niyi Jacobs
In Nigeria, more than 68% of the workforce operates in the informal sector, leaving millions of workers without pensions, savings, or retirement plans, according to latest report carried by BusinessNg newspaper.
This is a major concern given that only 7% of Nigeria’s working-age population holds formal pension accounts, according to recent data.
With over 100 million adults of working age, this means a vast majority are without a financial safety net for their future.
Nigeria’s informal sector is vast, encompassing street vendors, small traders, domestic workers, artisans, and those in agriculture or other informal industries. While these workers make significant contributions to the economy, they are excluded from formal financial systems. This gap means they lack access to critical services like pensions and health insurance that help safeguard financial futures.
Despite efforts to improve pension coverage, only a small percentage of Nigerian workers are covered by formal pension schemes. According to the National Pension Commission (PenCom), around 7% of the adult population has a pension account, leaving over 93% of the workforce, mostly in the informal sector, without retirement security. This highlights the challenge of financial inclusion in Nigeria.
Several factors contribute to the low pension penetration. Many informal sector workers are unaware of pension schemes, or they view them as unattainable due to the complexity of the system. Moreover, irregular incomes make it difficult for these workers to commit to pension contributions, and a lack of trust in financial institutions further compounds the issue.
Experts argue that addressing this gap requires more than just awareness. Tailored pension products designed for the informal sector need to be accessible and affordable. Digital platforms and mobile banking could play a key role in making pensions more accessible to informal workers.
Government and private sector stakeholders must work together to develop innovative pension products for informal workers. The Nigerian government has made some efforts to expand pension coverage, but much more needs to be done to ensure that the informal sector is included.
As Nigeria’s population grows and ages, ensuring that all workers, formal and informal, have access to a retirement plan is essential. Without this, millions of Nigerians will face financial insecurity in their later years. The time for action is now, and a concerted effort is needed to provide financial security for all workers, regardless of their sector
