FINANCIAL INCLUSION AND POVERTY REDUCTION IN NIGERIA

Financial inclusion remains one of the most contested yet consequential policy instruments in the pursuit of poverty reduction across developing economies. This study examines the relationship between financial inclusion and poverty reduction in Nigeria over the period 1986–2025, while controlling for macroeconomic factors (GDP growth rate), fiscal factors (government revenue and government expenditure decomposed into capital and recurrent components), a debt-related factor (external debt stock), and an institutional factor (fiscal rule adoption). Employing a time series regression framework, the study draws on data from the Central Bank of Nigeria (CBN), the World Bank World Development Indicators (WDI), and the International Monetary Fund (IMF). The dependent variable, poverty reduction, is proxied by the poverty headcount ratio at $2.15 per day (2017 PPP). Financial inclusion is measured through composite indicators of account ownership, credit access, and mobile money penetration. The empirical results indicate that financial inclusion exerts a statistically significant negative effect on poverty, suggesting that expanding access to formal financial services meaningfully reduces household poverty. Capital expenditure exhibits a significant poverty-alleviating effect, while recurrent expenditure shows a weaker and sometimes counterproductive relationship with poverty outcomes. External debt stock correlates positively with poverty, pointing to the fiscal crowding-out effects of debt servicing obligations. The adoption of fiscal rules demonstrates a modest but statistically significant poverty-reducing association, reinforcing the importance of institutional discipline in public financial management. GDP growth rate maintains its expected negative association with poverty, confirming foundational macroeconomic theory. These findings contribute to the empirical literature on the financial inclusion–poverty nexus in Nigeria and provide actionable policy recommendations for policymakers, financial regulators, and development finance institutions seeking to leverage inclusive finance for sustainable poverty reduction.