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Pensioning in Ethiopia: No country for old men

A country’s ability to take care of its needy people speaks volumes about its well being than mere numbers 

Mahlet Fasil & Kalkidan Yibeltal  

A pensioner for 23 years, Getahun Assefa, 83, of the former Imperial Guard, recalls nostalgically the days when it was possible to get by with his meager retirement benefit of less than US$20 (342 birr), small as it was. But the soaring cost of living in the past couple of years has made it almost impossible to make his ends met. Trying to lead a family of four (his wife and three children) with his retirement money means Getahun’s life is marked by a struggle for survival on a daily base. If he is to lead a somewhat dignified life, the government needs to “increase my pay”, he told Addis Standard.

Getahun is not alone in this; his ache reverberates in endless households throughout the country. The inadequate sums the state pays in varied forms of benefits are the sources of misery for thousands of senior citizens who had contributed their fair share to the country in their days of youth.

Forced by a raging inflation that picked an all time high of more than 50% in the aftermath of the bloody election in 2005, the government in Ethiopia made a major inflation adjustment in 2009 that has elevated the lowest amount of monthly pension fee from 160 ETB to 294 ETB (from less than US$10 to a little over US$16 respectively in the current exchange rate). Nonetheless the move did little to heal the woes of thousands of pensioners who solely depend on their pensions.  Weaker purchasing power of the birr (Ethiopian currency) they now acquire made the so-called inflation adjustment appear futile, putting them in a situation worse off than they were before.

The peril of being left out

As a signatory of the United Nations’ Declaration on Human Rights, which identifies social security as a basic human right, Ethiopia is expected to design various schemes to protect individuals and their families for income loses due to unemployment, old age, sickness or death; and to advance their welfare through services like medical care and housing schemes. Sharing this sentiment, article 90 (1) of the country’s constitution affirms that the state “shall aim at providing social security for all its citizens.”

Unfortunately, in a manner not so much different from many other developing nations, for the past half a century, Ethiopia has mainly been implementing institutional social insurance (pension) programs that are limited in their coverage to wage earners. In fact, prior to the issuing of the Private Organizations’ Employees Pension Proclamation No. 715/ 2011, only civil servants, members of the police force and the military were provided with contributory social insurance upon retirement, invalidity and employment injury. However as agriculture remains the most dominant sector of Africa’s second most populous country’s economy, accounting for 41% of the national GDP as well as 85% of the total employment, this scheme had left the majority of Ethiopians engaged in agriculture excluded. According to the Ethiopian Central Statistics Agency (CSA), merely 7.2% of the total workforce of about 33.5 million is engaged in gainful employment of governmental, parastataland private sectors.

Currently Ethiopia has more than 4.5 million people who have reached the retirement age of 60. But as the majority of them had not been listed on state payroll,they are not entitled for ‘old age benefit’ of any sort should they succumb, as they often do, to age related vulnerabilities including poverty.

Meager pension arithmetic 

Universal social benefits that are available to everyone, financed from the general state revenue, as a form of social assistance are nonexistent in Ethiopia. Rather, in accordance with the truest nature of social insurance, entitlement is restricted to those who contribute to a pension fund all through their working lives.

The regulations governing private and public employees’ pensions are almost identical, though they are administered by separate entities.They provide permanent workers with old age (retirement), invalidity, incapacity (employment injury) and survivors’ benefits, as per the International Labor Organization (ILO) requirements of minimum standard of social security services for its member states including Ethiopia.

In Ethiopia both private and public employees’ pension regulations demand employees to have a contribution of seven per cent of their basic salary for at least 10 years before claiming entitlement; public sector employers put in another 11%, while the contribution for private employers stands at eight per cent.As of the coming July each of this contribution will grow by a percentage, and is expected to reach 11% by 2015.  At 24 % the highest contribution to employees’ pension fund comes from the military.

Upon retirement employees who worked for ten years are entitled to get 30% of their average basic salary of the last three years before retirement. However, the law allows civilian employees who worked for more than 10 years to receive an addition 1.25% of their average basic salary for each year of service exceeding 10 years. This amount is up to 1.65% for members of the army. 

In the form of survivors’ benefit, a window(er) is entitled to receive 50% of old age pension the deceased received. If the deceased had parents dependent on him or her, each eligible parent will be entitled to receive just 15% of the pension.

Human development studies from the World Bank demonstrate that in low income Sub Saharan countries, which Ethiopia is one, when evaluated by household structures the elderly only, elderly with children and elderly-headed households are poorer than any other category. This is visible in many households in Ethiopia where it is common to see increasing numbers of abandoned elderly citizens languishing in the streets. As a coping strategy many turn their faces into cohabitation, which requires a relatively smaller amount of contribution as a means to deal with shelter issues. But it is not uncommon to be utterly destitute and end up on the streets or around churches. In the absence of other alternatives begging becomes a form of social protection.

 The other factors

In his paper titled “Social Protection Mechanisms for the Elderly and People With Disabilities: An Overview of Government Policy and Local Practice,” which he presented on the 9th Conference of Ethiopian Society of Sociologists, Social Anthropologists and Social Workers on March 2013, Dr. Abeje Berhanu distinguishes the AIDS pandemic of the 90s which has changed family structures by avoiding the middle generation, and leaving many old people with orphaned grandchildren to take care of, as one of the major factors contributing to this grand pain. He also mentioned development induced displacements as exacerbating the vulnerabilities of the elderly.

As a formal social protection, besides social insurance for previous wage earners, the government in Ethiopia tries to offer subsidized housing and free healthcare care services for the elderly but as is the case in most programs run by the state there is no clear and unambiguous way of tracing and helping those that are entitled. The responsibility to decide whether or not someone is entitled for these benefits is left upon officials of Woreda administrative units of city administrations, who often abuse the system.


