How Nigeria became Africa’s financial powerhouse

 

Of all of Africa’s burgeoning economies, the story of Nigeria’s growth has been one of the most remarkable. In just a short space of time the country transformed into Africa’s largest economy, with much of this growth attributed to the country’s strong financial sector.

In this article we take a closer look at Nigeria’s growth story to understand how the country became a financial powerhouse which continues to attract the interest of traders and investors.

 

Strong oil exports provide stability for growth

Nigeria's economy has grown dramatically in recent years, thanks largely to the country's vast oil and gas reserves. Nigeria had the world's fourth-highest GDP growth rate from 2001 to 2010.

The country's GDP is expected to rise above $500 billion dollars by 2020, following a fall in oil prices in 2015. Additionally, the country's gross domestic product (GDP) per capita has risen during the past decade as a percentage of its population.

A high GDP per capita is regarded as a sign of a high standard of life in countries where it is high. Although unemployment in Nigeria is on the rise, the country's trade balance aids in economic stability.

With the economy largely anchored by its oil exports, other sectors were given the stability required to grow into flourishing areas of national production which ultimately fed into the establishment of a strong financial sector.

 

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A digital transformation

While Nigeria’s oil sector remained largely stable before the pandemic, the coronavirus crisis has prompted major shifts in work practices, particularly work-from-home models, that are opening up new avenues for the financial sector to attract and retain the skills it needs in support of its shift toward digitalization.

Banks and brokers have taken steps to improve their employee value proposition in order to benefit from this trend, which is typically seen as less attractive than those of technological businesses competing for the same talent.

Players in the financial sector have been able to position themselves as desirable employers by evaluating the growth opportunities and workplace experiences that they offer, including the adoption of flexible working. Here, a firm commitment to equality for men and women has been essential.

 

A supportive regulatory framework

It became increasingly important for key industry regulators, such as CBN, NPC, NIC, and the Ministry of Finance, to coordinate their perspectives in order to unlock broad-based financial services growth and true financial inclusion in Nigeria's financial sector as the crisis had a negative impact on their revenue sources.

Several players stated their intention to broaden their financial services offerings in the future. Key to Nigeria's sustained financial growth was seeing how effectively these institutions performed in providing diverse financial services.

 

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Conclusion

Nigeria’s rapid and impactful growth as an economy allowed for its financial sector to transform into a regional powerhouse.

This growth was attributable to the interlocking elements of the economy’s growth as a whole, supported by a strong and stable oil sector that freed up other areas of the country for transformation.

As a result, Nigerians were able to transform a digital transformation that was essential to the establishment of a strong financial sector which continues to attract investors and traders from around the world.