Experts Urge Financial Sector Overhaul to Drive Nigeria's Economic Development

Samuel Mobolaji

Financial experts have called for a comprehensive overhaul of Nigeria’s financial sector to unlock its full potential and accelerate the nation’s economic development.

Speaking at the 17th Banking and Finance Conference in Abuja, industry leaders emphasized that despite the banking system being well-capitalized, key structural challenges hinder its ability to fully drive growth.

For instance, Managing Director of Financial Derivatives Company, Bismarck Rewane, noted that the banking sector has experienced significant growth in assets, which rose from N42.8 trillion five years ago to N138 trillion today—an increase of 222 per cent.

While this capital strength positions the sector to support economic expansion, Rewane stressed that issues such as cybersecurity risks, regulatory inefficiencies, and inadequate infrastructure are holding the industry back.

“Nigeria’s financial system remains relatively shallow when compared to emerging market peers like Indonesia and Malaysia. The industry is profitable but is becoming less attractive due to heavy regulation. A more efficient payment system is essential to boost financial inclusion,” Rewane said.

He added that the recapitalization of banks would help absorb the effects of higher interest rates on asset quality and profitability, but emphasized that deeper reforms are necessary to sustain long-term growth. These reforms include addressing regulatory bottlenecks, reducing the taxation burden on financial services, and improving institutional transparency to lower corruption risks.

Technology was highlighted as a key driver of the financial system’s future development.

Managing Director of First City Monument Bank (FCMB), Yemisi Edun, pointed out that innovation, especially through Artificial Intelligence (AI), could transform how financial services are delivered, making them more efficient and accessible to businesses, particularly small and medium enterprises (SMEs).

“We need AI to drive credit access, enhance payment systems, and create solutions that deliver speed and efficiency in the financial sector,” Edun explained, adding that technological adoption would make funding cheaper and more readily available for SMEs, which are vital to economic growth.

The role of security and improved regulation was also underscored. Managing Director of First Bank of Nigeria Limited, Olusegun Alebiosu, expressed optimism about the Nigerian economy in the coming year, citing improved security, increased oil production, and stronger local demand as key drivers of growth.

Meanwhile, Managing Director of FSDH Merchant Bank, Bukola Smith, urged that recapitalization efforts should extend beyond banks to include insurance companies. She argued that aligning the financial strength of insurance firms with banks would help balance growth across the financial sector, ensuring that all parts of the industry contribute to national development.

The theme of the conference, “Accelerated Economic Growth and Development: The State of Play and the Way Forward,” emphasized the need for bold and strategic reforms across the financial industry to foster sustainable economic development in Nigeria.

The experts agreed that while the sector has the potential to drive progress, its success will depend on a collaborative effort to address the persistent regulatory, technological, and infrastructural gaps.