EFFECT OF FINANCIAL INCLUSION ON INCLUSIVE GROWTH IN NIGERIA

Abstract

Despite various development efforts, a significant portion of Nigeria’s population remains financially excluded, hindering the attainment of inclusive growth. This study investigated the effect of financial inclusion on inclusive growth in Nigeria, focusing on the period from 2000 to 2023. To achieve this, the Autoregressive Distributed Lag (ARDL) model was employed to assess both short-run and long-run dynamics, while the causality test was used to examine the direction of causality between financial inclusion and inclusive growth. The findings revealed that financial inclusion significantly and positively influences inclusive growth in both the short and long run. Additionally, secondary school enrolment contributes positively to inclusive growth, whereas inflation exerts a negative impact. The error correction term is significant and correctly signed, confirming the presence of a long-run equilibrium relationship among the variables. However, unemployment was found to be statistically insignificant in explaining variations in inclusive growth within the study period. The causality analysis further supports a unidirectional causality running from financial inclusion to inclusive growth. Based on these findings, the study recommends that policymakers intensify efforts to deepen financial inclusion through increased deployment of digital financial services, improved financial literacy, and strengthened regulatory frameworks. In addition, targeted investment in education and inflation control measures should be prioritized to foster a more inclusive and sustainable growth trajectory for Nigeria.