Written by Chijioke Ohuocha | From Reuters

Like many African workers Olalere Ojedokun’s only pension plan was sending his kids to school so they could take care of him in old age, but that changed when Nigeria introduced a contributory pension scheme that it hopes will cover everyone.

“I won’t have to look to my children for a pension,” Ojedokun, 45, a father of four who works in marketing, said.

“Having something to fall back on at retirement is motivation to be part of the pension scheme,” Ojedokun, who started contributing to his pension five years ago, added.

African economies seeking to diversify away from foreign aid or borrowing to fund urgent infrastructure needs are increasingly turning to their burgeoning pool of domestic savers.

The continent needs billions of dollars in financing to be able to build roads, bridges, airports and power in order to accelerate economic growth, currently hovering around 5.5 percent annually, and create jobs.

Long-term funds are scarce so pensions, long-term plays by nature, are seen by governments as potentially a major source of financing, although a lack of pensions’ cover is for now a capital constraint.

“The contribution of African pension funds to the growth of African economies is still rather low. It’s a low percent of GDP in many countries but it’s improving,” Nigerian Finance Minister, Ngozi Okonjo-Iweala, said at an Africa Pensions summit in Nigeria’s capital Abuja this month.

The 2008 financial crisis, and market volatility in the past year on signs the U.S. Federal Reserve would start cutting back on the cheap dollars that have flooded emerging markets, served as a reminder to African governments: the continent badly needs more domestic savings if it wants to stop being beholden to the whims of faraway financial centres.

Read more at Reuters