Awabah’s Tunji Andrews offers insurance, pension, financial leverage to Nigeria’s informal workers

Nigeria’s informal economy is estimated at 57.7%, representing approximately $626 billion at GDP PPP levels. Most individuals in that sector are unbanked or excluded from financial services.

Despite the rise of many fintech platforms over the years, the EFInA Access to Financial Services in Nigeria 2020 Survey shows that only 51% of Nigerian adults are using formal financial services, such as a bank, a microfinance bank, mobile money, insurance, or pension accounts, up from 49% in 2018.

Growing up in Mushin, a densely populated area of Lagos, and being a longtime advocate for financial inclusion, Tunji Andrews, CEO and co-founder of Awabah, claims that the majority of financial services provided by fintech platforms do not cater for those who are seen to be excluded.

“A lot of the conversations I have heard people have, did not just resonate with the street. People talk about financial inclusion today and they mention an iOS app, which isn’t a bad thing. But if you are talking about financial inclusion, then you realise that iOS isn’t readily available to those who are excluded today.”

Tunji Andrews

On this basis, Tunji claims that his platform, Awabah – a digital platform that provides micro pension access to self-employed Nigerians and informal workers, differs from all other fintech platforms.

Tunji says that Awabah was created to offer financial leverage to those who do not have it rather than provide financial inclusion because he believes that the available financial tools offer nothing to this set of persons in terms of leverage.

“Awabah is a financial institution for gig workers, basically providing financial wellness to gig workers. For us at Awabah, we felt that it was important that informal sector workers are able to get the same level of financial service that their counterparts in the formal sector get.”

What we have done is created a bundle of financial services starting from micro pensions, and bundle this into what we call value bah, which is a value-packed bundle that you can get pension savings, health insurance, accident cover, and life insurance all for N1500.

Tunji Andrews, CEO and co-founder of Awabah

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The adoption rate of Awabah

The Micro Pension Plan (MPP) is a new retirement offering launched in 2019 by the Nigerian Government to cater to workers in the informal sector. It differs from the earlier established Contributory Pension Scheme (CPS), which is only available to workers in the formal sector.

Seeing that informal sector workers, who account for close to 80% of Nigeria’s labour force, had no access to structured retirement savings, the recently established scheme is a laudable one. However, despite noble intentions, the scheme has recorded a dismal adoption rate as a result of the absence of infrastructure required to reach the target market. Notably, there are currently few players in the industry, possibly because the market for micro pensions isn’t attractive.

What does Tunji have to say about this?

“The adoption has been good”, Tunji says. “The biggest success we had so far is our relationship with the pension industry. We are now a shared service provider for the pension industry. Last year, we won the most inclusive financial product from the CBN and we are seeing customers come from everywhere in the country”, he added.

Currently, we have an office in Kwara, Ibadan, Port Harcourt and a physical office in Abuja plus the office in Lagos. For us, it is perhaps baby steps, but ultimately, we have done a significant amount of reach at bringing people who would normally not have a pension plan by bringing our services to them.

Tunji Andrews

In terms of making profits, Tunji says apart from the commission gotten from these transactions because they are carried on its platform, “every time someone signs up on pen pay, which is a subscription-based service, they pay a subscription fee.”

Business Model

Awabah is coined from a Nigerian phrase simply pronounced as ‘Awa bah’, meaning ‘our money’. Often. Informal workers in Nigeria form cooperative unions where they get to contribute a part of their earnings and, in the end, get a bulk sum. This is sometimes called ‘esusu’ or ‘ajo’ amongst the Ibos and Yorubas.

Tunji tells us about the business model with Awabah:

“So the way the pension industry is built is a one size fits all pension system where the pension fund administrators that you know of all the big names across the country are charged with providing mandatory pensions, but at the same time also providing micro pensions. And
In the structure to which they’ve been built, managing both formal and informal sector pensions can be a bit tricky“. Tunji says.

