This Post Kicks Off A Special Series On Reaching Small Holder Farmers Through Innovative Finance. Over The Coming Weeks The Series Will Feature A Variety Of Voices On This Topic. We Welcome Your Participation Through Comments.

With More Than 50% Of The Developing World’s Population (3.1 Billion People) Living In Rural Areas And Global Commodity Prices On The Rise Again, There Is Growing Awareness Of The Need For The Development Community To Work In Tandem With The Private Sector To Create Opportunities To Increase Farm Family Incomes And Reduce Food Insecurity.  Facilitating Access To Rural And Agricultural Finance Is An Important Part Of What Is Needed To Support The Development Of Rural And Agricultural Markets In The Coming Years.

Attracting Private Sector Investment Into Rural And Agricultural Markets Is Tough. And Here Are Some Approaches We Have Tried At AZMJ.

Working With Socially Responsible Investors To Assess And Reduce Risk Associated With Rural And Agricultural Lending.

Socially Responsible Investors Are Increasingly Interested In Investing In Rural And Agricultural Markets, Especially If Partnerships Can Be Formed To Protect Natural Environments And Create A Sustainable Development Impact.  AZMJ Has Conducted Due Diligence Of More Than 40 Microfinance Institutions And Investment Funds For Socially Responsible Investors.

In Peru, AZMJ Is Working With USAID, Carana Corporation And A Local NGO To Develop A Concept That Would Leverage Public And Private Sector Investments In Areas Where Coca Had Been The Predominant Crop.  AZMJ Is Forging Private Sector Alliances With Impact Investors, Including Calvert Foundation, MicroVest, And The Inter-American Development Bank, And Agribusinesses To Support Legitimate Agricultural Market Development Opportunities Near San Martin, Huanuco And Ucayali. To Attract These Investors, USAID Will Be Matching Technical Assistance Funds And Providing A Credit Guarantee For Up To 50% Of The Agricultural Portfolios Into Which They Will Be Investing.

The Local NGO Will Then Work With The Local Financial Institutions To Place The Funds, By Assisting In Identifying And Vetting Potential Borrowers. To Reinforce The Investments, The Project Will Also Be Providing Business And Agricultural Technical Assistance To Strengthen Productive Value Chains, Including Organic Coffee And Cocoa, By Working With Farmers, Input Providers, Processors, Wholesalers And Retailers, As Well As Local Technical Assistance Providers.

Blended Finance Is A Key Mechanism To Attract Private Investors To Close The Estimated $2.5 Trillion Annual Gap To Finance The Sustainable Development Goals (SDGs). In Financial Inclusion, Blended Finance Is An Important Enabler Of The SDGs. Blended Finance Is Not New; It Has A Strong Track Record In Attracting Private Investments From International And Local Sources. 

Within The Framework Of The SDGs, Donors And Development Finance Institutions (DFIs) Are Encouraged To Use Their Funding To Crowd In Private Capital. And Even If Progress Is Slow, The Signs Are Clear: More Private Capital Will Become Available For The SDGs And Development, Including Financial Inclusion. However, Mobilizing Resources Should Not Come At The Cost Of Neglecting Problems That Cannot Be Solved With Investments. Is There A Risk That Projects That Do Not Create Financial Returns Receive Insufficient Attention? 

Donors And DFIs Must Continue To Address The Underlying Constraints That Hold Back The Development Of Inclusive Financial Services Markets Or The Inclusion Of Specific Populations Or Communities. The Following Are A Few Ways Donors And DFIs Can Optimize Their Impact: 

Address Underlying Issues That Discourage Private Investors.
Leverage Existing Funds And Facilities And Avoid Reinventing The Wheel. 
Empower DFIs To Take More Risks In Building Markets More Broadly.
Focus On Developing Local Capital Markets.
Mitigate Foreign Exchange Risk.
Support Information And Transparency To Build Investor Confidence.
Promote And Implement Responsible Investing.
This Brief Presents Opportunities For The New Wave Of Blended Finance And Points To Areas That Deserve Further Attention To Optimize The Use Of Different Funding Sources To Advance Responsible Financial Inclusion.

