The finance and insurance sector recorded a 30.83% growth in real GDP in Q3 2024, driven by the Central Bank of Nigeria’s (CBN) aggressive monetary tightening policies. This growth marks a significant 2.62% increase compared to Q3 2023 and a 2.04% rise from the previous quarter. The sector is dominated by financial institutions, contributing 91.76%, while insurance accounts for 8.24%. Experts attribute the sector’s strong performance to higher interest rates that have boosted income streams for banks and enhanced investment yields.
The CBN’s sixth rate hike in November raised the monetary policy rate to 27.50% to combat inflation, following a similar increase in September. Analysts note that banks have benefitted from repricing assets and robust lending operations, while the liberalization of the foreign exchange regime has significantly devalued the naira. This monetary policy has fostered lucrative opportunities for financial institutions but has also introduced concerns about its long-term impact on other economic sectors.
Despite challenges, the finance and insurance sector has emerged as the fastest-growing contributor to Nigeria’s economy, driving overall GDP growth to 3.46% in Q3 2024. The sector’s expansion has created jobs, increased financial inclusion, and boosted government revenue. However, economists caution that while these figures reflect resilience, policymakers must carefully manage monetary tightening to ensure balanced growth across all economic sectors.
