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I learned a lesson about Nigeria’s informal economy a few days ago. I asked my Bank for cash, and after two days, they said they could give me 200k.
I wanted 2M. On my way to Asaba at the Abuja Airport, I saw a PoS operator, and he ‘sold’ 800k in brand new notes to me for 12k per 100k. I bought.
While I was at his shop, I noticed people came in, took a booklet, recorded something, and handed cash to the lady in the shop. I got curious.
He explained it is a daily savings platform. Over 150 staff of the various Airport companies save money daily with them. I got more interested.
How much interest do you pay them? None, he replied. I collect one day’s savings as my fee. They pay to save, I asked incredulously. Yes, he answered.
All the processes were manual, with no BVN, No NIN, just name, address, and phone no. In the unlikely event of death, they trace your address and pay your family.
As I got to Obosi, after dinner, my friend told me they would be sharing their cow on the 26th. I said who is the ‘our’.
He explained that every year, about 9 of them contribute 6k a month from February to November, and in December, they buy a cow and share the meat. For how many years, I asked. He said this group has been on for three years.
Other groups exist that buy other food items in bulk and share. In their case, they transfer the 6k every month to an account in a bank created for the purpose, and the admin shares the balance with the group.
Here is a trust system at work. In the first case, at the Airport in Abuja, the shop’s owner is a Northerner. The girl working is from the South, I guessed, and the three depositors I saw were mainly Southerners.
No ethnicity, no religion, just trust developed from experience.
In the second case, friends overcome the profound financial challenges confronting Nigerians by pulling resources together to buy in bulk.
In both cases, they are deferring gratification and saving towards a target. I hear this is pretty common, and they usually pay to save. Due to widening poverty, they save to consume.
These citizens live in Naija, that space where the government of Nigeria is not obstructing growth through entrenched divisions.
They are crossing our various divides, enjoying the benefit of mutual effort, and expressing their trust in alternative systems since the government and the formal institutions are viewed with low trust.
The POS operator buys Naira from Bankers, who tell you there is Naira scarcity, so they know the system is rigged.
The operators cannot trust a rigged system. That is the tragedy of corruption. The operators, beneficiaries, and onlookers distrust the system.
On a positive note, can our enterprising startups think out how to scale the business of target savings by creating a trust system, paying interest on savings, and buying in bulk to share with the depositors?
I see a new business opportunity leveraging technology and operating with the Naija ethos to create a vast, profitable, low-cost operation.
If you recall, in 2020, I asked our young entrepreneurs to provide a money transfer operation that enables low-value transactions for minimal or no fees ~ moniepoint and Opay are cleaning out. Go for it.
The bottom of the pyramid sure has opportunities. Nigeria is locked, and Naija is working. To unlock Nigeria is the mission.
Osita Chidoka, sitting on my terrace sipping brewed coffee and taking in the massive urbanisation surging into Obosi ~ a growing problem and an opportunity.
24 December 2023