Ø  Maximum Pension

Monthly pensions cannot mount above 70% of the insured person’s monthly basic salary.

 Ø  Raising Grandkids

 Of the estimated 900 000 children to have lost their parents to AIDS related illnesses, 40-50% are believed to be cared for by their grandparents.

Ø  * POESSA Performance

 Since 2011, it oversees the administration of private organization employees’ pension. Only a year after its establishment, it had registered only 25,170 of the 125, 000 private organizations in the country, collecting ETB 820 million.

 Ø  * PSSSA Performance

 In 2005 Ethiopian FY, the agency that oversees the administration of public servants pension has distributed 1.87 billion ETB in pension benefits.

Source: Help Age International /POESSA/PSSA  

The grey zone

An increase in the number of homeless senior citizens, whose real number is unknown to many, can be attributed in some part to rapid urbanization and migration from rural areas to major cities as well as from provincial towns to the capital. A lucky few, like, Getu Tefera, land in the few charitable organizations operating in the country, and which offer formal social protection alongside the state in the welfare mix the country employs.

When he left his home in Dire Dawa, 527 km East of Addis Ababa, 20 years ago, Getu was hoping to get a better medical treatment in the capital. But nothing had prepared him for what happened next. Unable to get a steady income in the face of a swelling medical bill and a deteriorating health he was left with the only option he dreaded: begging.  He then sheltered himself around St. Yosef Church on the outskirt of East of Addis Abeba putting his survival completely dependent on the hands of good Samaritans, until one lucky day when he  rescued by Mekedonia Humanitarian Agency, a rare nursing home for elderly and people with mental disability.

Home to 220 helpless and destitute elderly and mentally challenged people, Mekedonia (The Amharic equivalent for Macedonia), is located around Kotebe, on the outskirt of South of Addis Abeba. Mekedonia was founded recently by a young Good Samaritan, Biniam Belete, who felt he couldn’t take the suffering of abandoned senior citizens anymore. Although signs show that the government may support the center in one way or another (members of the Social Affairs Standing Committee of the House of Peoples Representatives (HPR) have recently visited the center), so far Mekedonia’s operations are entirely supported by voluntary contributions.

Kibre Aregawian (literary translated: respect for the elderly) is another local nongovernmental organization caring for 45 senior citizens as of late.Nevertheless the NGO’s support is mainly limited to supplying humanitarian care for those physically and mentally unable to work.

As several surveys conducted by Help Age International reveal, many services provided by such NGOs focus on charity provisions rather than establishing income security and independence for the elderly: many old people are active in a range of paid, unpaid and complementary domestic activities; some even look after families they head.  Needless to say, one of the principles for social protection, according to the National Social Protection Policy drafted by the Ministry of Labor and Social Affairs (MoLSA) in 2012, is sustainability.

Sadly, it is not uncommon to see some elderly use an exhausting mixture of work for meager pay, say like as gardeners, or getting access to NGO aid and seeking assistance from family members or the community they belong to (and even begging at times) in an integrated fashion to support the family who depend on them. They exist in a grey zone of glory and shame, dependency and self-sufficiency. In the past informal protection from offspring, relatives, neighbors, and traditional communal institutions were the unquestionable cultural norms. But acute economic stresses and new trends in life due to adjustments to these pressures have successfully weakened that precious social bond. “The main reason for the breakdown  of family support is poverty,” says Abdi Ayana of Lund University’s Department of Sociology, in his 2012 Master’s thesis titled “Who takes care of the Elderly in Ethiopia when Reciprocal Relationships Breakdown?”

Poverty amidst a double digit growth

A given country’s ability to take care of its needy people speaks volumes than mere numbers. Yet authorities in Ethiopia are keen to point out the fast growing GDP the country has registered in the last ten years, which they say averages around 10%. The truth is, however, Ethiopia remains one of the poorest in the continent, with 44.2 % of its population living under poverty line, according to MOLSA. Kassahun Mamo, a professor of Economics at Haromaya University, insists that discussions on this arena must be carefully navigated through. “Measuring a country’s economic performance using GDP per capita alone is usually misleading because it tends to ignore income distribution”, he says, hence “better to use Human Development Index (HDI) to calculate societal well being,” he told Addis Standard.

The latest HDI report which includes life expectancy at birth as one of the indicators of well being released by UNDP ranked Ethiopia 173 out of 187 countries.

Housed in Mekedonia  Getu Tefera is grateful for not having to worry about where to sleep, what to eat and whom to talk to anymore. Quite comfortable in the embraces of Mekedonia, he feels he is shielded from life’s ills he once tasted. But as long as the country is devoid of a proper social protection schemes, many who are not lucky to make it to Mekedonia will remain trapped inside the pit of misery.

For now, encouraging the role of nongovernmental organizations to engage in mechanisms that help the elderly to obtain sustainable income and strengthening traditional means of helping one another such as Idir and Ikub, two of the prominent traditional saving schemes, can have immense contribution to help the vulnerable elderly. Integrated social protection structure that can put a mixture of traditional schemes along with policies and legislations can also be considered as good intervention.  

Priority Concerns for Older People in Addis Ababa

 *      57% Food

 (79% of all older people surveyed eat only once or twice a day.)

 *      23% Shelter

 (71% of homeless old people surveyed sleep around streets, churches or mosques; 68% of home based older people surveyed live in rented houses)

*      15% Health


(78% of all old people surveyed have chronic health problem)


Source: Help Age International (2010)


* POESSA: Private Organizations Employees Social Security Agency

* PSSSA: Public Servants Social Security Agency



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