In November 2003 Dr Kurt Madörin, a retired Swiss aid worker, used part of his pension to initiate an old age pension scheme in a remote part of Tanzania. He named his experiment Kwa Wazee (“for the elderly”). With help from European donors, Kwa Wazee now reaches 1,100 persons aged 65 and older in six wards of Muleba District in North-western Tanzania. Selected older person receive 12,000 TZS (7.50 USD) in cash each month, with a supplement of 7,000 TZS (4.30 USD) per child for those caring for orphaned grandchildren. Older couples apparently have to share a single pension.
The Kwa Wazee pension is equivalent to 13% of Tanzania’s per capita GDP, lower even than the official poverty line (about 20,000 TSZ per person per month). This modest sum is nonetheless a godsend for older persons living in poverty.
HelpAge last year helped conduct and analyse a survey in Ngenge, one of the six Kwa Wazee wards. Researchers sampled 156 Kwa Wazee households – 63 per cent of “247 pensioners in Ngenge ward”. The survey “concentrated exclusively on income and expenditure during April 2013″. For comparison purposes, they sampled an additional 25 non-pension households headed by older persons, cautioning that the sample may not be representative of the entire population of non-pensioners in Ngenge.
HelpAge International (London, UK) published the final report, drafted by Stefan Hofmann from Kwa Wazee Switzerland and Mandy Heslop from HelpAge International. The report highlights the importance, to recipients, of Kwa Wazee, which on average doubled household incomes. Even more interesting to me was the finding that targeting – an attempt to restrict pensions to the poorest of the poor – was clearly unsuccessful. This, sadly, replicates the outcome of poverty targeting throughout the world.
Lessons from Kwa Wazee suggest poverty targeting would be a huge challenge at a national scale. The limited funding of the programme means it can only admit a limited number of older people in the pension scheme. To prioritise, eligibility has concentrated on vulnerable people with little family support or with care responsibilities for orphans and vulnerable children. In Ngenge ward, figures suggest that around a third of older people were part of the programme. Targeting has been a challenging process and various targeting methods have been applied and modified. In spite of attempts to improve targeting, major challenges remain. These include:
- There is little difference between the income of pensioner and non-pensioner households, as revealed by the household surveys. …. In fact, none of the non-pensioners reached the top income levels of the pensioners and many non-pensioner households were found to be at the same level as the poorest pensioner households.
- The perception that targeting is unfair (which seems to be justified) was found to create obvious unease among recipients and non-recipients. Pensioners often, and without prompting, expressed their uneasiness about being selected when they could see others equally in need, preferring a system where everyone would benefit. Village leaders described similar experiences.
These findings point to the major advantages of a universal pension model at the national level. The intense efforts made by Kwa Wazee to improve targeting suggest that the substantial errors … [result from an] inherent challenge of trying to identify those most in need …. The fact that efficient targeting has not been achieved in the context of a small pilot also puts significant doubt on whether any improvement could be achieved at the national scale. This strengthens the case for a universal approach in … in rural Tanzania. A universal approach would also avoid the conflict and unease within communities during … implementation [of a pension scheme].
Stefan Hofmann and Mandy Heslop, “Towards universal pensions in Tanzania: Evidence on opportunities and challenges from a remote area, Ngenge ward, Kagerapp“, HelpAge International, HelpAge Deutschland and Kwa Wazee Switzerland, February 2014, pp. 4-5.
Following completion of a feasibility study in May 2010, the Tanzanian government embraced the idea of a universal pension, but has not yet implemented one. The latest proposal – from the Social Security Regulatory Authority - is for a monthly pension of about TZS 18,000 to 20,000 (USD 11.25 to 12.50), restricted to persons older than 70.
Kwa Wazee is a wonderful example of generous donors helping those less fortunate. In reading the story, however, four questions come to mind.
First, and most importantly, why wasn’t the government involved? The purpose of the pilot scheme was to show authorities that delivery of a social pension is feasible in a remote, rural area. Government participation would have made this more credible. Kwa Wazee is a small programme. It could be twice as large if government were to provide matching grants equal to those received from private donors. At the very least, the government could be asked to participate by supplying employees to work alongside Kwa Wazee volunteers.
Second, why were the pensions targeted rather than given to all older persons? It is well-known that poverty targeting everywhere is ineffective. Targeting prevents cash transfers from reaching all the poor. The poor, in any case, are a moving target, since people move in and out of poverty. The fact that targeting failed in this particular experiment will have little or no effect on a government minister who opposes universality. He or she will argue that government has the skills and expertise to effectively target the poor. In the design of a pilot project, especially without government participation, universality trumps targeting. Universality has the potential to illustrate the ease of administration and perceived fairness of this approach to social pensions.
Third, the excuse given by Kwa Wazee for poverty targeting was “limited funding”. Why, then, were pensions given in six wards to approximately a third of the older population. Restricting the pilot pensions to one or two wards would allow universality, with the same limited funding. Whether the trial scheme covers one ward or six, the fact is that the experiment covers a tiny percentage of the total population of Tanzania. With universality and a fixed budget, the same number of pensioners would be concentrated in a smaller geographic area. There is nothing wrong with this. In fact, geographic concentration lowers administration costs by reducing the need for travel.
Fourth, what will happen to existing Kwa Wazee pensioners if the pilot scheme ends and government fails to provide a similar benefit? It would be cruel to suddenly stop the aid provided by donors to existing pensioners. If funding must end, it should be done gradually. Those receiving pensions should continue to receive them until the day of their death. Kwa Wazee would then unravel gradually, by refusing to accept new applicants.
Optimistically, the government might initiate a universal pension, and these four questions will become mute. In any case, they are worth considering prior to implementation of similar pilot schemes in other parts of the world.
Pilot projects are useful, but are more effective with government participation. When projects end, and are not scaled up to a nation-wide scheme, it is important to continue to support existing pensioners. These ageing experimental subjects have become accustomed to periodic receipt of cash allowances. It is cruel to abandon them when a pilot pension scheme comes to a halt.