Sustaining micro pension plan in Nigeria's informal sector

The Pension Fund Operators of Nigeria is aiming to extend the coverage of the Micro Pension Plan to over 2.2 million Nigerians in the informal sector. Currently, there are nearly 100,000 individuals enrolled in the micro pension program with assets amounting to just under 450 million. Despite the modest penetration, CEO of PENOP, Oguche Agudah, remains optimistic about ramping up those numbers in the coming years to reach the ambitious targets set by the National Pension Commission. Agudah highlighted the need for innovative product designs that align with the specific needs of informal sector operators to drive implementation and coverage of the micro pension plan. The strategies outlined focused on market segmentation, digital platform utilization, and partnerships with telcos and digital financial services for effective distribution. One of the key strategies to boost micro pension coverage in Nigeria is to understand the market requirements and segment the target audience. Agudah pointed out the potential of the growing gig workforce, including young entrepreneurs and digital natives who are currently not part of any pension plans. By tailoring products to meet the unique needs of these individuals and leveraging partnerships with existing financial service providers, the micro pension plan can reach a wider audience. Looking ahead, Agudah expressed optimism about the potential of the micro pension market in Nigeria. Modelling shows that with just 10% of the current informal sector or non-pension contributors contributing $1 a day, the assets could grow to nearly $5 billion within 5 years and $18 billion within a decade. The CEO emphasized the importance of consistent contributions over time from many individuals to drive the growth of the micro pension market. Despite mixed feedback from the informal sector, Agudah emphasized the importance of financial literacy and education to change perceptions about pensions. By highlighting the importance of saving for the future and the benefits of long-term investing, the micro pension plan aims to attract more participants over time. Agudah acknowledged the need for continuous education, publicity, and awareness campaigns to encourage more individuals to join the scheme. When asked about successful models in similar economic conditions, Agudah mentioned India, Rwanda, and Kenya as examples of countries with growing micro pension industries. India, in particular, has seen significant success in micro pensions, providing a blueprint for Nigeria to follow. By learning from these countries' experiences, Nigeria can further develop and expand its micro pension plan to include more excluded individuals in the informal sector.