Despite facing significant economic challenges last year, Nigeria’s banking and financial services sector has demonstrated remarkable resilience, emerging as a bright spot in the nation’s economy. According to the latest State of Enterprise (SOE) Report by EnterpriseNGR, a member-led organisation committed to advancing the Financial and Professional Services (FPS) sector, the sector has thrived despite an environment marked by rising inflation, escalating production costs, currency depreciation, and other adverse macroeconomic factors.
The SOE Report, an annual publication showcasing the contributions and achievements of the FPS sector in Nigeria, was developed with input from prominent EnterpriseNGR member organisations such as Chapel Hill Denham, Coronation Merchant Bank Ltd, Custodian Investment Plc, Investment One Financial Services Ltd, Lotus Bank Ltd, Meristem Securities Ltd, Templars Law, Udo Udoma & Belo Osagie, and Wigwe & Partners. The report also draws on data from various institutions, including the National Bureau of Statistics, Central Bank of Nigeria, and the Nigerian Exchange Group, among others.
Speaking at a media briefing in Lagos, EnterpriseNGR’s Chief Executive Officer, Obi Ibekwe, alongside key team members, highlighted the significant positive impacts of the sector across its nine sub-sectors: Banking, Insurance, Capital Markets, Asset Management, Pensions, Non-interest Finance, FinTech, Professional Services, and Sustainable Finance.
Ibekwe noted that the banking sub-sector led others in many key performance indicators, underscoring its vital role in the economy. “Nigerian banks and other financial services accounted for 4.6% of GDP in 2023, meaning financial institutions contributed approximately ₦5 for every ₦100 generated nationally, up from about ₦4 in 2022,” she said. She also pointed out that the collective Deposit Money Banks’ total assets, which stood at ₦121 trillion, are equivalent to half of Nigeria’s GDP, highlighting the sector’s critical role in supporting businesses and the productive economy. Moreover, the banking sub-sector ranked third among 23 economic sectors in terms of income tax and VAT contributions to government revenues.
The Insurance sub-sector also showed impressive growth, with gross premiums written reaching ₦1 trillion in 2023. This growth, driven by regulatory interventions such as increased motor insurance rates, was accompanied by a 36% rise in claims payments compared to 2022, indicating the sub-sector’s increasing responsibility in safeguarding policyholders from financial risks.
The Capital Markets experienced notable expansion, with the All Share Index (ASI) increasing by 46%—a performance not seen since the pandemic’s early days in 2020. Market capitalisation surged by 47% to approximately ₦41 trillion, driven by substantial trading activities and policy shifts, such as the suspension of fuel subsidies, which contributed to the Oil & Gas sector’s remarkable 126% gain.
Similarly, the Asset Management sub-sector, integral to capital markets activity, saw its total net asset value (NAV) for collective investment schemes soar by almost 50% in 2023. The number of registered mutual funds increased from 133 in 2022 to 144 in 2023, reflecting growing investor confidence.
The Pensions sub-sector, a regulatory success story, continued to build a secure financial future for millions of Nigerians, with over 10 million contributors and ₦18 trillion in accumulated investments—65% of which are invested in government securities. In 2023, the sub-sector disbursed over ₦400 billion in retirement benefits and provided about ₦36 billion to contributors temporarily out of employment, reinforcing its role as a crucial economic safety net.
Non-interest Finance, which promotes financial inclusion through ethical investments, expanded significantly, with the market size growing by ₦1 trillion to ₦2.5 trillion in 2023. A standout example of this growth is the oversubscription of a ₦150 billion sovereign sukuk by more than 400%, underscoring the rising demand for ethical investment options.
The FinTech sub-sector also made notable strides, particularly in digital payments and lending. Mobile money operators processed transactions worth ₦46.6 trillion in 2023, a 140% increase from ₦19.4 trillion in 2022. Personal loans also saw a 19% rise, growing from ₦1.92 trillion to ₦2.28 trillion between the second and third quarters of 2023.
Professional Services firms—encompassing accountants, management consultants, and legal advisors—played a crucial role in helping businesses navigate economic challenges and seize opportunities in 2023. Their contributions were substantial, particularly in economic integration, revenue generation, and risk management. The Professional, Scientific and Technical Services sector, to which these firms belong, contributed 3.2% to national output in 2023.
While the FPS sector’s performance in 2023 underscores its pivotal role in Nigeria’s economy, EnterpriseNGR emphasised that several challenges remain, including low levels of technology and innovation, a deficit in talent and human capital, and non-accommodative macroeconomic policies like inflation and exchange rate volatility. These issues, they stressed, require a collaborative effort from federal and state governments, industry regulators, policymakers, and operators to further advance the FPS sector and support the broader growth and development of Nigeria’s economy.
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Echoing similar sentiments, EnterpriseNGR’s Director of Policy and Public Affairs, Lami Adekola, and Head of Research, Omotayo Muritala, expressed optimism that ongoing reforms in key areas of the economy would yield positive outcomes by the end of 2024. They particularly highlighted the banking sector’s longstanding dominance and noted that its recapitalisation would likely impact the sector positively, along with other areas like capital markets and asset management.
