14 février 2024

The SOE Report 2023: Towards a more resilient Nigeria’s FPS sector

Obi Ibekwe
EnterpriseNGR recently published the State of Enterprise (SOE) Report 2023 which is the second edition of its annual publication on Nigeria's Financial and Professional Services (FPS) sector. The design of the 2023 report celebrates the fusion of art and finance, highlighting the growing position of art in global finance, a theme the World Alliance for International Financial Centers is working to amplify.

The SOE Report offers a comprehensive overview of the nine classified FPS subsectors — Banking, Insurance, Capital Markets, Asset Management, Non-interest Finance, Pensions, FinTech, Professional Services (encompassing Legal, Accounting, and Management Consulting), and Sustainable Finance — and provides fresh insights into the pivotal role of the collective sub-sectors in spurring economic growth.

According to our findings, despite the economic, social, and political challenges Nigeria witnessed in 2022, the FPS sector continued to show resilience. Notably, during the cash crunch in December 2022 and early 2023, digital transactions experienced a surge, forcing a remarkable 41.6% increase in point-of-sale (POS) transactions and a noteworthy 36.3% rise in web-based transactions. This underscores the Banking and Fintech sub-sectors’ vital role in driving digital payments.

The Banking sub-sector, a major contributor to Nigeria's economy, recorded an impressive 24% growth in the assets of Deposit Money Banks, to reach a total of ₦78 trillion in 2022.

Despite its low penetration (0.4%) in Nigeria, the Insurance subsector over the last seven years, has experienced a remarkable surge in gross premium income expanding from ₦289.34 billion in 2015 to ₦1.85 trillion in 2022. This astounding 540% growth highlights the subsector‘s evolution and potential. The Capital Markets also showed resilience with gains in the All-Share Index and increased market activity. Total transactions on the local bourse amounted to NGN2.32 trillion in 2022, a 22.38% increase on 2021. The debt capital market likewise enjoyed greater participation in 2022. According to FMDQ, fixed income market turnover reached NGN81.38 trillion in 2022, substantially increasing from the NGN28.7 trillion recorded in the prior year.

The Pensions sub-sector contributed significantly to economic growth through increased investments in securities and other asset classes. The total assets under management of pension funds grew by 11.9%, reaching ₦15 trillion in 2022, compared to ₦13.4 trillion in 2021. Non-interest Finance showed growth as well with the market estimated to be over ₦1.5 trillion. The Nigerian Fintech sub-sector attracted substantial international funding and remains a market leader in Africa. While Sustainable Finance made progress globally, Nigeria was not left behind as investments in green bonds and sustainability-focused mutual funds increased.

The achievements recorded in 2022 compared to those of 2021 demonstrate that the FPS sector is on a growth path and continues to be a major contributor to Nigeria's GDP. To sustain this growth trajectory, the report suggests major initiatives and policy changes needed to address challenges in the sector.

In summary, this report provides crucial insights into Nigeria's FPS sector, highlighting its resilience and growth potential. By downloading and reading the SOE Report 2023, local and international stakeholders will have an improved knowledge and understanding of the Nigerian FPS space and among other things be better positioned to identify investment opportunities, effectively develop policy initiatives and ultimately contribute to sustainable growth and development of the country.

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