Nigeria: Financial sector experts optimistic about economic recovery

Data by the National Bureau of Statistics (NBS) showed that Nigeria's financial service sector contributed N3. 8 trillion to Nigeria's Gross Domestic Product (GDP) in 2023, an increase of 26.5% from N3. 01 trillion in 2022.

The contribution was made by top financial service providers like the United Bank for Africa (UBA) Plc.  The bank prides itself as Nigeria’s biggest bank which has been in existence for 75 years since its inception in 1949.

The bank has evolved to a global financial institution with a presence in 20 African countries and 4 centres in New York, London, Paris and Dubai.

As the bank kicked off an event to mark its 75th anniversary, Oliver Alawuba said the financial institution has grown to be a global brand with about 45 million customers which supports the growth of SMEs in countries where it has a presence.

“In UBA Financial inclusivity is very important, and we will continue to come up with how we can make sure we increase the number of Africans that have banking relationships. When we landed in Ghana in 2005, that was one of the first things UBA did. We removed initial deposits that are required for banks so that we can drive financial inclusivity" said Alawuba.

"Today too, we are using digital means to ensure that we get to anyone in Africa. It is important that everyone in Africa has a banking account, and that will support management of the economy in a better way.” Alawuba added.

The bank executive also commended the measures taken by the government to revive the ailing economy despite the current hardship.

These measures include the controversial removal of petrol subsidy and floating of the naira which has led to the currency consistently losing value against the dollar, thereby triggering inflation.

“The government of Nigeria has made very positive decisions, decisions about subsidy removal, decisions about harmonization, free of rate. These are decisions that are very positive for the economy, now of course there are short-term hiccups.  But I can tell you overtime this will go away and the economy will do better. But if those decisions are not taken it will lead to more serious implications for the country” s aid the UBA Group Managing Director.

Additionally speaking on the move to revive the economy, Muyiwa Akinyemi, UBA’s Group Deputy Managing Director said though the policy may affect both long- and short-term plans of investors, it will come good.

“I would say that Nigerian banks are supporting the money managers to see how best to stabilize the economy and the currency as it were because if volatility is not to the best of Nigerians and even the banks as well. because you want to be able to plan your development plan, you are not able to plan properly by six months or one year”.

He added “we're looking at how best can we facilitate a lot more investments and a lot more capital flow to Nigeria than stabilize the economy which is what money managers are looking at with the various policies and pronouncements that they made in the past few days or months as well. But it is in our best interest to have a stable currency and to also have a stable economy without the high inflation that we are experiencing currently.”

Akinyemi identified financial inclusion as one of the major challenges facing the Nigerian banking sector.

He said despite these challenges, which are expected in a developing economy like Nigeria, the UBA will continue to support the government and its customers for the economy to thrive.

“I think the main challenges facing the banking sector today are penetration and alternatives to banking we see in Nigeria today.  You will expect that in a developing economy today anyway, where we (lenders) have to be involved in putting up infrastructure to support banking services. We have to do a number of things we are not supposed to be doing or constrained to do for our services across the country.

So those things that are not core activities will be the main things that are actually challenging the Nigerian banks today”

Akinyemi also stated the Nigerian consumer banking sector has a positive outlook despite the present economic challenges in the West African country.

“Now you will see that Nigeria's consumer banking market is quite resilient. Despite all the headwinds that you've seen, it's continued to grow, even though purchasing power may be a little bit low, it has actually been resilient over the past years"

"So, for us our role in that space, one would be to be able to provide unique banking solutions to the consumer banking market. Beyond that, we are also enhancing their financial capability (customers) as well to improve their purchasing power and also see how we can support what we're doing today to support the distribution business across consumer markets in Nigeria”. Muyiwa Akinyemi added.

Nigeria is facing its worst cost of living crisis in three decades.

While the country’s apex bank and regulator, the Central Bank of Nigeria (CBN) has said they are taking the necessary steps to get the country’s fiscal and monetary health back to normal, UBA says supporting Small and Medium-sized Enterprises (SMEs) remains crucial for economic growth and job creation even at this challenging time.