While Nigeria’s Gross Domestic Product (GDP) grew by 3.4% in 2021, the finance and insurance sub-sectors recorded further annual growth of 10.07% at the end of the year. last year, data released by the National Bureau of Statistics (NBS) revealed.
The finance and insurance sector includes the two sub-sectors, financial institutions and insurance.
According to the latest report from the National Bureau of Statistics, the two sub-sectors recorded an annual growth of 9.37% in 2020 against 2.03% in 2019.
Further analysis of the BNS data revealed that the annual growth of finance and insurance in 2018 and 2017 was 1.26% and -4.54% respectively.
However, BNS figures showed that the annual growth of the finance and insurance subsector lags far behind the annual growth of the information and communication sector.
The insurance sector grew from -15.30% to 6.24% in 2021, while the annual growth of financial institutions was 10.53% in 2021 against 13.34% reported by the SNB in 2020.
SNB figures revealed that the contribution of the finance and insurance sub-sectors to real GDP amounted to 3.66%, which is 0.59% higher than the recorded contribution of 3.07%. in the fourth quarter of 2020 and above the 3.16% recorded in the third quarter of 2020. quarter of 2021 by 0.50 percentage points.
Financial experts have attributed the growth of the finance and insurance subsector to numerous federal government policies led by the Central Bank of Nigeria (CBN), Nigeria Deposit Insurance Corporation (NDIC), among other stakeholders.
In his comments, Vice Chairman of Highcap Securities Limited, Mr. David Adnori, pointed out that the annual growth of the finance and insurance sub-sector was driven by National Insurance Commission (NAICOM) policy.
According to him: “The banking sector in 2021 has not performed well enough to drive GDP growth, unlike the insurance sector. is open in 2021 after the 2020 COVID-19.
“Part of the suspended credit in 2020 started operating the following year and this is having a positive impact on the financial sector. The capitalization of insurance companies by NAICOM has played a vital role in this sector and this has been reflected on the listed NGX Insurance index. . Mind you, some financial companies have been playing the FX market and they have generated a lot from the Naira devaluation in 2021.”
He noted that the real sector is expected to perform better than the sector, adding that “the financial sector is a service sector serving the real sector. Real growth is expected to come from the real sector.
“It should come as no surprise that the information and communication sector is doing better than the financial and insurance sectors, but they play a vital role in economic development.”
Speaking from a different perspective, an analyst from PAC Holdings, Mr. Wole Adeyeye, noted that an increase in financial inclusion plays a critical role in the annual GDP growth of the financial sub-sector and insurance.
“The growth of branch banking is massive, adding to electronic banking. I am sure that when MTN Nigeria and Airtel Africa start their financial services, the annual growth of the financial sector will increase significantly.”
Mr. Ambrose Omordion, Analyst at InvestData Consulting Limited, said the slowdown in the global economy due to the COVID-19 lockdown in 2020 drove the annual growth of the finance and insurance sub-sector in 2021, forecasting that the trend could continue.
According to him: “The financial and insurance sub-sector recorded 10.07% of annual GDP in 2021 due to the increase in online transactions and, as local and international economies recovered, the government disbursed funds via the financial sector. Around the world, the banking sector is the engine room of economic growth and this is reflected in growth in 2021.”