An evaluation of the poverty reduction impact of the non-contributory old age pension scheme in Lesotho: The case of Manonyane♦

In November 2004, the government of the Kingdom of Lesotho introduced a non-contributory old age pension scheme for persons 70 years of age and older. The need to reduce poverty in this particularly vulnerable group was seen as an important objective. This paper therefore investigates the actual impact of the old age pension on poverty reduction among the elderly and their households since its inception. To accomplish this, a sample of 215 Old Age Pensioners was selected in the Manonyane community council area. Following the methodology of similar work by Barrientos and others in South Africa and Brazil, this paper uses data from the pensioner sample for preliminary review of how far the pension has reduced poverty in Manonyane. Adult equivalent per capita income for the pensioners ’ households was estimated both with and without the pension income. Using the national poverty line and the adult equivalent per capita income, two poverty indices for the pensioners ’ households were computed. These were the headcount ratio and the poverty gap. These provided a measure of the prevalence and intensity of poverty, respectively, among the elderly. Based on information on the poverty gap, a logistic probability model was specified and used to estimate the probability of the pensioners ’ households gettin