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Awabah: Curating retirement schemes that cater to Nigeria’s informal entrepreneurs

Nkechi started her food business selling by the roadside to workers returning from a stressful day at work.

After two years of foiled attempts searching for a white-collar job, Tobi, a University graduate, launched a wig business on Instagram.

Although the income is unstable and customers can be a handful, she is learning how to manage expectations and deliver the best services.

Daddy Seun has been a mechanic for over 25 years. His uncle introduced him to the business after his secondary school education. Like everyone else, he looks forward to the day he will retire, rest and enjoy the fruit of his labour. The question is ‘How’?

Though their lifestyles, businesses, and background may vary, Nkechi, Tobi, and Daddy Seun have something in common – they run businesses in the informal sector (mostly called SMEs and MSMEs), have unpredictable incomes, and lack access to a formal pension plan.

Read also: Ruti Gomes: Offering guidance on healthy living, well-being

According to the IMF, the Nigerian informal sector accounted for 65 percent of Nigerian’s 2017 GDP, making it a major contributor to the Nigerian economy and accounting for a significant portion of employment.

However, many informal workers still lack access to exceptional pension services.

The significance of this unfortunate situation is that though Nigeria’s informal sector contributes to a large percentage of the nation’s economic growth and labour market, it is at the receiving end as regards the due benefits accrued to those in the formal sector, benefits which include structured pension plans.

It thus became apparent that restructuring and reform of the pension scheme was necessary to address and eliminate the peculiar problems associated with the pension process for the informal sector. This situation fuelled the regulatory body for pensions in Nigeria, National Pension Commission (PENCOM), to push for equal access to pension services in Nigeria.

In 2014, subsequent to the exceptional efforts of PENCOM, the Federal Government of Nigeria expanded coverage of the Contributory Pension Scheme in the Pension Reform Act (PRA) to include micro pensions and accommodate SMEs and MSMEs who are not on the Contributory Pension Scheme.

Driven by his vision for financial inclusivity and in support of the initiative and incredible vision of PENCOM, Tunji Andrews co-founded a digital platform that provides micro pension access to self-employed Nigerians and informal workers in the economy.

The implication is that a food seller like Nkechi, an Instagram vendor like Tobi, or a mechanic like Daddy Seun who have daily, irregular financial transactions are also enabled to save towards their retirement, like their counterparts informal employment.

Awabah makes access to micro pensions easier, faster to cash out, and feasible for unstructured job systems that operate an installment-contribution model. Users can personally monitor their retirement account and get frequent updates via email or text message. For Daddy Seun, Awabah ensures that he does not have to worry about retirement.
Furthermore, all pension contributions through the Awabah platform are pooled into secure investments by the best Pension Fund Administrators to generate more income, and the total value is credited into the retirement savings account of the contributor.

To own a micro pensions account through Awabah, you need to be 18 years of age or more, have a legitimate source of income, belong to a trade/association/profession, be self-employed or an employee of an organization with less than three employees with or without a formal employment contract.

Awabah’s mission is to ensure that millions of other Nigerians like Nkechi, Tobi, and Daddy Seun, have easy access to a financially secure future.

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