What we’ve now come to do and what we’ve set up to do is to be able to make their informal sector conversation easier. So we plug into helping to ensuring that the relationship with the informal sector workers is fantastic. But here’s the beautiful thing, they are the ones that manage the pension savings.

Tunji adds that people using the platform can choose their administrator themselves. “When you come to Awabah, you get to choose the pension fund administrator that you will work with. We have no say in which pension fund administrator you choose to go with, our job is just to make sure that all of them are available to you when you decide you want to start saving for your future.”

The Value Bah

Among the many services, the company offers its customers to make pension plans attractive and savings encouraged is the Value Bah. Tunji claims the value bah pack has been a big hit amongst the informal sector workers where with N1500, “you can get pensions, health insurance, life insurance and accident cover.”

“But what we’ve done also is that instead of just also sending a loan to the individuals, what we’ve now been doing is selling it to their employers. By employers, I mean everybody that has a driver, a maid, everybody that has factory workers, delivery guys, cleaner in the office, every single person who is earning an income structured or unstructured but is earning an income is able to get access to that.”

So what we’ve now done is to be able to use employers of casual workers to be able to spin the number of people who can get access to this. So now we’re moving to cooperatives, partisan communities, societies, you know, clusters of ride-hailing drivers.“

Our eventual goal and desire is to be able to make it reach every single Nigerian across the country.

Tunji Andrews

Plans for low-income earners in rural areas

If the fight against financial exclusion is really to be won, then much of financial services ought to get to those who do not have access to it. These people majorly live in rural communities. For Tunji, although this is true, he really doesn’t believe in financial inclusion anymore.

“I do not think, as a concept, it is honest enough. What we are pushing within Awabah right now is to be able to give financial leverage. And the context of financial inclusion just means bringing in people who do not have any financial service into the space that gives them financial service.”

This is good, but this is not enough to be able to actually do what we think or thought financial inclusion was supposed to do on the African continent. What we are now pushing is financial leverage, being able to give the average everyday person services that enable them to, you know, create more leverage for themselves.

Providing credit for its customers

As part of providing leverage to its customers, Tunji says the platforms also help ensures that they do not miss important opportunities when it arises. This it does by providing low-interest loans to its customers when they need it to sort something pressing.

Also, he claims that because its customers have acquired various financial services with them over time, they can build a strong credit history and muscle to get a loan when they need it. However, the company is still working on this model.

The credit is still being tested because obviously, we have to be able to go through all the others.

Tunji Andrews

As for the necessary finances to finance that model and the investments they have generated since launch, he says the company has raised $300,000 and is looking to get more soon.

Life being a founder

For many, being a founder is one of the most challenging endeavours one can take upon themselves. It entails managing many personalities, staying focused on the vision and inspiring others to commit to it. For Tunji, it has both been challenging and inspiring.

It’s been challenging and inspiring, he says. I totally get when people say, you should do something you’re passionate about because it’s really so hard that if you are not super passionate, you would quit.

“The resilience not to give up on what we’ve been doing has opened up many multiple doors for us that we could have just quit because we did not see the responses from the market that we expected on day one. But because we persevered, things started to open up to us and people started to trust us because of our perseverance.”

On how he manages the people he works with and the company’s current staff strength, he says they are currently 28. However, he doesn’t manage people.

I’m not good at micromanaging, he says. Everybody that works with us does so as a partner really. Everybody does what they need to do and I do what I need to do and we all just meet in the middle. So the culture is building and we are hiring people who are self-motivated because they should be able to make sure that the job they need to do gets done.

Tunji Andrews

Ending 2023 on a high

For Tunji, more is to be expected in the remaining months of this year. This is what he says;

You’re going to be seeing a lot coming from us. We’re going to be really taking our value bah package to the market. We’re gonna be taking it down a lot more just to be able to have more customers and get access to it across the country.

“Also, we have a sister proposition called PenPay, which also is going to be reaching out to as many people across the country. We want to be able to have more presence across the country. So more expansion and more deep roots in Nigeria are going to be an entire focus for 2023“, he added.