By Rasheed Sobowale
This publication is the first in Vanguard Online series of Tech StartUps’ stories.
Tunji Andrews an advocate of financial inclusion shares the story of his company, Awabah, a Mirco-Pension startup tech. Andrews once argued that not everybody living in Nigeria earn enough to save for the future.
Read on as he is grilled on this comment and how he planned to make Nigerians pensionable.
What is your drive?
Tunji Andrews is an economist that has spent much of the last decade advancing financial inclusion in Nigeria. I’ve always had a passion for seeing people understand financial matters and also hoping to see more people included in the financial service sector in a bid to fight extreme poverty.
Tell us about Awabah?
Awabah Nigeria is a company set up to bring Micro-Pensions and target savings to the informal sector. We make these available to the general public in collaboration with our technical partners LEADWAY PENSURE and LEADWAY ASSURANCE.
As a technology company, our focus is how to automate access for the informal sector, using USSD, WhatsApp, agent bankers, etc to make sure that the last mile Nigerian will get the same level of access to world-class financial services as Nigerians in the major cities.
We are determined to give world-class services and hope that our clients will remember us for the relationship with them.
Your target market?
Yes, our target market is the entire informal sector. Traders, transporters, techies, market people, artisans, domestic staff. Basically, everybody that is not in formal employment.
Meaning of Awabah?
(Laugh). It’s pidgin English. It means ‘Our-Money’. Awa – Bah.
We have a tag line.
This Bah, nah your bah, nah my bah, nah Awa-Bah
This is so because we believe that our focus is on building wealth in the local communities together.
How does it work?
So, contributors with as little as N1,000 can start a Micro-Pensions account and here is where it gets interesting, the structure to contributions are super flexible. Daily, weekly, monthly, or even quarterly.
Also, due to the inconsistent cash flow of many people in the informal sector, contributions are flexible.
Think of it like your long term ajo/esusu/contributions.
Also, because PENCOM realised the need for cash flow for the informal sector, contributors can withdraw up to 40 per cent of their savings at any point, after the 1st 3 months of contributing.
If I read the above right, it means the minimum amount to get started is N1,000? If yes, is this also the same for consequent contribution, which as you highlighted can be daily, weekly or monthly?
Subsequently, you can contribute what is easy for you. We believe in encouraging people to contribute as much as they want to see when they retire but ultimately, it’s up to the contributors.
Why are you restricting your collaboration to just one partner?
So, yes we are with LEADWAY PENSURE because of the support they have given us. It also doesn’t mean we are ruling out conversations with other PFAs.
PENCOM only issues unique numbers for contributors and regulates the sector. We work with LEADWAY PENSURE to see that the conversation is seamless for the contributor.
You once queried the “No matter how little you earn, you must save” quote, questioning its workability in a nation like Nigeria. Has your thought on this changed?
Amazing! So here is my thought about savings. For the average Nigerian, it is a luxury because the earning power is poor. This is why we go beyond just encouraging people to save, we also give financial education to help people improve their earnings.
We will be deploying a service called WHAT ARE YOU INVESTING IN in February. A completely free financial education platform that helps individuals grow their income and it will be in English, pidgin, Hausa, Igbo and Yoruba.
We will be taking this service to the local communities to help our people grow their income because we know that people can’t save without increasing their earnings.
You stated earlier that users can withdraw 40 per cent after three months. Does this mean after the first 3-month, I can withdraw 40 per cent, then a few weeks later, I can request another withdrawal. And probably withdraw everything in my account?
No, so the savings portfolio is an entire block of 60 per cent that is not accessible till the agreed date and 40 per cent which is available to draw on.
So, whenever you deposit N1,000 for instance, N600 goes into your retirement savings and N400 goes into contingent savings.
If you don’t draw on it, both will be available to you at retirement but you can draw on the contingent savings bucket.
Which means the funds in the contingency 40 per cent bucket is all you can draw on.
When did you launch and what are the early feedbacks like?
So we launched officially last month [December 2020]. Doing local meetups with cooperatives and artisan communities.
They have been excited about our product, especially in the light of how we explained it to them.
