Financial Inclusion and Inclusive Growth in Nigeria: A Critical Appraisal for Evidence Based Policy

Abstract

Economic growth, both local and global, is no longer regarded as a measure of a state or country's wealth, this is because economic growth is usually accompanied by inequality, poverty, and joblessness, which becomes a poor measure of a country’s wealth, hence the need for economic growth that is inclusive. This study examines the impact of financial inclusion on inclusive growth in Nigeria from 1990 to 2024 using the Non-Linear Autoregressive Distributed Lag technique; the study utilized insurance and financial services, monetary sector credit to private sector and remittances as measures of financial inclusion while real GDP per capita captures inclusive growth. This study used time series data sourced from the Federal Reserve Economic Data, NBS, CBN database, and WDI with the new growth theory as its theoretical framework. The findings reveal that infrastructural investment and insurance financial services exhibited a significant relationship with RGDP per capita in both the long and short run terms. The long-term analysis established a significant positive relationship which posits that inclusive financial policies contribute positively to GDP per capita, albeit in the long run, while the short run was statistically insignificant, signifying that the immediate effects of financial inclusion might not be prominently observed in increasing GDP per capita. This study highlights potential nuances within the Nigerian economic landscape and suggests that despite the current lack of discernible effects on RGDP per capita in the short-run, financial inclusion initiatives could be instrumental in laying the groundwork for future economic stability at the long run, which will generate a more conducive environment for inclusive growth in Nigeria.