Nigeria’s financial services sector delivered an impressive real growth rate of 27.78% in the fourth quarter of 2024, maintaining its position as one of the economy’s fastest-growing sectors. The latest data from the National Bureau of Statistics (NBS) reveals that financial services contributed 6.10% to real GDP in Q4, up from 4.95% in the same period of 2023.
This extraordinary expansion reflects the sector’s ongoing digital transformation, the deepening of financial inclusion, and a growing appetite for innovative financial products, particularly in digital payments, consumer credit, and asset management. It also highlights how technology-driven disruption continues to reshape Nigeria’s financial landscape, even as traditional banking players adapt to new competitive realities.
A Sector on Fast-Forward
The headline growth rate underscores the sector’s accelerated recovery from the currency redesign crisis of 2023, which triggered severe cash shortages and briefly eroded public confidence in formal financial institutions. By Q4 2024, the sector had not only regained lost ground but entered a phase of rapid expansion driven by multiple converging factors.
Digital banking adoption accelerated sharply in 2024, aided by improved mobile connectivity and sustained investment in fintech infrastructure. Mobile banking platforms saw double-digit increases in transaction volumes, particularly in peer-to-peer payments and small business lending.
Meanwhile, payment service banks (PSBs), designed to offer banking services to the unbanked, expanded aggressively into rural areas, helping to push Nigeria’s financial inclusion rate to 74% by the end of 2024, up from 68% in 2023, according to Central Bank data.
Fintech in the Driver’s Seat
The vibrancy of the sector owes much to the fintech ecosystem, which continued to attract capital despite a tougher global funding environment. Venture funding into Nigerian fintech firms reached $928 million in 2024, according to industry estimates, as investors doubled down on payment platforms, lending apps, and wealth management startups targeting Nigeria’s vast informal economy and underdevoloped consumer credit market.
Fintech in Nigeria is going beyond being a disruptor to beccoming the primary engine of growth for financial services, setting the pace for innovation that even the biggest banks are forced to follow.
Traditional banks have responded by investing heavily in their own digital transformation, launching app-based banking products targeted at younger consumers and forming partnerships with fintechs to improve customer experience. The result is a blurring of lines between banks, fintechs, and telecom players, with each competing for a share of Nigeria’s fast-growing digital finance market.
Consumer Credit and Microloans on the Rise
A particularly important driver of growth in Q4 2024 was consumer credit, which saw a surge in demand amid rising inflation and falling real incomes. Fintech-led platforms offering buy-now-pay-later (BNPL) services, salary-backed loans, and microcredit to small traders experienced record application volumes, as millions of Nigerians turned to short-term borrowing to cope with rising living costs.
This credit boom reflects both the deepening of financial services penetration and the economic distress faced by many Nigerian households, who increasingly rely on digital credit to cover day-to-day expenses. While this has boosted financial services GDP, it also raises concerns about household indebtedness and the potential for rising defaults in 2025.
Regulation Playing Catch-Up
The rapid evolution of Nigeria’s financial services sector has also exposed gaps in regulatory oversight, particularly in the fast-growing digital lending space. The Central Bank of Nigeria (CBN) and the Federal Competition and Consumer Protection Commission (FCCPC) spent much of 2024 grappling with complaints of predatory lending practices, data privacy violations, and unauthorized digital loan recoveries.
Regulation is playing catch-up with innovation. Critical issues such as cybersecurity breaches, phishing scams, identity theft, and misuse of customer data must be tackled urgently. If left unchecked, these risks could erode public trust and ultimately stall the sector’s impressive growth trajectory
Outlook for 2025
Despite modest regulatory risks, the outlook for Nigeria’s financial services sector remains broadly positive. With Africa’s largest youth population, rising smartphone penetration, and a policy push to expand financial inclusion, the sector is likely to maintain double-digit growth in 2025.
However, analysts caution that the sustainability of this growth will depend on stabilizing the macroeconomic environment, particularly taming inflation and ensuring exchange rate stability, both of which directly impact the cost and availability of credit.
For now, the Q4 2024 performance confirms that Nigeria’s financial services sector is not only thriving but increasingly defining the future shape of the country’s economy one where technology, finance, and innovation converge to create new pathways for growth.