Our digital rollout will be from the 20th of January for those who are more digital in orientation but since our people are on the streets, we felt it best to go to them first while following strict COVID prevention protocols.
But MicroPensions as a product is over a year in existence. PENCOM felt the need to extend this service to the informal sector but it’s not had as much traction until now.
Any external investment yet? Or still bootstrapping?
So, we are bootstrapping at the moment while speaking to investors. We are passionate about what we are bringing to the people. Delivering MicroPensions to the informal sector is first a social impact conversation, which doesn’t eliminate profit but speaks to how we believe profitability and growth must be pursued.
It can’t be growth at all costs and that is why we have been picky with taking on investments. When we find the right fit (which I suspect we have), we will make it public.
We are expecting the announcement.
Definitely. We will make it public.
In numbers, what is your subscription base like?
We have a little over 4,000 clients on our waiting list that will be converted in the coming days. People who have even made financial commitments.
Aged poverty isn’t a number we track in Nigeria because, by the stats, we have just about 5 million people 65 years and over. Can you imagine the poverty effect when the 25-45 years join that age group? Especially if we don’t actively push retirement savings? This is why we are here.
Do you have a license yet?
No, we do not. Our partner holds the license and we just manage the relationship between them and clients. We hope to push conversations with PENCOM on the possibility of issuing MicroPension licenses for small players like ourselves because we believe we are best positioned to drive this product but it’s still very early days.
Your thoughts on Nigerian startups potentials?
Honestly, it’s hard but improving, from infrastructure to capital (human and financial). It’s tough.
Most startups die before even reaching the market because of these things I’ve said and we need urgent interventions to see ideas come to life.
The Lagos State government has been helpful in this regard with the LSETF and other interventions but this needs to be a national conversation to let more tech startups survive post fundraising.
From your experience as a data analyst, in Nigeria (and Africa), have we missed out on big data opportunities?
So, part of our work at ResourceDat was to be able to help the average Nigerian (1st of all) make sense of Nigerian focused data.
We did so much work in data gathering and aggregation; and honestly, this has gone on to birth even more companies focused on big data for better decision making and building a better Nigeria.
I still think we don’t have as much data as we should have and that inspired some of my work in collaboration with the National Bureau of Statistics (NBS) because I believe Africa desperately needs to make better decisions.
Please explain ‘better decisions’?
So, from capital deployment to national development. I’ll give you an example. Lagos is surrounded by large bodies of water but Lagos doesn’t have running water in most parts.
Big Data can put the water consumption needs of Lagosians side by side and the impact of a Dubai size water treatment plant in Lagos. It will also show the possible number of jobs that can be created; potential revenue that could be generated for the government; savings for the people in spending on water; and the extension of water transmitted illnesses. We are not even looking at the multiplier effect on factories, etc.
Big data is everything.
You did a lot as an economic data analyst, what do you think about the Nigerian economy?
The Nigerian economy bothers me because it has so much potential but very little productivity.
I don’t need to go into the “what we can do” but it’s not yet producing at a sufficient scale for its population. We need to do everything we can to improve productivity and ensure it’s done in structured and sustainable ways.
It’s not right that over 60 per cent of our economy is informal but it then proposes a challenge for social impact startups to solve problems within the community.
My thought on Nigeria is that we are yet to pursue our place in the global conversation but I’m also sure that when we are ready, we won’t wait too long.
In your word, what does financial inclusion means?
Financial inclusion to me is wealth distribution. So, in financial services, banking to be exact, Mr(s) A brings his/her millions, deposits it in a bank and keeps it for safekeeping.
The bank then takes that money to make loans for those who don’t have millions.
Also, look at insurance cover, it’s the many healthy people paying for the bills of the few sick ones.
The more we have people that are financially included, the more wealth is distributed and poverty reduced.
As a founder, what did you wished you knew earlier?
For anyone starting now, know that entrepreneurship is hard and lonely.
You will only make it through if you are passionate about what you’re doing because you will find many reasons to quit and will only find answers if you’re determined to make it work.
No business in my opinion can absolutely fail if your determination is resolute, the product may not be a market fit but that’s why businesses pivot.
Only someone passionate can think through such times.