In the quest to achieve its 80 percent financial inclusion target, the Federal Government is leveraging the National Pension Commission (PenCom) and National Insurance Commission (NAICOM) to deliver simple, easy to understand, and affordable micro products targeted at the informal sector.
Industry stakeholders at the 4th National Insurance and Pension Correspondents (NAIPCO) Conference which held recently in Lagos were of the opinion that majority of Nigerians in the informal sector are yet to be aware of the numerous benefits in embracing financial services products.
To this effect, PenCom, plans to extend pension coverage to 30 million contributors by 2024, with the aim to ensure 40 percent of Nigerian adults are included in the scheme.
In March 2019, the Mohammadu Buhari led-administration launched the micro pension scheme to provide the informal sector with a veritable means of securing old age income.
According to Aisha Dahir-Umar, the Acting Director General (DG) of PenCom, the implementation of the Micro Pension Plan (MPP) would yield positive results for Nigerians and the pension industry, adding that it would assist greatly in reduction of old age poverty in the country where about 152 million people live on less than $2 a day.
“The commission has put in place requisite infrastructure to facilitate seamless implementation of MPP. The Enhanced Contribution Registration System (ECRS) has been deployed to facilitate seamless operations of the MPP. This system has so far aided the smooth registration of micro pension contributors,” she disclosed.
According to the latest figures by PenCom analysed by BusinessDay, the number of workers on the pension scheme stood at 8.63 million as at first quarter of 2019, 158,837 higher when compared with the 8.47 million reported in the fourth quarter of 2018.
But as at the end of May 2019, the scheme membership is at a record high of 8.87 million. According to Agusto & Co, a Lagos-based research and credit rating agency, the employers in the formal sector has been the major driver of the scheme.
“The survey findings reveal that the influence of employers remains the biggest driver of enrollees’ decision in selecting a Pension Fund Administrator,” the agency said in its recent report.
At the current level, PenCom is about 58 percent behind its 20 million workers targeted to be enrolled in the scheme by the end of 2019.
If the industry regulator is to achieve its goal, it would have to include 11.6 million new workers to the pension scheme in less than five months.
Checks by BusinessDay revealed that only about 12.2 per percent of the working population in Africa’s most populous nation have keyed into the contributory pension scheme.
“We also observed an increasing level of enrollee dissatisfaction, with over 50 per cent of respondents indicating the possibility of switching PFAs when the transfer window is open,” Agusto & Co said.
As at December 2018, EFInA’s recent figures revealed that 36.8 percent or 36.6 million Nigerian adult populations are outside the financial service net.
With the current level, Nigerian apex bank would have to close the 16.8 percent inclusion gap to achieve the 20 percent exclusion target by next year.
In October 2012, the financial service regulator in partnership with industry stakeholders launched the National Financial Inclusion Strategy (NFIS) with the aim to ensure it include 80 percent of Nigerian adult population into the financial cycle by 2020. The deadline is now less than five months.
In the quest to contribute its quota, Sunday Thomas, the Acting Commissioner for Insurance, said the insurance commission has issued some guidelines to ensure that those not in the formal sector embrace financial services.
The acting commissioner, who was represented at the 4th NAIPCO National Conference by Leo Aka, the Director, Governance Enforcement and Compliance, said it required collective efforts to ensure that Nigerians in the informal sector embrace financial services.
Looking at the demography of Nigeria, Thomas said one would notice that unemployment rate in Nigeria is quite high, adding that this was a signal that the industry needs to move fast to capture the people in the informal sector.
He added that while establishing the micro insurance guidelines, the commission ensured that the micro insurance products are very simple, easy to understand, affordable, valuable in that it should be able to address needs and remain efficient.
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