Report: Financial Professional Services Recorded Impressive Performance in 2023

Dike Onwuamaeze

The Financial and Professional Services (FPS) sector of the Nigerian economy recorded an improved performance in 2023 with the banking sub-sector significantly increasing its contribution to national output in 2023 to 4.6 per cent of the GDP.

This was revealed in the, “State of Enterprise (SOE) 2024 Report: Insights into Nigeria’s Financial and Professional Services Sector,” launched yesterday in Lagos, by the Chief Executive Officer of EnterpriseNGR, Ms. Obi Ibekwe, with the Director of Policy and Public Affairs, Mr. Lami Adekola and Head of Research, Mr. Omotayo Muritala, shedding light on the report.

Ibekwe, said the report celebrated, “the fusion of tourism and finance to emphasise the interplay of the two industries and underscore the increasing importance of tourism in today’s global financial landscape.”

She added: “In 2023, Nigeria’s FPS sector delivered improved performance across the nine classified sub-sectors, which include banking, insurance, capital markets, asset management, pensions, non-interest finance, FinTech, professional services and sustainable finance.

“Significant positive impacts on people, businesses, and the economy were recorded, despite heightened inflation, increased production costs, exchange rate depreciation and other poor macroeconomic fundamentals.”

According to the report, the banking sub-sector accounted for a noteworthy 4.6 percent of GDP, with a remarkable 28.8 percent surge in output, reaching a new peak of N3.5 trillion compared to N2.72 trillion in 2022.

“Deposit money banks saw a stellar 56.14 percent growth in assets, reaching N121.8 trillion. This translates into a significant 52 percent share of national nominal GDP, compared to 39.1 percent in 2022,” the report stated.

The report also stated that Nigeria’s Insurance sub-sector demonstrated impressive momentum in 2023 as its gross premium written surged to N1.003 trillion, a significant increase from N844.5 billion gross premium income in 2022. 

Similarly, the Nigerian Capital Markets experienced a period of significant expansion in 2023 as its All Share Index (ASI) experienced a remarkable 45.9 percent increase, reaching a new high of 74,773.77 points, and marked the strongest performance since 2020. Its market capitalisation mirrored this growth, surging by 46.6 percent to reach an impressive ₦40.92 trillion.

Moreover, the Asset Management sub-sector reached a global value of $118.7 trillion in 2023, a 12 percent increase from 2022.

“In Nigeria, the total net asset value (NAV) for all collective investment schemes soared by 47.48 percent year-over-year to an unprecedented N2.24 trillion in 2023. This surge was predominantly fuelled by Mutual Funds, which saw a 51.24 percent year-over-year (YOY) increase. 

“Also, the pensions sub-sector remained a key sub-sector in savings accumulation, with assets under management (AUM) reaching N18.36 trillion in 2023, up from N265 billion in 2006, achieving a compound annual growth rate (CAGR) of 30 percent.

“In 2023, there were 10.19 million Retirement Savings Account (RSA) holders, reflecting a 13.5 per cent penetration rate within the formal labour force of 75.7 million, with RSA holders growing at a CAGR of 11.2 per cent,” the report said.

The report categorised Nigerian FinTech sub-sector into six domains: Payments, Mobile Money and Digital Banking (38%); Lending (23%), Savings, Investments, and Crowdfunding (15%), Enterprise Services and Infrastructure (13%), Cryptocurrency (8%), and InsurTech (3%).

“The sub-sector bolsters the economy through point-of-sales (POS) machines, with total transaction value growing by 27.9 percent to N10.73 trillion in 2023.

“FinTechs processed substantial transaction volumes, including N46.6 trillion in mobile money transactions in 2023, a 140 per cent rise from 2022. FinTechs also enhance consumer credit, with a 15.5 per cent increase in consumer credit within two quarters (Q1 and Q3 2023),” the report said. 

The report added that the professional services firms (PSFs) helped businesses to navigate compliance and risks, talent retention, and supply chain disruptions in 2023, supporting sectors like Technology, Banking, Finance, and Construction.

PSFs contributed N2.5 trillion (3.2% of GDP), N35.19 billion (1.4%) of CIT and N33.4 billion (1.6%) of VAT to Nigeria’s economy in 2023.

Also in 2023, the report stated that the Sustainable Finance sub-sector witnessed growing global interest and investment. Global green bonds remained robust despite overall declines in sustainable finance issuance, including a drop in sustainability-linked instruments. Sustainable funds attracted $136 billion.

It added: “Nigeria’s green bond stock is valued at N47.8 billion, comprising Federal Government of Nigeria (FGN) green bonds (N15 billion) and corporate green bonds (N32.8 billion).

“The two principal ESG ethical mutual funds recorded increased growth in total investment from N2.4 billion in 2022 to N3.08 billion in 2023. The number of fund unit holders also grew to 11,304 from 10,796 in 2022.”