Despite Reforms, Financial Sector’s Contribution to Nigeria’s GDP Falls to N1.57 Trillion

Nigeria’s financial institutions contributed N1.57 trillion to real gross domestic product in the second quarter of 2026, down 10% from the N1.75 trillion recorded in the first quarter. The National Bureau of Statistics reported the decline in its latest GDP figures, despite reforms intended to strengthen the sector.

The Central Bank of Nigeria has pursued measures to improve banks’ ability to finance the economy and support the government’s goal of building a $1 trillion economy by 2031. Banks completed a recapitalisation exercise in March after the central bank ordered them to raise fresh capital. The exercise aimed to improve their capacity to finance major infrastructure and industrial projects.

The reforms attracted capital into the sector, while banks continued to support activity in the real economy and the expansion of digital payments. However, continued monetary tightening aimed at strengthening the naira, containing inflation and preserving macroeconomic stability put pressure on lending and transaction volumes.

Insurance provided a stronger counterpoint. Its contribution to real GDP rose to N230.64 billion in the second quarter from N180.9 billion in the first, a 27.5% increase. Financial institutions represented 87.22% of the combined real contribution from Finance and Insurance, while insurance accounted for 12.78%.

The wider sector grew 9.29% year-on-year in real terms, although that pace was 6.84 percentage points below the second quarter of 2025. On a quarterly basis, it contracted 6.49%. In nominal terms, the sector grew 11.88% year-on-year, with financial institutions up 10.92% and insurance up 18.88%. Its nominal GDP share was 4.32%, compared with 4.57% a year earlier and 3.83% in the first quarter.