Strategise To Integrate Informal Sector, Expert Urges Insurers, PFAs

The managing director/chief executive officer (CEO) of Arthur Stevens Asset Management Limited, Olatunde Amolegbe, has charged operators in the insurance and pension sectors to develop strategies to bring the whole informal sector under insurance and pension coverage.

Amolegbe presented the challenge at a recent conference in Lagos and noted that the informal sector comprises about 70 million Nigerian working population.

He identified the two sectors as key sub-sectors of the economy’s financial services industry that can accumulate long-term investible funds.

‎However, he regretted that both sectors suffered from underdevelopment for years due to a lack of public confidence and trust and poor awareness of their value.

Highlighting the underdeveloped nature of the two sectors, Amolegbe said, pension and insurance coverage remained low, observing that only 26.3 per cent of Nigerian workers had access to a pension plan and health Insurance in 2023, largely due to the high number of informal sector workers in the country.

“Approximately 92 per cent of Nigeria’s employed population works in the informal sector. Voluntary Micro pension scheme adoption has been low as of December 2024. Micro pension registration was barely 172.936 six years after the scheme’s introduction, for the inclusion of the informal sector,” he noted.

On insurance performance, he said: “Nigeria’s insurance penetration remains largely low at less than 1.0 per cent compared to South Africa ‘s 11.54 per cent, Namibia’s 7.41 per cent, Morocco’s 4.10 per cent, Kenya’s 2.25 per cent and the global average of 6.8 per cent.”

‎To address the problem, he said, the operators’ first step towards capturing the informal sector into insurance and pension fold was to rebuild their confidence and trust.

‎He said, This was necessary. Without regaining their confidence, they could not be captured in pension and insurance nets because they would not want to put their money where they could not easily access it.

‎He also urged operators of the two sectors to devise a different and straightforward system of enrolling the informal sector operators into the system using modern technology, urging operators of the pension sector to begin to think about how to establish micro Pension Fund Administrators(PFAs) and operate such firms in areas where micro people live.

‎He urged insurance operators to use the opportunity of publicity created by the NIIRA 2025 to promote financial literacy among young Nigerians and make people have feelings for savings through insurance and pensions.

‎Highlighting statistics on the performance of the two sectors between 2020 and 2024 Amolegbe said: “The pension and insurance sectors have recorded substantial growth, positioning them as critical pillars for economic stability and capital market deepening. Total pension assets reached over N23 trillion in 2025, equivalent to approximately 8.6 per cent of GDP.

Between 2020 and 2024, public sector contributions rose by 71.7 per cent to N5.89 trillion, while private sector contributions grew by 65.7 per cent to N5.42 trillion. In the fourth quarter of 2024 alone, contributions totalled N342.23 billion, with total Assets under Management standing at N22.51 trillion,” he stated.

‎He, however, noted that, penetration remained below 1 percent far behind regional peers such as South Africa, Namibia, Morocco, and Kenya. He highlighted benefits of pension as driving long term investment, reducing poverty level among the elderly, promoting social stability and reducing dependency on family and government.

‎He also highlighted insurance benefits as mitigating financial risks, and enabling businesses to invest and grow with confidence, promoting economic stability by compensating losses from unforeseen events and attracts foreign investment by offering risk coverage, boosting capital inflows among other benefits.