A lot of people with 9-5’s probably see pensions as a given. Some amount gets deducted from your salary and your employer contributes the rest. You watch your millions pile up and wonder when you’ll get to retire and enjoy all of that money.
But what is it like for low income earners who are informal workers? This question was the core of my discussion with Tunji Andrews, whose new startup, Awabah NG, in collaboration with Leadway Assurance will now offer Micro Pensions to Nigeria’s low income earners.
Micro Pensions are a voluntary, defined contribution, individual account plan for low income earners.
How Tunji Andrew is thinking around the problem: “The average Nigerian lives paycheck to paycheck, hoping one day that they’ll walk into a room and find a bag of money. It’s difficult to find a Nigerian who has not thought about this.”
“In our view, we believe that it is important to plan towards having a financial future while you hope. So far, what we’ve seen is that most products that help you move towards financial freedom look like it’s only for the formal sector. This is why our flagship product is micro pensions.”
Why isn’t Awabah leaving the job of selling micro pensions to PFAs? “It’s difficult for PFAs to sell micro pensions, because the informal sector is a tricky space to go into. If you’re speaking to people in the formal sector, all you need to do is tell them their future is at stake and they get it.”
“With low income earners, you have to convince him or her that having multiple children is not a retirement plan.”
Awabah is betting that it can speak the language of the informal sector and with a partnership with Leadway, a bigger player in the space, Tunji Andrews is optimistic they can show informal sector workers a newer way to think about financial security.