Title:
The Cashless Policy and the Nigerian Economy

Authors:
Grace Ofure Evbuomwan and Deborah Ekenedilichukwu Ajudua, Nigeria

Abstract:

The increasing shift towards a cashless economy has become a significant development in Nigeria’s financial sector in recent years. This study investigates the effect of Nigeria’s cashless policy introduced in 2012 on economic growth, focusing on four major digital payment channels: ATM transactions, POS usage, mobile banking, and web payments (to represent internet banking). Using quarterly data from 2012 to 2023 and applying the Auto-Regressive Distributed Lag (ARDL) model, the research analyzes both short-run and long-run dynamics of these payment tools on real GDP. The results from the analysis indicate that Mobile banking shows a short-run negative impact initially but turns significantly positive at a one-quarter lag, while web payments have a short-run negative effect, becoming significant at lag 1. In the long run, none of the payment channels have statistically significant effects on economic growth, although ATM, POS and web payment showed positive directional impacts, while mobile banking exhibited a negative directional impact. However, the error correction term is negative and statistically significant, confirming the existence of a long-run equilibrium relationship, with 19.7% of disequilibrium corrected each quarter. These findings suggest that while cashless policy tools offer short-run potential, structural enhancements are necessary to achieve sustained economic benefits from this policy in Nigeria.  The study therefore, recommends that targeted approaches that improve trust and security, financial literacy as well as strengthening of digital infrastructure nationwide be implemented by the respective stakeholders to improve the impact of the cashless policy in Nigeria.

DOI: https://doi.org/10.51505/IJEBMR.2026.10314