Lagos, August 20, 2024— Nigeria’s financial sector has shown remarkable resilience, with total assets of banks soaring to N121.8 trillion, despite facing a tough economic environment. This represents a 56 percent increase in 2023, nearly half of the nation’s Gross Domestic Product (GDP), according to a new report from EnterpriseNGR, a professional policy and advocacy group.
The “State of Enterprise (SOE) 2024” report, released on Monday, underscores the critical role of the Financial & Professional Services (FPS) sectors, highlighting nine sub-sectors, including banking, insurance, capital markets, and fintech.
“Nigerian banks and other financial services accounted for 4.6% of GDP, translating to approximately ₦5 for every ₦100 generated nationally in 2023, up from about ₦4 in 2022,” the report stated.
The banking sector, a key component of the FPS, has made significant contributions to the economy, notably in tax revenue. The sector ranked third among 23 economic sectors in generating income tax and VAT for the government.
The insurance sub-sector also showed positive growth, with gross written premiums rising by 18.77 percent to N1.003 trillion in 2023, reflecting increased insurance activities. However, the industry also saw a rise in the gross claims ratio to 53.5 percent, indicating higher payouts.
The capital market experienced increased domestic participation, with the equity market’s All Share Index reaching 74,773.77, a 47 percent increase by the end of 2023. This performance outpaced several international indices, demonstrating strong investor confidence in Nigeria’s equity market.
Fintech, another rapidly growing sub-sector, continued to expand, providing digital and electronic financial services to millions of Nigerians, thus lowering transaction costs and improving access to financial services.
Despite these gains, the report noted several challenges facing the FPS sectors, including inflation, foreign exchange volatility, and human capital deficits. EnterpriseNGR called on the government and regulators to address these macroeconomic issues to further support the growth of the FPS sector and the broader economy.
The report highlights the significant contributions of these sectors to Nigeria’s economy and their potential to position the country as Africa’s financial powerhouse.
