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.
NBS figures revealed that the contribution of the finance and insurance subsectors to real GDP stood at 3.66%, which is 0.59% higher than the 3.07% contribution recorded in the fourth quarter of 2020 and higher than 3.16% recorded in the third quarter. quarter of 2021 by 0.50 percentage point.
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 did not perform sufficiently impressively to stimulate GDP growth, unlike the insurance sector. Such growth in the finance and insurance sub-sector is expected as the national economy opened up in 2021 after the COVID-19 of 2020.
“Part of the credit suspended 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 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 sector, 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 by the time 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 finance and insurance subsector recorded 10.07% of annual GDP in 2021 due to the increase in online transactions and as local and international economies recovered, the government was disbursing funds through the financial sector. Around the world, the banking sector is driving economic growth and this is reflected in growth in 2021.”