The Nigerian financial and professional services (FPS) sector has demonstrated remarkable resilience and growth in 2023, according to the State of Enterprise 2024 Report released by EnterpriseNGR.
Banking Sector Dominates with ₦121.8tn Assets
The banking sub-sector emerged as a standout performer, with its total assets swelling to a staggering ₦121.8tn, a 56.14 percent increase from the previous year.
This robust expansion underscores the banking sector’s pivotal role in driving the nation’s economy. The sector contributed a substantial 4.6 percent to the gross domestic product (GDP), marking a 28.8 percent year-on-year growth.
“The collective deposit money banks had total assets (of ₦121tn) that are equivalent to half of the national gross domestic product,” emphasized the report.
“But this is not just about numbers; it is about the significant supportive role of the banking sub-sector in facilitating necessary funds to support businesses and the productive sector.”
Beyond its financial prowess, the banking sector has proven to be a significant taxpayer, ranking third among all economic sectors in terms of income tax and VAT generation.
Insurance and Capital Markets on the Rise
The insurance sub-sector also exhibited positive growth trajectories. Gross premiums written climbed by 18.77 percent to ₦1.00tn, reflecting increased insurance penetration. However, the industry’s gross claims ratio rose to 53.5 percent, indicating higher payouts.
The capital markets witnessed increased domestic participation, with the All Share Index closing at a commendable 74,773.77 by the end of 2023. This outperformance compared to global indices such as the FTSE100, S&P 500, and Hang Seng reflects a thriving equity market and growing investor confidence.
Fintech and Digital Payments Revolutionize Financial Services
The burgeoning fintech landscape has significantly transformed how financial transactions are conducted. A surge in electronic payment transactions has empowered consumers to manage their finances with greater ease and convenience.
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State of Enterprise Report
The State of Enterprise 2024 Report is a collaborative endeavor, drawing contributions from leading industry players such as Chapel Hill Denham, Coronation Merchant Bank, Custodian Investment, Investment One Financial Services, Lotus Bank, Meristem Securities, Templars Law, Udo Udoma & Belo Osagie, and Wigwe & Partners.
The report also leveraged data from reputable institutions including the National Bureau of Statistics, the Central Bank of Nigeria, the Securities and Exchange Commission, the Nigerian Exchange Group, the FMDQ Group, the National Insurance Commission, and the National Pension Commission.
Outlook and Implications
The robust performance of Nigeria’s financial sector holds immense promise for the nation’s economic growth and development. The sector’s ability to mobilize resources, support businesses, and facilitate financial inclusion is crucial for achieving broader economic objectives.
However, challenges such as regulatory hurdles, infrastructure gaps, and cybersecurity threats must be addressed to sustain this momentum.
Obi Ibekwe, CEO of EnterpriseNGR, expressed optimism about the sector’s future, stating, “We are excited to unveil the SOE Report 2024. The report reflects EnterpriseNGR’s dedication to providing evidence to showcase the critical role of the FPS sector in Nigeria’s economy and to inspire collective action to advance the growth and development of the sector. This is in line with our vision for transformation and we invite all industry stakeholders to join hands with us.”
As the financial landscape continues to evolve, the sector’s ability to adapt and innovate will be essential in driving Nigeria’s economic prosperity.