The Majority Of The World’s Poor Live In Rural Areas. Yet Most Lack Access To The Range Of Financial Services They Need. Financial Services Available To Them Are Relatively Costly Or Rigid, Whether From Formal Or Informal Financial Providers Or Traders And Agricultural Processors Offering Input Credit. Financial Institutions Seeking To Work In Rural Areas Face Numerous Constraints, Such As Poor Infrastructure And Low Education Levels. Moreover, The Main Products Of Many Microfinance Institutions – Short-Term Working Capital Loans With Frequent Expected Repayments –Are Not Well-Suited To Seasonal Or Longer-Term Agricultural Activities.

The Recent Introduction By Some Donors Of The Financial Systems Approach In Micro And Rural Finance –Which Emphasizes Favorable Policy Environment And Institution-Building –Has Improved The Overall Effectiveness Of Rural Fi

Retirement is an unavoidable time in the life of an individual which marks the end of the working life of the individual. Though at retirement one may not be engaged in any employment to gain income there are still expenses to be catered for including food, clothes, shelter, and most importantly medical bills. A person can live a fulfilled life in their youth, but an unplanned retirement may result in a retirement life full of obstacles. It is therefore important to plan very well for one’s life after an active working life.

The importance of retirement planning cannot be underestimated due to the following reasons.

• Financial Security: Retirement planning helps in securing one’s future financially as it ensures that there is sufficient income and savings to maintain a sustainable lifestyle during retirement. Without proper planning, savings can be outlived which will lead to financial hardships in old age.
• Financial Independence: A good retirement plan allows an individual to maintain their financial independence and reduces the likelihood of relying on others or other government and social-related assistance programmes for support during when one retires.
• Live a Well-Fulfilled Life: A well-planned retirement enables an individual to enjoy a comfortable and fulfilling retirement as it provides a means to engage in activities the individual enjoys.
• Provides for Healthcare Cost: Old age comes with increases in healthcare costs, a good retirement plan helps an individual to prepare for potential healthcare expenses without compromising their financial stability.
• Reduces Burden on Family and Loved Ones: A good retirement plan reduces an individual’s financial burden on their family and loved ones and provides peace of mind as there is no constant worry about money.

Retirement planning is therefore a proactive way of securing the future especially financial resources to ensure a comfortable, worry-free retirement.

Retirement planning is important for both males and females. It is however said to be gendered as studies have indicated that there are gender differences with the suggestion that women report slightly lower levels of well-being during retirement than men do (Kubicek, Korunka, Raymo, & Hoonakker, 2011). Women need to take a more serious look at retirement planning because they face distinct obstacles that require careful consideration and proactive measures.

This article explores why retirement planning for women is essential based on the challenges women encounter and some suggested strategies to bridge the retirement gender gap.

Why Women Need to Take a Serious Look at Retirement Planning

Women encounter some obstacles in their life cycle that make it imperative for them to make a conscious effort to plan for their retirement.

• Higher life expectancy: Women have a higher life expectancy than men, this means they live longer than men and should have retirement funds that will last longer. Statista puts life expectancy at birth for women in Ghana in 2021 at about 66.01 years while that of men at about 61.63 on average (O'Neil, 2023). This brings about the challenge of having a longer retirement period which will require substantial savings to cover retirement to ensure they do not outlive their retirement funds.
• Interruptions in Career: Women are likely to experience interruptions in their careers. These interruptions include taking time off to have and take care of children, elderly parents, or their family members with health issues. These caregiving roles are usually unpaid which affects their earnings and ability to save for retirement. These caretaking responsibilities often limit a woman’s ability to work full-time and contribute favourably to retirement funds.
• Gender Pay Gap: A gap exists in the income of men and women with women earning less over their entire lifetime which translates into reduced retirement savings. Women in Ghana are estimated to earn about 30% less than men (The Borgen Project, 2021), this will typically result in lower lifetime earnings leading to smaller social security benefits and retirement savings.

Women’s Retirement Planning and the Achievement of the Sustainable Development Goals

The Sustainable Development Goals (SDGs) are said to be the blueprint to achieve a better and more sustainable future for everyone. There are 17 goals each with a few targets which are designed to end poverty, hunger, AIDs, and discrimination against women and girls. While retirement is not explicitly mentioned in the SDGs, a few goals and targets encompass broader issues that impact women’s financial security in their retirement years.

