By David Akinmola
Nigeria is forfeiting vast pools of long-term savings and investment capital because most of its estimated 70 million informal sector workers are excluded from pension and insurance schemes, financial experts have cautioned.
Speaking at an industry that involves insurance and pension operators in Lagos, the Managing Director of Arthur Stevens Asset Management Limited, Olatunde Amolegbe, said that failure to capture the informal economy poses a major economic risk to the country’s financial stability and growth ambitions
Amolegbe said the insurance and pension industries, two critical arms of Nigeria’s financial system with the potential to mobilize massive long-term funds, are still underdeveloped, with penetration levels among the lowest globally.
“Approximately 92 per cent of Nigeria’s employed population works in the informal sector, yet only 26.3 per cent had access to a pension plan or health insurance in 2023. Six years after the micro-pension scheme was launched, enrolment is barely 173,000 contributors. This represents a huge gap and an even greater opportunity,” Amolegben, said.
On insurance performance, he pointed out that penetration in Nigeria is still under 1 per cent, far behind South Africa at 11.54 per cent, Namibia at 7.41 per cent, Morocco at 4.10 per cent, and the global average of 6.8 per cent.
Industry data suggest the cost of this exclusion is enormous. Nigeria’s pension assets reached N23 trillion in 2025, equivalent to 8.6 per cent of GDP, while insurance premiums hit N1.56 trillion in 2024.
Experts estimate that extending coverage to the informal sector could more than double these figures, creating fresh investible funds for infrastructure, capital markets, and private enterprise.
Between 2020 and 2024, public sector pension contributions surged 71.7 per cent to N5.89 trillion, while private sector contributions grew 65.7 per cent to N5.42 trillion. Retirement Savings Accounts rose 14.8 per cent to 10.58 million, but micro pension contributions stood at just N1.06 billion, evidence of a vastly under-tapped market.
Similarly, insurance industry assets rose by 46.1 per cent to N3.9 trillion in 2024, while net claims paid totaled N622 billion. Yet, despite strong topline growth, lack of trust, poor financial literacy, and low awareness continue to hold back deeper penetration.
Amolegben argued that the first step toward harnessing the informal sector of the economy is restoring trust and confidence. “Without confidence, people will not commit money to systems they believe they cannot easily access,” he warned.
Also speaking at the forum, former Commissioner for Insurance, Sunday Thomas, urged operators to simplify processes, adopt digital technology, and consider setting up micro PFAs(Pension Fund Administrators) embedded within communities where informal workers operate.
He also called on insurers to use the publicity around the Nigerian Insurance Industry Reform Act (NIIRA) 2025 to intensify financial literacy campaigns, particularly among young Nigerians.
According to him, bringing millions of informal workers into formal savings structures is not just a social imperative but an economic necessity. “Insurance and pensions are not just about individual security; they are economic stabilizers. They reduce poverty, lower dependency on family and government, provide long-term capital, and attract foreign investment by mitigating risks,” Thomas said.
Analysts warned that unless Nigeria accelerates informal sector integration, the country risks widening inequality and missing opportunities to mobilize domestic capital at a time when foreign inflows are drying up.
“The informal sector is where Nigeria’s hidden savings lie,” said a Lagos-based pension consultant. “Unlocking it could transform the financial markets, fund infrastructure, and provide the resilience the economy desperately needs.”
