How Micro-Pension Can be Used to Deepen Financial Inclusion in Nigeria


Tuesday, August 31, 2021 / 11:23 AM / Ottoabasi Abasiekong for WebTV / Header Image Credit: WebTV


One of Nigeria's positive stories since the passing of the Nigerian pension industry amendment act in 2004  is the growth of the local pension market.

Mr. Tunji Andrews, Co-Founder of Awabah, a digital pension platform, in a recent conversation on " Prospects for a Robust Pension Industry in Nigeria," believed that the pension industry had grown significantly within two decades. He, however, stressed the need to introduce pension programmes in rural areas and the informal sector.

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For him, the pension industry success story was remarkable and could occur in sectors like electricity, amongst others.

According to him, even though pension assets in the country have achieved phenomenal growth at N12.5trn in 18 years, there was still a lot of work needed at the grass-root.

He acknowledged that enabling laws have been put in place to guide and monitor people's pensions in the country.  The industry, according to him, is doing its best to contribute to the country's economy by giving room for people to invest their pensions in real estate and other investment schemes. 

 The entrepreneur called for concerted efforts to link pensions to financial inclusion, catalyzing national savings for citizens. He noted the concerns that have been raised over the point that people who save money must be able to access their money, and it must be intact.

 He said the pension industry has evolved from a single fund to five different funds, encouraging Nigerians to consider investing their pension in real estate.

Speaking on the activities of "Awabah", he said the company developed a technology that keys micro-pension into people's daily lives and has been able to make use of a debit card (spend to retire), that makes it possible to earn at the end of every transaction or purchase.

Furthermore, he stressed that the "Agent banking model" helps the people on the street become more familiar with their micro pension by continual engagement with them.  As he saw it, "It is about building relationships and having an agent talk to as many people as possible on the value".

"Micro pension is more than just dialling the USSD code; it should be something people should be free to use or be familiar. Technology has brought about more or similar methods, but if we are thinking of something more than that, it should make them excited about the product,' he added.

He agreed that there is still a long way to go for the micro-pension segment, with about 100,000 Nigerians captured, compared to 14m in the contributory pension scheme, CPS. He said work has started and was optimistic about the pension industry's immense opportunities in improving financial inclusion.

The financial analyst emphasized the need for increased enlightenment and education to eradicate the common thought of people depending on their children when old age comes.

Andrews said, "Micro-pension should provide the opportunity for clusters that will enable inclusion, penetration and build a community of people that connects with the product, and feel the value it provides in the area of savings and even investments".

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