Nigeria’s financial institutions, including banks and insurance companies, contributed N1.77 trillion to the nation’s economy in the first quarter of 2025, marking a significant 15% year-on-year increase from N1.545 trillion in Q1 2024, according to the latest Gross Domestic Product (GDP) report from the National Bureau of Statistics (NBS).
The NBS report, released this week, highlights the robust growth of the finance and insurance sector, which plays a pivotal role in Nigeria’s economic landscape. The sector’s performance in Q1 2025 underscores its resilience and growing importance amid ongoing economic challenges, including inflation and currency fluctuations.
Breakdown of Contributions
The financial institutions subsector, encompassing banks and other financial entities, accounted for the lion’s share of the sector’s contribution, delivering N1.613 trillion in Q1 2025. This represents a 16.8% increase from the N1.391 trillion recorded in the same period last year. Meanwhile, the insurance subsector contributed N164.58 billion, reflecting a 7.1% year-on-year growth from N153.71 billion in Q1 2024. Within the sector, financial institutions made up 90.74% of the total contribution, while insurance accounted for 9.26% in real terms.
Sector Growth and Economic Impact
The NBS report indicates that the finance and insurance sector experienced a nominal growth rate of 21.01% year-on-year in Q1 2025, significantly outpacing the 11.04% growth recorded in Q1 2024. Financial institutions led with a 22.82% growth rate, while the insurance subsector grew at a more modest 5.74%. This performance reflects a 9.97% improvement over the same quarter last year, although it was 6.43% lower than the preceding quarter (Q4 2024).
In real terms, the sector grew by 15.03%, a substantial increase from the 1.46% growth recorded in Q1 2024, driven by heightened economic activity and strategic reforms in the financial sector. Quarter-on-quarter, the sector saw a robust 17.50% growth in real terms, highlighting its dynamic contribution to Nigeria’s economic recovery.
Contribution to GDP
The finance and insurance sector accounted for 3.60% of Nigeria’s real GDP in Q1 2025, up from 3.23% in Q1 2024 and 2.46% in Q4 2024. This 0.37% year-on-year increase and 1.14% quarter-on-quarter rise underscore the sector’s growing influence on the economy. In nominal terms, the sector contributed 3.07% to GDP, compared to 3.00% in Q1 2024 and 2.70% in Q4 2024, reflecting its increasing economic significance.
Driving Economic Resilience
The strong performance of the finance and insurance sector comes at a critical time for Nigeria, as the country navigates inflationary pressures and works toward its $1 trillion economy goal by 2030. The sector’s growth is attributed to ongoing reforms, including banking sector recapitalization and increased regulatory oversight, which have bolstered investor confidence and financial stability. The Central Bank of Nigeria’s efforts to maintain interest rates at 27.5% have also supported the sector’s ability to finance economic activities, particularly for small and medium enterprises (SMEs).
Analysts at the Comercio Partners H2 2025 Economic Outlook conference noted that the financial sector’s robust contribution reflects its potential to drive inclusive growth. The sector’s ability to channel funds into critical areas like infrastructure and SMEs is seen as a cornerstone of Nigeria’s economic diversification strategy, reducing reliance on oil revenues.
Looking Ahead
As Nigeria continues to strengthen its economic framework, the finance and insurance sector’s performance in Q1 2025 signals a positive trajectory. With sustained reforms and strategic investments, the sector is poised to play an even larger role in supporting job creation, industrial growth, and economic stability. Stakeholders are optimistic that continued collaboration between regulators, financial institutions, and policymakers will further enhance the sector’s contribution to Nigeria’s GDP in the coming quarters.
