FINANCIAL INCLUSION AND POVERTY IN NIGERIA

Abstract

This study examined the effect of financial inclusion on poverty alleviation in Nigeria from 1982 to 2020. It highlights the importance of financial inclusion as a tool to combat poverty, emphasizing the significant impact of poor financial inclusion on the inability of the poor to access financial services, thereby exacerbating poverty levels. The study utilized data from the Central Bank of Nigeria (CBN, 2022) statistical bulletin and the World Development Indicators (World Bank, 2022). The study employed descriptive statistics, correlation analysis, unit root tests (Augmented Dickey Fuller and Phillips-perron tests), and the Auto Regressive Distributed Lag (ARDL) model to analyze the data and assess the relationship between financial inclusion and poverty. The findings revealed both short-term and long-term negative relationships between financial inclusion and poverty in Nigeria. Specifically, variables such as the number of commercial bank branches, loans by rural bank branches, and credits to the private sector were found to have a negative association with poverty. Conversely, lending rates were positively correlated with poverty levels. Additionally, while credits to the private sector and loans by rural bank branches were statistically insignificant, the number of commercial bank branches showed significance at a 5% level. Based on the findings, the study recommended several policy measures to enhance financial inclusion and alleviate poverty in Nigeria. These recommendations include expanding the Small and Medium Enterprises Development Fund (MSMEDF), reducing lending rates, and lowering the cost of delivering financial services to improve access to financial services for the poor. Keywords: Credits, Credits to private sector, Financial inclusion, lending rates, per capita income, poverty.