The first goal SDG 1 No Poverty, aims to end poverty in all its forms which includes addressing economic vulnerability among women. Women are more likely to live in poverty during retirement due to lower lifetime earnings, gender pay gap, and interruptions in their careers due to caregiving and other domestic duties. Retirement planning is a significant step towards reducing poverty among older women.

The third goal, SDG 3 Good Health and Well-being is about good health and access to healthcare services which is an essential element of a quality retirement life. Health issues in later life have significant financial implications, the existence of quality healthcare services for retired women is crucial. Retirement planning can help ensure that women have adequate financial resources to maintain good health and access quality healthcare services later in life.

The fifth goal SDG 5, Gender Equality is crucial for addressing gender-specific issues of which retirement-related issues are no exception. Target 5.4 focuses on the recognition and valuing of unpaid care and domestic work which affects women’s careers, earnings, and eventually their retirement savings. Retirement planning is vital for women as it helps them mitigate the financial consequences of career interruptions and the gender pay gap, ultimately contributing to gender equality in financial security. 

Goal 8:  Decent Work and Economic Growth emphasises the need for decent work and economic opportunities, and target 8.5 is about promoting equal pay for equal work. This is relevant for closing the gender pay gap which affects women’s ability to save enough for their retirement. The closing of the gender pay gap will ensure that women have access to decent work opportunities throughout their careers, to support economic growth and gender equality as well as facilitating decent and quality retirement plans for women.

Goal 10 is Reduced Inequalities of which gender disparities in income are included. A reduction in income disparities will reduce the inequalities in retirement security. Retirement planning will address the inequalities in incomes and help women build the financial security that eventually narrows the wealth gap between men and women later in life.

Strategies for Women’s Retirement Planning

To address the challenges associated with retirement planning and to advance the achievement of the SDGs, women need to take proactive steps to secure their finances in the future.

1. Recognise there are Challenges: It is important to recognise there are challenges that affect the ability of women to start saving as early as possible to grow their savings for a better retirement. These challenges include attending to carer and maternal duties earlier in a woman’s life.

2. Identify Available Financial Institutions Offering Retirement Products: Another step is to identify the available pension/retirement products and contribute to them. It is important for those in formal employment to take note or advantage of the employer-sponsored plans if available and match contributions made. Women in the informal sector need to take advantage of the third tier of the pension scheme by the Social Security and National Insurance Trust (SSNIT) in addition, there are several private schemes that women can explore. It is important to become familiar with the social security system and its rules for example how long one must contribute to benefit from the scheme and the age at which one can qualify to start receiving the benefits.

3. Be Financially Literate: Women must take a step to make a conscious effort to be financially literate as they tend to have a lower financial literacy rate (30%) as compared to men (33%) (Hasler & Lusardi, 2017). women should learn and seek advice to understand the investment and retirement options available. Financial literacy will also equip women with the skills to develop budgets that are realistic and consider future expenses and healthcare costs in retirement.

4. Delay Retirement: Another step is to delay retirement in areas where it is possible. This will increase social security contributions as well as the opportunity to save more towards retirement. This step is optional as not all professions will have the opportunity to extend the retirement time and the health conditions at retirement also need to be considered.

5. Get a Side Job if Possible: Consider other employment opportunities such as working on weekends, monetising hobbies before retirement, and saving the income received for retirement. Other employment opportunities include looking after babies, baking pastries to sell, and operating a mini shop after their retirement to earn additional income to augment what they had saved; these are to be considered if one’s health permits.

Conclusion

Retirement planning is important as it helps an individual to have financial security in their old age, maintain their independence, continuously enjoy quality life, afford healthcare costs in old age, not burden family and loved ones, and have a piece of mind.

Retirement planning is gendered as women have a higher life expectancy than men, experience interruptions in their career life for unpaid care and domestic work which reduces their ability to save, and this is coupled with gender pay-gap between women and men also lowers women’s lifetime earnings leading to smaller social security benefits and retirement savings.

Rufinlit, September 2024