to recipients, significant amounts are saved that can be invested. African pension funds are relatively small, but in some countries, funds are growing rapidly. So do their economic importance and potential for financing SDG investments. This will require significant changes in current investment practices and regulatory frameworks.

The Evaluation Study is written by DIIS researchers Rasmus Hundsbæk Pedersen and Ole Winckler Andersenfor the Evaluation Department at the Ministry of Foreign Affairs of Denmark. The studyprovides an overview of the development of African pension funds combined with findings from exploratory fieldwork in Tanzania and Ghana, which have different types of pension systems.

This paper has received financial support from the Ministry of Foreign Affairs of Denmark. It reflects the views of the authors alone.