Digital Finance as a Catalyst for Financial Inclusion in Nigeria. A Critical Examination

Financial inclusion remains a significant challenge globally, especially in developing economies like Nigeria. The advent of digital financial services (DFS) has been touted as a potential solution to this challenge. However, the impact of DFS on financial inclusion is yet to be fully understood, and existing studies have yielded mixed findings. This study investigates the relationship between DFS and financial inclusion in Nigeria, with a focus on access, usage, efficiency, and inclusion. Using an ex post facto design with a quantitative approach, the study anchored on the vulnerable group theory analysed data obtained from the Statistical Bulletin of Central Bank of Nigeria for the period 2010–2023. The Ordinary Least Squares was used to run the regression analysis after carrying out several diagnostic checks. Our results show that Agency Banking, Automated Teller Machine transactions, Point of Sale Facilities, and Mobile Banking services can be powerful tools for promoting financial inclusion in Nigeria, but that USSD transactions have a minimal effect on financial inclusion in Nigeria suggesting that improved access, usage, and efficiency of these digital financial services instruments will enhance financial inclusion in Nigeria. The study contributes to the existing literature by providing insights to how DFS tools influence financial inclusion in the context of a developing economy like Nigeria. The originality of the study stems from its contributions to extant literature as it provides evidence of the positive influence of DFS on financial inclusion in Nigeria, a context that has received limited attention. The study findings also have important implications for policymakers and financial services providers that seek to promote financial inclusion through digital financial services.