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Nigeria’s payment infrastructure ranks most advanced in Africa
From Adanna Nnamani, Abuja
Nigeria’s Financial and Professional Services (FPS) sector recorded a strong performance in 2024 despite tough economic conditions, with Deposit Money Banks (DMBs) growing their assets to N170.02 trillion, about 63.1 percent of the country’s total GDP.
This is according to the State of Enterprise (SOE) 2025 report, which showed that the FPS sector contributed 5.8 percent to GDP and remains a major pillar of national economic recovery, inclusive development, and public revenue generation.
Despite challenges posed by naira depreciation, inflationary pressures, and FX volatility, banks, insurance firms, capital markets, and fintech companies emerged as resilient players, sustaining business activities and investor confidence throughout the year. The banking industry alone recorded a year-on-year growth of 30.9 percent to N4.58 trillion.
The report shows that financial and insurance institutions overtook the manufacturing sector as the top contributors to corporate income tax, with N570.91 billion remitted as of Q3 2024, projected to reach N825.92 billion by year-end.
Their contribution to Value Added Tax (VAT) also grew to N223.69 billion and is expected to hit N409.98 billion.
While manufacturers struggled with high input costs and FX-related losses, banks capitalised on currency depreciation to boost revenue and attract investment. This trend is expected to persist, especially with the implementation of a proposed windfall tax on profit-heavy financial institutions.
The insurance sub-sector also posted a robust performance, with gross premiums written increasing to N1.17 trillion by Q3 and projected to hit N1.47 trillion by year-end. Gross claims rose to N696.9 billion, representing a 29.9 percent increase over 2023, while the sector’s asset value climbed 45 percent to N3.88 trillion.
Investors responded positively to the sector, with the NGX Insurance Index recording a 123.2 percent surge. Market confidence is further buoyed by the expected passage of the Insurance Industry Reform Bill aimed at enhancing governance and digitalisation.
Capital markets continued their bullish run. The NGX All Share Index rose by 37.65 percent to 102,926.40 points and further increased to 105,660.64 points by Q1 2025. Market capitalisation jumped to N66.26 trillion, a 53.4 percent increase, while trading volumes hit N5.59 trillion. Foreign capital inflows reached $9.64 billion by year-end, the highest since 2020, up from $3.91 billion in 2023, with banks’ recapitalisation driving a large portion of the transactions.
The fintech sector recorded one of its strongest performances yet, facilitating N1.08 quadrillion in digital payments in 2024, an 80 percent rise from N600 trillion the previous year. The number of mobile money transactions rose 30 percent to 3.9 billion, while POS usage climbed to 1.5 billion. Despite a 53.5 percent drop in African tech funding overall, Nigeria led the continent, attracting $331.64 million in tech capital, nearly 30 percent of Africa’s total, much of it channelled into fintechs.
The pension industry continued to grow, with Retirement Savings Account (RSA) holders rising to 10.58 million and Assets Under Management (AUM) expanding 22.6 percent to N22.51 trillion in 2024.
The AUM climbed further to N23.34 trillion by Q1 2025. The private sector contributed significantly, with a 7.39 percent growth in contributions, compared to just 0.78 percent from the public sector.
Nigeria’s asset management sector also flourished, with the Net Asset Value of mutual funds increasing 79.81 percent to N3.98 trillion. Domestic retail transactions rose 105.88 percent to N2.31 trillion. Infrastructure funds and ETFs also saw major growth, rising by 39.38 percent and 21.74 percent, respectively.
Non-interest finance gained further ground in 2024, with the industry’s size expanding to over N4.4 trillion. Non-interest bank assets stood at N2.85 trillion, while total sukuk stock reached N992.56 billion. Deposits and loans rose by over 100 percent, and sukuk bond issuances attracted N2.2 trillion in subscriptions, seven times more than the N300 billion on offer.
According to the report, Nigeria’s payment infrastructure is now ranked the most advanced in Africa and among the top globally. The country recorded 7.9 billion real-time transactions, placing it behind only India, Brazil, Thailand, China, and South Korea.
While the FPS sector’s progress was impressive, the report also called attention to lingering obstacles, including low insurance penetration, capital market liquidity constraints, limited fintech infrastructure in rural areas, and weak pension adoption in the informal sector. It also identified talent drain and insufficient sustainability-linked investments as concerns needing urgent reforms.
Nonetheless, stakeholders say the sector remains central to Nigeria’s economic future. “The sector’s performance underscores its capacity to drive sustainable growth, unlock capital, and improve livelihoods,” the report stated.