The Impact of Financial Inclusion on Poverty Level in Nigeria

Abstract

This study investigated the impact of financial inclusion on poverty levels in Nigeria. The study employed time series data obtained from the Central Bank of Nigeria statistical bulletin, World Development Indicators and National Bureau of Statistics. Financial inclusion was captured by total bank branches, total bank credit, total bank deposit, automated teller machine, point-of-sale and mobile pay while poverty level was captured by the ratio of total consumption expenditure to total population. The Autoregressive Distributed Lag (ARDL) estimation technique was used to establish the long run relationship among the variables. It was revealed that long run relationship exists among the variables in the estimated model. The results of the Error Correction Mechanism (ECM) within the framework of the ARDL shows that financial inclusion has significant impact on poverty levels in Nigeria. The study concludes that to stem the scourge of poverty in Nigeria, the government must promote financial inclusion and oblige banks to grant microcredit and expand the scope of mobile banking penetration to the rural poor. It was recommended that the government and banking authorities should prioritize strategic rural banking, and shift toward pro-poor and productive lending by introducing mandatory quotas, risk-sharing guarantees, and gender-inclusive credit products to overcome urban/commercial bias and procyclicality, thereby strengthening credit direction. The government and banking authorities should reform savings mobilization by offering low/no-fee digital accounts, inflation-protected products, and integration with informal mechanisms. They should accelerate rural agent expansion, enforce zero-fee transfers, ensure interoperability, and integrate literacy/gender-sensitive programs to maximize mobile pay’s dominant and robust long-run poverty-reducing effect.