January 27, (THEWILL) – There are strong indications that the expanding presence of fintech platforms across the country will accelerate Micro-Pension penetration in 2025. This anticipation hinges on the unusually high rate of expansion by fintech companies into the countryside in recent times, as witnessed during the last Yuletide season.
PAINS OF THE PAST
In the past, the inability of the rural dwellers to enjoy satisfactory financial services transactions, especially the payment systems, added to the frustration of cash and fuel scarcity during the festive period.
This resulted in loss of business opportunities, compelling many people to travel long distance to the cities to access bank and network services in order to have something to show for their efforts.
DIGITAL BOOM
The experience in the last Christmas and New Year season was remarkably different in a positive way. The cash scarcity that hit the banks and their ATM terminals pushed people to alternative payment systems – using the fintech platforms, especially Moniepoint, Opay and PalmPay digital payment platforms.
Consequently, for the first time in many years, the rural areas witnessed idle bank ATM terminals, yet businesses boomed via digital payment transactions – such as transfers and POS services – as was never experienced in the past. Petrol filling stations, transporters like the bus, motor-cycle and tricycle operators, petty traders, market women selling soup ingredients embraced digital payments.
Drinking joints operated late into the night with customers making instant payments through their digital accounts.
“Business has never been this good, despite the high cost of things,” a middle-aged woman who identified herself as Beathrice Akor, revealed in her local restaurant in the remote area of Imo state.
She was excited about the boom in digital payment transactions that guarantee security and safety of her wares.
Roadside mechanics, vulcanizers and car wash operators accepted e-payment through transfer or POS, so did the worship centres.
ENHANCED MICRO-PENSION DRIVE
Industry stakeholders believe that, with adequate public awareness, the development would accelerate the Micro-Pension scheme meant for the informal sector.
“This is a window of opportunity to drive the Micro-Pension initiative,” said Anthony Edoki, a finance and tax expert.
Amid prevailing economic hardship across the country, the National Pension Commission (PenCom) has embraced tech-driven initiatives in its regulation of the pension industry. This is in pursuit of its mandate of ensuring that retirement benefits are paid as and when due – a measure that also enhances financial inclusion.
Evidently, the reform policies of the Bola Tinubu-led government have thrown up unintended consequences of closure of businesses and loss of jobs across sectors, which has put pressure on the assets of the Contributory Pension Scheme (CPS).
In response, PenCom has risen up to the challenge. According to the apex pension regulator, effective regulation of the pension industry demands accelerated adoption of appropriate technology in all aspects of the Commission’s activities – from enrolment through oversight functions to payment of retirees’ benefits.
Leveraging on the rapidly expanding fintech platforms to implement the necessary policies would advance Micro-Pension penetration across the hinterlands.
WALKING THE TALK
At a recent media engagement in Lagos, the Director-General of PenCom, Ms Omolola Oloworaran revealed that the Commission was not slacking in its adoption of technological initiatives as pressure mounts on the agency..
“Technology has become the backbone of transformation across all sectors, and the pension industry is no exception. At PenCom, we have embraced this transformation wholeheartedly.
“Today, we have over 10.5 million contributors and oversee pension assets in excess of 21.9 trillion naira as of October. This progress demonstrates the strength of our contributory pension system, but we are not without challenges.
”Inflation, for instance, continues to erode the purchasing power of pensioners, and we are actively seeking innovative solutions to address this issue,” Oloworaran said in her address at the occasion, with the theme: , ‘Tech-Driven Transformation: Shaping the Pension Landscape,’
Commenting on the pressure experienced by the Commission amid prevailing economic challenges, the PenCom boss lamented over the delay in settling accrued entitlements of contributors – the essence of the tech-driven options, and the way forward.
Her words, “We also continue to face the persistent issue of delays in the payment of accrued rights. Recently, 44 billion Naira was approved under the 2024 budget appropriation to settle accrued pension rights for retirees from March to September 2023.
“Moving forward, we are working with the Federal Government to put in place a sustainable solution that ensures retirees receive their benefits promptly and without undue stress.”
Among the automated processes in the Commission’s tech-driven initiatives include the E-Pension Clearance Certificate (EPCC). This is aimed at improving the turn-around time for issuing PCC, engender transparency and promote ease of doing business.
The Commission automated the process by developing the e-Pension Clearance Certificate Application which has the following Modules: Employer Module, Pension Fund Custodian Module,and the PenCom Module.
DATA SPEAKS
A total of N1.14 trillion was realised through the automated E-PCC since inception in 2012, through 484,839 Retirement Savings Accounts (RSAs).
The Commission’s various Innovations in Retirement Benefits Processing added to the enhanced tech-driven initiatives. Under this include Programmed Withdrawal which is administered by the Pension Fund Administrators (PFAs) and Retire Life Annuity administered by licensed life assurance companies approved by the National Insurance Commission.
Others are the Temporary Loss of Employment which has the following features:
The PenCom boss explained that since assuming office, she and her team have been focused on strengthening compliance, enhancing service delivery, diversifying pension assets to optimize returns, improving benefits, and expanding coverage to include more Nigerians, especially those in the informal sector.
“The micro-pension initiative, in particular, is something we are very passionate about. It is our way of saying that no one should be left behind, no matter how small their earnings might be.
“Technology plays a vital role in driving this inclusion, from mobile enrollment to real-time account management to benefits administration. We intend to use technology to scale the micro-pension plan,” she said.
With the rapid expansion of the fintech platforms through the countryside, the Micro-Pension scheme would see a boost that reflects the enhanced productivity, fluid communication and affordable, pleasant business environment.
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
