Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.

Despite challenging economic conditions, Nigeria's Financial and Professional Services (FPS) sector performed well in 2024, with Deposit Money Banks (DMBs) increasing their assets to N170.02 trillion, or roughly 63.1% of the nation's total GDP.

According to the State of Enterprise (SOE) 2025 report, the FPS sector continues to be a key pillar of inclusive development, public income generation, and national economic recovery, contributing 5.8% of GDP.

Notwithstanding the difficulties brought on by the depreciation of the naira, inflationary pressures, and foreign exchange volatility, banks, insurance businesses, capital markets, and fintech enterprises proved to be robust, maintaining investor confidence and business operations all year long. Just the banking sector grew 30.9 percent year over year to N4.58 trillion.

According to the research, banking and insurance companies are now the largest donors to corporate income tax, surpassing the manufacturing sector. As of Q3 2024, they remitted N570.91 billion, which is expected to increase to N825.92 billion by the end of the year.

Additionally, their value-added tax (VAT) contribution increased to N223.69 billion and is predicted to reach N409.98 billion.

The Sun reported that banks used currency depreciation to increase revenue and draw in investment, while manufacturers battled with high input costs and FX-related losses. It is anticipated that this tendency will continue, particularly if the proposed windfall tax on profit-driven financial institutions is implemented.

With gross premiums written rising to N1.17 trillion by Q3 and expected to reach N1.47 trillion by year-end, the insurance subsector also reported strong performance. The sector's asset value increased 45% to N3.88 trillion, while gross claims increased to N696.9 billion, a 29.9% rise over 2023.

The NGX Insurance Index had a 123.2% increase as a result of investors' favorable reaction to the industry. The anticipated approval of the Insurance Industry Reform Bill, which aims to improve governance and digitisation, further boosts market confidence.

The capital markets' upward trend persisted. By Q1 2025, the NGX All Share Index had climbed by 37.65% to 102,926.40 points and then again to 105,660.64 points. Trading volumes reached N5.59 trillion, and market capitalisation surged to N66.26 trillion, a 53.4% rise.

By year-end, foreign capital inflows had increased from $3.91 billion in 2023 to $9.64 billion, the most since 2020, with banks' recapitalisation accounting for a significant amount of the transactions.

With N1.08 quadrillion in digital payments made in 2024—an 80% increase over N600 trillion the year before—the fintech industry had one of its best years to date. While POS usage increased to 1.5 billion, mobile money transactions increased by 30% to 3.9 billion.

Nigeria led the continent in garnering $331.64 million in tech capital, or roughly 30% of Africa's total, with a large portion of that money going toward fintechs, despite a 53.5% decline in total African tech funding.

The report claims that Nigeria's payment infrastructure is currently among the best in the world and the most developed in Africa. The nation trailed only China, South Korea, Thailand, Brazil, and India with 7.9 billion real-time transactions.

The report highlighted persistent challenges, including as low insurance p*netration, capital market liquidity limits, insufficient fintech infrastructure in rural areas, and weak pension uptake in the informal sector, despite the FPS sector's remarkable success. Additionally, it noted that issues requiring immediate improvements included talent drain and a lack of investments related to sustainability.

Stakeholders assert that the industry is still essential to Nigeria's economic prospects. “The sector’s performance underscores its capacity to drive sustainable growth, unlock capital, and improve livelihoods,” the report stated.

Legit.ng reported that the Central Bank of Nigeria's (CBN) recapitalisation target is set to significantly reshape the country's banking landscape, particularly impacting smaller banks.

The deadline for meeting the new capital requirements is March 31, 2026.

According to reports, two Nigerian banks, one with a regional licence and another with a national licence, have started merger talks, which may be finalised in the coming months.

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Source: Legit.ng