A recent report by the National Development Plan (NDP) showed that the financial sector added a total of N44.2 trillion to Nigerian GDP from 2017 to 2020.
According to the report, the total size of the financial services sector in 2017 was 78.10 trillion naira but has grown significantly to reach 122.30 trillion naira by 2020, adding 4.8 trillion naira and 17, N4 billion in 2018 and 2019 respectively.
The banking sector presided over the market by contributing the most with 34.6 trillion naira in 2017, 37.8 trillion naira in 2018 and 42.7 trillion naira in 2019, consequently accelerating the figure in 2020 to 53.3 trillion naira due to the COVID-19 lockdown which has forced increased adoption of digital banking.
This was followed by the capital market which contributed N32.6 trillion in 2017 but slipped to N31.9 trillion the following year. In 2019 however, the market rose sharply to reach N42.6 trillion and continued with the trend of N49.2 trillion in 2020.
The non-banking financial institution contributed the least during the period with 10.9 trillion naira in 2017, improving the figure to 13.2 trillion naira, 15 trillion naira and 19 trillion naira respectively in the following years.
What you should know
A review of sector performance shows that the money market, which is largely dominated by banks, has undergone significant changes in recent times, amid Central Bank of Nigeria (CBN) regulations and innovations from market players. industry while the apex bank maintains the stability of the banking sector.
In the capital market, several innovations have recently been introduced as part of the Ten-Year Capital Market Master Plan (2015-2025) which foresees the emergence of Nigeria as the most modern, efficient and competitive market in the world. international level in Africa. These include the new derivatives regulations and registration of Central Counterparties (CCPs) aimed at kick-starting derivatives trading in Nigeria.
Similarly, the performance of the non-bank financial institutions (NBFIs) segment of the financial sector which includes pensions, insurance, development finance institutions (DFIs), finance companies and major mortgage institutions (PMIs); steadily increased over the years, with pensions accounting for over 60% of the sector, while DFIs and SMIs had almost the same total assets as the insurance sector.
The improved performance of the NBFIs reflects the implementation of important reforms as the National Insurance Commission (NAICOM) worked to improve the effectiveness and efficiency of the insurance sector during the period through investments in automation and risk-based monitoring. In addition, the National Pensions Commission (PenCom) recently introduced a multi-fund structure to align the age and risk profile of pension savings account holders.