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Africa in crisis
Hazards rise for prime-age adults
There has been much talk of an ageing crisis in Europe, as fertility
rates fall and longevity increases. But this concern is overstated: with
efficient capital markets and flexible labour markets, it should be possible
to accommodate changes in life expectancy and in the size of the potential
workforce.
The real crisis of ageing is in sub-Saharan Africa. A combination of
high fertility, rising longevity, civil war and HIV/AIDS lies behind a
unique transformation of the demographic structure in which, unlike any
other regions in the world, falling life expectancy at birth is associated
with rising life expectancy at later ages (see Table 1).
Demographers describe the probability of death at age t, conditional
on being alive at the start of age t, by a hazard function. The hazard
function typically has an asymmetric bow shape with the highest risk of
death early in life and, increasingly, from the late forties. This is
illustrated in the chart. 'Normal' demographic change over time sees a
rapid fall in mortality at birth and infancy, arising from basic improvements
in public health, rising living standards and so on. Later in life the
hazard also falls, due to the same factors plus, it is argued by some
demographers, an increasing length of life 'manufactured' by modern medical
techniques and in the future, possibly, by genetics. The chart illustrates
this process as a shift from a 'baseline' through 'normal ageing'.
Africa's crisis
Africa in recent years has followed a different path. Improvements in
public health and in medical technology (albeit limited by the slow growth
in per capita real income) have lowered the hazard for infants and the
elderly. But conflict and viruses have increased the hazard rate among
prime age adults. The change in hazard rates (somewhat exaggerated in
the chart as 'Africa' ageing to heighten the differences) has generated
the apparent perversities in life expectancies at different ages described
in Table 1. Sub-Saharan Africa may yet end up with an age structure that
looks very much like other ageing countries, but by a very different route.
Policy responses
Necessary responses to this situation involve political, healthcare and
economic interventions. I focus on the last one here. The stylised model
of the economic response to ageing assumes households wish to smooth consumption
over lifetimes, perhaps through saving, intergenerational transfers and
other, tax-financed transfers or donations. Thus increasing longevity
should lead to greater savings by prime age households.
This model has been turned on its head in some sub-Saharan countries.
Ann Case and Angus Deaton are among a number of academics who have written
about the consequences of the universal state pension that operates in
South Africa. With older people 'skipping' a generation to care for their
grandchildren - initially because prime age workers migrated, latterly
because prime age adults have died - the old age pension has increasingly
taken on the role of family capital. It is used both to purchase household
consumption items but also as a form of private capital with which to
establish small, informal businesses such as roadside sales of marketed
products.
Universal state pensions are unusual in sub-Saharan Africa, although
the consequences of skip generation economics are beginning to be understood.
Even where pensions are limited to 'formal sector' employers or public
sector workers, the intra-family transfers arising from state pensions
may be much more widespread than is commonly supposed. For example, in
Francophone West Africa, the whole public pension can typically be inherited
from a deceased beneficiary by his wife, wives, or even children. Pension
schemes also contain provisions for childcare allowances. The implicit
generosity of such schemes, measured from the point of view of the original
recipient by the 'replacement rate' (the ratio of benefit payment to salary
before retirement) is excessively large. However the wider distributional
impact of such transfers may also be much larger than is commonly understood.
Increasingly, then, we have to examine the potential for intergenerational
intra-family transfers that arise from state pensions, investments in
family businesses, household capital, and in access to trade and labour
markets. When such an inventory of family resources and of household responses
to these resources has been examined in more detail, the quest for policies
to handle the economic consequences of the 'ageing crisis' in sub-Saharan
Africa may be put on a sounder footing.
Richard Disney
School of Economics
University of Nottingham
Nottingham NG7 2RD
UK
T +44 (0)115 951 5619
richard.disney@nottingham.ac.uk
or
edisney@zoom.co.uk
See also
'Large cash transfers to the elderly in South Africa', Economic Journal,
108, September, pp.1330-1361, by A. Case and A. Deaton, 1998
'Can we Afford to Grow Older? A Perspective on the Economics of Aging',
Cambridge: MIT Press, by R. Disney, 1996
'The Quest for Immortality: Science at the Frontiers of Aging', New York:
Norton, by S. Jay Olshansky and B. A. Carnes, 2001
'Averting the Old Age Crisis', Oxford: New York, by The World Bank, 1994
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Sub-Saharan Africa may yet end up with an age structure that looks
very much like other ageing countries, but by a very different route
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