Extracting the true economic potential of Africa will depend on a true collaborative effort between business, government, communities and the people who inhabit this continent.
“This is likely to be an unfamiliar role for many corporates, whether multinational or local. That said, there are actually areas of public-private partnerships in place that could be far more effective if this collaborative engagement was thought through more thoroughly. Employee benefits represents just such an area,” comments Craig Bentley, managing executive of coverage at Alexander Forbes.
By providing a measure of income and health protection to formally employed workers, the private sector could take some of this burden off the national fiscus. Bentley believes that with a deeper appreciation of the financial challenges that employees and their families face this benefit can have a significant multiplier effect.
Employers have only just begun to understand how powerful a contribution this outcome can be in helping developing economies meet their sustainable development goals.” BenefitsALL Barometer Africa applies a different lens to the question of unlocking future value in Africa. It argues that if employers can develop an appreciation of the socioeconomic challenges their employees face, they can craft a more meaningful set of employee benefits that can provide a win-win solution for all stakeholders. They can create a benefit structure that enhances an employee’s financial well-being and this will have direct relevance to the stability of employees’ everyday lives.
With stability comes focus and higher productivity for employers. With an increase in financial capability and financial literacy, governments can feel more assured that their citizens will make the right choices to ensure their future financial security. If the end-game for Africa is economic growth, then we need to ensure that that growth translates into a measure of ongoing stability, self-determination and quality of life for the people and nations of this continent.
According to Bentley, for benefits to really benefit members, they need to be relevant to their lives and needs. A closer look at the demographic and socioeconomic reality of sub-Saharan Africa suggests that funding for retirement takes a back seat to other more urgent issues.
“If we assess where the real pressure point will come in Africa over the next 30 years, it will be less about servicing dramatic increases in the aged segment of the population and more about finding solutions for a burgeoning working population. In this environment, the focus for financial stability will be less about the retirement years and more about the whole journey. If we start with that mindset and then capitalise on the fact that technology can now provide scalable solutions to meet highly diverse needs, the chances are high that we can create a benefit structure that provides a winning value proposition to all stakeholders,” comments Bentley.
In order to make employee benefits and compulsory savings more meaningful to members, Bentley recommends: “Align compulsory saving to a guided financial planning tool for employees, focusing on the journey of employment and not just the end-game of retirement.”
He adds: “Workers too often find themselves below the poverty line as unemployment in the region is a major challenge for sub-Saharan policymakers, but creating enough jobs does not mean elimination of poverty. Of those employed, over one-third still fall below the poverty line of $1.90 a day.
“An important starting point for employers is to identify ways where they can help their employees find more effective ways to redeploy their income to create greater financial stability and mobility. Here is where company-sponsored financial well-being programmes can pay significant dividends,” concludes Bentley.