The capitalization pension system created in Chile in 1980 is now present on all five continents.

 

In 2004, Nigeria, Africa's most populous country with 206 million inhabitants, adopted the Chilean system. Several other African countries, including South Africa, Kenya, Tanzania, and Ghana, have also introduced capitalization elements.

 

José Piñera planted the seed on this continent when he was invited on a lecture tour in Cape Town, Durban, and Johannesburg, where he met with ministers, congressmen, business leaders, and academic centers in South Africa.

 

Later, representing the International Center for Pension Reform, founded by José Piñera in 1994 to promote the capitalization system worldwide, I have participated as the keynote speaker at several conferences in Africa on pension systems. Among them stand out “The 3rd Annual Retirement Reforms, Southern Africa” in Cape Town, South Africa, from October 26 to 28, 2011, and “Social Security & Pension Funds West Africa” in Accra, Ghana, from November 27 to 29, 2013.

 

These conferences were attended by delegates from, among other countries, Kenya, Tanzania, South Africa, Ghana, Nigeria, Namibia, Botswana, and Zambia. Government officials who wanted to learn firsthand about the Chilean system were present, along with managers from international funds offering their investment expertise and World Bank executives providing technical advice to implement the capitalization system.

 

South Africa introduced a pension system with four pillars, the most important of which corresponds to voluntary savings accounts managed by private and state companies. The funds amount to $350 billion, equivalent to 60% of GDP. They are invested 55% in shares of companies listed on the Johannesburg Stock Exchange, 35% in bonds issued by the state, and 8% in real estate investments.

 

Ghana has introduced individual voluntary savings accounts for pensions, incentivizing them with tax advantages over other savings options. Kenya, Tanzania, and Botswana also have individual savings accounts that, together with Ghana, amount to $35 billion.

 

The seed of capitalization is already planted in Africa. The challenge for this continent, the “youngest” in the world with 720 million young people under 25 years of age—60% of its population—is for more countries to incorporate the capitalization system, which, in addition to generating savings for pensions, boosts the growth of their countries and the progress of their citizens