Nigeria’s Financial & Professional Services (FPS) sector demonstrated strong performance in 2023, with the banking sub-sector leading the way, contributing 4.6% to the nation’s gross domestic product (GDP), according to the recent State of Enterprise (SOE) 2024 report by EnterpriseNGR, a member-led group focused on developing Nigeria’s FPS sector through collective advocacy.
Obi Ibekwe, CEO of EnterpriseNGR, considers this ‘’a positive indicator of the increasing role of the sector in the economy’’.
However, Ibekwe, speaking with FORBES AFRICA, maintains that “as banks expand rapidly, there might be an aggressive push to increase lending portfolios, which could lead to a deterioration in the quality of loans if risks associated with non-performing loans (NPLs) are not guided against… The likelihood of increasing cybersecurity risks becomes very high as banks leverage technology to drive expansion.”
The total assets of Nigerian banks soared to ₦121 trillion ($76.1 billion), and financial institutions generated about ₦5 ($0.0031) for every ₦100 ($0.063) earned nationally. The banking sub-sector also ranked third in generating income tax and value-added tax (VAT) for the government.
She also emphasizes the need for the banking sub-sector’s growth to be matched by other sectors to avoid economic bubbles.
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Fintech is playing a key role in making financial services more accessible. In 2023, mobile money transactions skyrocketed by 140%, reaching ₦46.6 trillion ($29.31 billion), while personal loans increased by 19% to ₦2.28 trillion ($1.43 billion).
‘’This evolution is expected to continue and even accelerate shortly. The trend presents financial inclusion opportunities as the rise in digital payment platforms expands financial services to previously unbanked populations… The limitation, however, arises with limited access to the internet and smartphones, especially in rural areas, can hinder the adoption of digital payment solutions; and a significant portion of the population may lack the digital literacy required to effectively use electronic payment systems, which could limit the overall impact on financial inclusion,’’ Ibekwe notes.
However, she believes Nigeria’s fintech sector has the potential to boost the country’s global competitiveness and solidify its position as Africa’s fintech hub.
The insurance sub-sector also saw growth, with gross premiums hitting ₦1 trillion ($628.9 million), driven by regulatory changes like increased motor insurance rates. Claims paid out by insurers rose by 36% compared to 2022, as per the study.
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