For six years, Nigeria’s “Micro Pension Plan” (MPP) has been inactive. It was launched in 2019 by the Buhari administration to include millions of traders, artisans, and gig workers in the pension system. However, progress has stalled. As of Q3 2024, only about 164,000 out of a target of roughly 75 million informal workers had registered. Of these, only about 12,000 had funded accounts. This means coverage is effectively zero.
On Monday, the National Pension Commission (PenCom) made a significant change. By licensing Awabah as the first “Accredited Pension Agent,” PenCom is shifting its strategy. They are moving from a “build it and they will come” approach to a more proactive “go and get them” model.
Introducing the Agent Banking Model to Pensions
This marks the “fintech-ification” of the pension industry. For years, PenCom promoted pensions to the informal sector using terms suited for corporate workers, such as “compliance” and “safety nets.” This strategy did not resonate. A market woman, facing 30% inflation, is less concerned about compliance and more about her money’s safety and accessibility.
Awabah, founded by Tunji Andrews, takes a different approach. They function as an aggregator. Instead of lengthy forms at banks, users can register via mobile or through agents. They treat pensions like “Esusu” (thrift savings), allowing small daily or weekly contributions. They also offer immediate benefits, like health insurance or accident coverage, making the wait for long-term savings more appealing.
By licensing Awabah, PenCom is outsourcing pension distribution to the private sector, much like mobile money agents have helped expand banking access.
Addressing Economic Challenges
Awabah faces more than just logistical issues. The overall economy is a challenge. Their core belief is, “No African worker should be one mishap away from poverty.” But with high inflation, many workers find it hard to save. For informal workers, saving for 20 years seems impossible.
To tackle this, PenCom has rebranded the scheme from the “Micro Pension Plan” to the “Personal Pension Plan” (PPP) to attract more participants. Awabah has also launched the ValuBah bundle to provide immediate benefits. Instead of just asking for savings, this bundle includes health insurance, accident coverage, and life insurance alongside pension contributions.
It costs just N3,000 per month. Contributors can also access 40% of their savings in emergencies after a qualifying period. By offering immediate health coverage with long-term savings, they are helping workers avoid choosing between their health now and saving for retirement later.
Why This Matters
If the pilot program with Awabah succeeds, PenCom may license many more agents, including fintechs, telecommunications companies, and trade unions.
This is urgent!
Nigeria’s informal sector is ageing, and if 75 million people retire with no savings and no social safety net, it could create a major social crisis. PenCom understands it cannot rely solely on regulations; it needs to innovate. Now, they are allowing startups to take the lead.
