As Nigeria’s Gross Domestic Product (GDP) grew by 3.4 per cent in 2021, financial and insurance subsectors hit a new annual growth of 10.07 per cent at the end of last year, data released by the National Bureau of Statistics (NBS) has revealed.
The Finance and Insurance Sector consists of the two subsectors, Financial Institutions and Insurance.
According to the latest report by the National Bureau of Statistics, both subsectors recorded annual growth of 9.37 per cent in 2020 as against 2.03 per cent in 2019.
Further analysis of the NBS data revealed that financial and insurance annual growth in 2018 and 2017 were 1.26 per cent and -4.54 per cent respectively.
However, the NBS numbers showed that the finance and insurance subsector annual growth far behind annual growth in the Information and communication sector.
The insurance sector moved from -15.30 per cent to 6.24 per cent in 2021, while the financial institutions’ annual growth was at 10.53 per cent in 2021 from 13.34 per cent reported by NBS in 2020.
The NBS numbers revealed that the finance and insurance subsectors contribution to real GDP totalled at 3.66 per cent, higher than the contribution of 3.07 per cent recorded in the fourth quarter of 2020 by 0.59 per cent points, and higher than 3.16 per cent recorded in third quarter of 2021 by 0.50 per cent points.
Finance experts attributed the growth in financial and insurance subsector to numerous policies by the federal government-driven by Central Bank of Nigeria (CBN), Nigeria Deposit Insurance Corporation (NDIC), among other stakeholders.
Commenting, the Vice president, Highcap Securities Limited, Mr. David Adnori stressed that the annual growth in the finance and insurance subsector was driven by the policy of the National Insurance Commission (NAICOM).
According to him: “The banking sector in 2021 did not perform impressively enough to drive growth in GDP, unlike the insurance sector. Such growth in the financial and insurance subsector is expected because the nation’s economy opened up in 2021 after the COVid-19 of 2020.
“Some of the credit that on hold in 2020 started performing the following year and it has it positive impact in the financial sector. The capitalisation of the insurance companies by NAICOM played a critical role in that sector and it reflected on the listed NGX Insurance index. Mind you, some financial companies played in the foreign exchange market and they generated a lot from the devaluation of naira 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. It is expected that the real growth is going to come from the real sector.
“It should not be a surprise that the information and communication sector is doing better than the financial and insurance sector but they play a critical role in economic development.”
Speaking from a different perspective, an analyst at PAC Holdings, Mr. Wole Adeyeye noted that an increase in financial inclusion is playing a critical role in GDP annual growth of the financial and insurance subsector.
“The agency banking growth is massive, adding to electronic banking. I am sure by the time MTN Nigeria and Airtel Africa commenced financial services, the annual growth of the financial sector will increase significantly.”
Analyst at InvestData Consulting Limited, Mr. Ambrose Omordion said the slowdown in the global economy due to COVID-19 lockdown in 2020, drove the financial and insurance subsector annual growth in 2021, projecting that the trend might be sustained.
According to him: “Financial and insurance subsector recorded 10.07 per cent in annual GDP in 2021 because of increasing online transactions and as local & international economies were recovering, government were disbursing funds through the financial sector. Anywhere in the world, the banking sector is the engine room of economic growth and it is reflected in the growth in 2021.”