Digital Payment Systems and Economic Development in Nigeria

Abstract

This paper assesses how digital payment channels relate to Nigeria's level of human development. In particular, it looks at how Point of Sale (POS) transactions, Web Payment (WP), and Mobile Payment (MP) each relate to the Human Development Index (HDI). The analysis draws on annual data for 2010–2024, sourced from Central Bank of Nigeria (CBN) statistical bulletins and Human Development Reports published by the United Nations Development Programme (UNDP). An ex-post facto design guided the study, and the Autoregressive Distributed Lag (ARDL) approach was used to estimate the relationships. Before estimation, descriptive statistics and an Augmented Dickey-Fuller (ADF) unit root test were run; the latter showed the variables were integrated of mixed order. A Johansen co-integration test pointed to a long-run relationship among the series, but the ARDL bounds test did not support this, finding no significant long-run equilibrium. Estimation results show that POS and web payments carry negative, statistically insignificant coefficients with respect to HDI, whereas mobile payments show a modest positive association. Overall, the evidence does not support a strong or dependable link between digital payment adoption and human development in Nigeria over the study period. The paper recommends stronger investment in digital infrastructure, broader financial inclusion, and improved cybersecurity to help digital payment systems deliver more developmental benefit.