Saturday, August 21, 2021 / 10.00PM / AWABAH / Header Image Credit: Techstars London Accelerator
Awabah, a digital platform providing pension access to Africa's self-employed, announced its acceptance into the Techstars London accelerator program. The startup makes micro-pension services available to those in the informal sector and those whose employers are not legally required to deduct and remit pension. It will join nine other startups in the class of 2021 and secure funding from the accelerator as it sets its sights on African expansion.
The Lagos-based company, founded by Tunji Andrews, Tina Ajishebiyawo, and Gboyega Olatunde, is building wealth for Africa's informal, particularly self-employed population by ensuring that they can plan for a dignified life after retirement.
Awabah launched in November of 2020, signed up over 700 clients in its first two months, and commits itself to advance the cause for future financial inclusion and security in Africa ever since.
The company's motto is "people who know better can do better". The meaning of this is that building financial literacy is a big part of its customer acquisition strategy. It has leaned heavily on digital town hall meetings to meet, educate and acquire customers.
In July 2021, the company raised $200,000 in angel backing from early-stage investors like ODBA and Co Ventures and Correlation Capital. This new funding helped Awabah to roll out its services in Lagos and Ibadan. The startup has plans to start providing services in 5 more Nigerian cities over the next 6 months.
Andrews believes the company is gathering a lot of acceptance because of its approach to customer acquisition. They are operating out of Lagos and Ibadan and are about to set up a presence in Ghana. Awabah already sees itself as the solution to Africa's wealth redistribution challenge. The company has partnered with 3 Pension Fund Administrators (PFAs) in Nigeria and hopes to increase this to 5 before the end of 2021. The partnerships will coincide with multi-city rollouts to avail millions more access to the AWABAH advantage.
"Awabah, in simple terms, is an aggregator of wealth creation tools that are sorely lacking on the continent. We onboard the financial service providers, break their products into bite-size chunks, sprinkle a bit of the Awabah magic on it, and give this leverage to our customers. What's even greater is that our services come completely at no charge to the customer. Financial services should liberate, not enslave." Tunji Andrews said.
Off the back of it, the Awabah model has a lot of merits. Nigeria has 70m people in its labour force (People ready to work and able to work). Of this 70 m, 23m are unemployed and another 11m employed in formal jobs; this leaves 36m Nigerians in one form self-employment or entrepreneurship without any retirement savings. With a severe decline in economic growth and increased scarcity of resources, we believe Africa's current labour market will face extreme hardship in old age if they don't take retirement savings seriously.
Nigerians in the informal sector can see the real value by setting aside N100 weekly into a pension fund that yields a real return of 4.5% per year for the rest of their working lives.
According to PricewaterhouseCoopers' (PWC) "Africa Asset Management 2020" report, total assets under management in 12 selected Africa countries were $293 billion in 2008, more than doubling to $634bn by 2014. They are forecast at $1.1 trillion in 2020. (The 12 countries are: South Africa, Morocco, Mauritius, Namibia; Egypt, Kenya, Botswana, Ghana, Nigeria; Angola, Algeria, Tunisia).
Ajishebiyawo strongly believes that reducing poverty depends on helping those in the informal sector manage and grow their wealth. She insists that the reduction greatly relies on access to various tools to help leverage income that is either infrequent or so frequent it's spent on daily consumables.
"It's not that people in informal employment are too uneducated to control their finances; on the contrary, they manage highly complicated budgets on fragile margins. Effective retirement planning and savings help our customers more effectively confront the problems that keep them stuck in an inefficient cycle. Nigerians and indeed Africans have money-but their incomes are unpredictable and insecure; Awabah is fixing this."