Beyond Access: Digital Payment Activity, Productive Investment and Economic Growth in Nigeria

This study examines whether digital financial activity is linked to productive investment and economic growth in Nigeria. It uses quarterly data from 2010Q1 to 2024Q4 and applies the Autoregressive Distributed Lag (ARDL) method to assess short-run and long-run relationships. POS transaction volume is used as the main measure of digital financial activity, while gross fixed capital formation represents investment and real GDP measures economic output. The results show that POS transactions have a positive and significant long-run relationship with productive investment and real GDP. Investment is also positively associated with economic output. However, tests using other payment channels produce mixed results. Mobile payments show a positive and significant relationship with investment, while internet, ATM and cheque transactions provide weaker evidence. These findings suggest that digital payments may support investment and economic growth, but their contribution varies across payment channels. The study recommends improving digital payment services, expanding access to business finance and creating a more supportive environment for productive investment. Overall, digital finance has the potential to support Nigeria's economic development, but increased payment activity alone may not be enough to achieve this. Keywords: Digital financial activity; productive investment; economic growth; digital payments; ARDL