Nigerian Journal of Banking and Financial Issues (NJBFI)

ASSESSING THE EFFECTIVENESS OF FINANCIAL INCLUSION STRATEGIES ON POVERTY ALLEVIATION IN RURAL AREAS OF SOUTHWESTERN NIGERIA

Abstract

The study investigated the relationship between Financial Inclusion and Poverty Level in Osun State, Nigeria. It examine how access to formal and informal financial services, use of digital financial services, and financial literacy as components of Financial Inclusion affect Poverty Level measured by income level and saving behaviour of individuals. A survey research design was used focusing on economically active adult in Osun State. Data were collected through multi-stage sampling techniques and analysed using descriptive statistics in SPSS and Partial Least Squares Structural Equation Modeling (PLS-SEM) via Smart-PLS. Result showed that access to formal and informal financial services did not have a statistically significant impact on poverty level. Conversely, digital financial services and digital channels were identified as efficient drivers of accessing and cost reduction in financial inclusion, while financial literacy empowers individuals to make financial decisions has great effect on the people’s poverty level. The study concludes that poverty reduction in Osun State is driven by digital financial services and financial literacy, rather than access to traditional formal or informal financial services alone. Policy recommendations include enhancing financial education, improving accessibility to digital services, reforming formal financial services, strengthening relationship between informal-reduce to formal financial services, and implementing financial policies.