Financial Inclusion and Poverty Reduction in Northern Nigeria

Abstract

This paper investigates the impact of financial inclusion on poverty reduction in Nasarawa State of North Central, Nigeria. Using secondary annual data from the Central Bank of Nigeria, National Bureau of Statistics, and World Bank, the research applies a time series econometric approach, including unit root tests, Johansen cointegration, and an Error Correction Model (ECM), to examine the relationship between GDP growth, financial inclusion, and poverty rates. Results reveal a long-run equilibrium relationship among the variables, with financial inclusion exerting a positive and significant short-run effect on economic performance, while poverty negatively influences growth. Despite relatively strong GDP growth, financial inclusion remains shallow, largely due to sectoral concentration in capital-intensive industries, informal rural economies, insecurity, and low human capital. These structural barriers limit the transformative potential of financial services in raising incomes and improving education. The study highlights the fragility of local economic resilience in the face of protracted crises and underscores the need for integrated policies that expand rural financial access, promote inclusive, labor-intensive growth, strengthen governance, and address structural inequalities. It recommended linking financial inclusion strategies to poverty reduction programs, sustainable economic participation and poverty alleviation in Northern Nigeria.