By Victor Ogiemwonyi
Lagos, Dec. 1, 2025 – The informal sector is the engine of Nigeria’s economy, yet for decades, it has remained largely excluded from critical financial structures like pension schemes. With millions of self-employed Nigerians, market traders, artisans, and small business owners working daily to keep the economy alive, the lack of a retirement safety net represents a glaring vulnerability for both workers and the nation.
In a bold move, the National Pension Commission (PENCOM) has signaled a transformative approach, aiming to expand pension coverage to the informal sector through the newly branded Personal Pensions Plan (PPP). The shift from Micro Pensions to PPP is more than semantic—it reflects an inclusive strategy designed to reach self-employed individuals, entrepreneurs, and even formal-sector workers who wish to supplement their retirement savings.
According to PENCOM, over 42% of informal sector workers have no savings at all, according to the Moniepoint 2025 Informal Economy Report. Without structured financial planning, millions risk retiring in vulnerability, despite being the backbone of the nation’s commerce and production. Inclusion in the pension ecosystem is therefore not just a social imperative—it is a matter of national economic security.
Digitalization and Accessibility: A New Era for Pension Inclusion
Technology is central to PENCOM’s strategy, with digitalization enabling easy access to pension plans for millions previously excluded. By leveraging mobile platforms, online enrollment, and automated contributions, informal-sector workers can seamlessly participate, building savings for the future while contributing to the country’s long-term capital formation.
PENCOM’s ambitious target of reaching 80 million informal-sector contributors could be exceeded, particularly with mass media campaigns and simplified enrollment processes. This scale of mobilization will inject enormous long-term capital into Nigeria’s economy, complementing the existing N26 trillion pension pool contributed by just 10 million formal-sector participants over the last two decades.
From Pensions to Infrastructure: Financing Nigeria’s Future
The potential impact extends far beyond retirement. Long-term pension capital can be strategically deployed to finance critical infrastructure projects that have historically struggled for funding. Railways, for instance, represent a commercially viable and socially transformative opportunity. With millions of Nigerians relying on efficient mass transportation, pension funds could finance railway development, creating a steady revenue stream while stimulating job creation and economic growth.
Historically, banks in Nigeria have successfully syndicate-financed large projects beyond the capacity of a single institution—examples include the Styer Truck Assembly in Bauchi, the Battery Factory in Ibadan, and Cadbury’s chocolate expansion. Pension funds, with their long-term capital horizon, are ideally positioned to replicate and expand this model, potentially in partnership with insurance companies and other institutional investors.
Investing pension money in infrastructure not only generates recurring revenue for pension funds but also strengthens the economy, providing employment and boosting future contributions. The concept is simple: a creative, forward-looking pension industry can simultaneously safeguard retirement security and catalyze national development.
A Call to Action for Nigeria’s Pension Industry
For too long, pension investments have been concentrated in fixed-income government securities. While cautious management was necessary initially, the industry now faces a critical opportunity to diversify into alternative real assets, creating sustainable revenue streams and supporting long-term national projects.
Collaboration among pension companies, banks, and other capital-rich institutions can unlock transformative opportunities. By pooling expertise and resources, these stakeholders can fund infrastructure projects that address both social needs and economic imperatives, mitigating risks while ensuring profitability.
Pension inclusion in the informal sector is not merely a financial innovation—it is a national imperative. It aligns the social safety of millions with the economic development of the country, leveraging capital today to secure wealth, infrastructure, and stability for tomorrow.
Nigeria stands at a crossroads. The choices made today regarding pension coverage, infrastructure investment, and financial inclusion will shape the nation’s economic trajectory for decades. The informal sector—long undervalued, underrepresented, and underfunded—holds the key to this transformation. With vision, technology, and policy alignment, pensions can move beyond retirement security to become a driving force for national prosperity.
Victor Ogiemwonyi writes from Ikoyi, Lagos. He is a retired investment banker and market analyst. Follow his insights at marketconversations.substack.com.
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Godwin Okafor is the Publisher & CEO of Naija247news Media Group LLC, an independent investigative news platform delivering accurate, data-driven reporting on Nigerian and global politics, economy, finance, and business. Founded in October 2010, Naija247news specializes in developmental journalism, providing timely insights and analysis to readers across Nigeria and the diaspora.
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