Nigeria’s finance and insurance industry has experienced significant growth, with a real increase in the country’s total economic output of 30.83% in the third quarter of 2024. This growth is mainly because the Central Bank of Nigeria (CBN) has been strict with its monetary stance, particularly the aggressive rate hike that has occurred throughout the year.
Most of this growth comes from the financial institutions subsector, which makes up 91.76% of the industry. The insurance part makes up the remaining 8.24%. The real GDP growth rate of the finance and insurance sector went up to 5.51% in the third quarter, compared to 3.70% in the same quarter of 2023.
Experts observe that although the financial services sector is growing rapidly, this growth is unusual because of the significant increase in interest rates. In November, the Central Bank of Nigeria (CBN) raised the interest rate to 27.50% to control rising inflation, which has boosted banks’ income earning streams.
This growth in the sector has had good effects on the economy, such as creating jobs, making financial services more accessible, and increasing government income. However, experts warn that the long-term effects of continued high interest rates on borrowing costs and economic growth need to be watched closely.
