Financial Inclusion and Poverty Alleviation in Nigeria: The Role of Mobile Banking, Microfinance Institutions, and Digital Payment Systems

Abstract

Despite the growth of digital finance, many Nigerians are still outside the formal financial system. This study examines whether mobile banking, microfinance, and digital payments help reduce poverty. In 2024, we surveyed 500 adults in Lagos and Enugu to understand how their use of financial services relates to income, assets, emergency funds, school attendance, and housing. We found that 68.4% had bank accounts, but only 52.3% used them regularly, showing a 16.1% gap between account ownership and use. Mobile banking reached 42.4% of people who previously did not have bank accounts. Microfinance users were more likely to expand their businesses (52.8% versus 21.5%). Financial inclusion helped people perform better in all areas. For instance, 68.4% of fully included people earned more than ₦50,000 a month, compared to only 23.3% of excluded people. These findings show that people use both formal and informal financial tools. Policies should focus on encouraging regular use and addressing barriers such as cost, paperwork, and digital skills.