African Development Finance Journal

Diaspora Remittances and Economic Development in Nigeria

2025-09-22T14:27:16+00:00

This study aims to examine the significant impact of diaspora remittances on Nigeria's economic development, specifically focusing on GDP growth, per capita income, and human capital development. By exploring the relationship between remittances and key economic indicators, the study seeks to provide empirical evidence on the role of remittances in driving long-term economic growth and enhancing socio-economic welfare in Nigeria. The study employs an Autoregressive Distributed Lag (ARDL) model to analyze the relationship between diaspora remittances and Nigeria’s economic development. The model is tested using secondary data from credible sources, including the Central Bank of Nigeria and World Bank, spanning the period from 1985 to 2023. The research involves both long-run and short-run analysis, with a focus on error correction modeling. The findings reveal a significant positive relationship between remittances and Nigeria's GDP growth, per capita income, and human capital development. Remittances are shown to stimulate economic growth, reduce poverty, and improve education and healthcare outcomes, reinforcing the positive multiplier effect on the Nigerian economy. This study contributes to the understanding of how remittances can be harnessed for economic growth and development. The results suggest that policies promoting the productive use of remittances in sectors like education, healthcare, and small businesses can boost Nigeria’s long-term economic stability.

Originality/ Value: This study provides original insights into the role of diaspora remittances in Nigeria's economic growth, offering valuable recommendations for leveraging remittance inflows for sustainable development.

Keywords: diaspora remittances, GDP growth, per capita income, human capital development, Nigeria.

Do Trade Imbalances Drive Inflation? A Nonlinear and Asymmetric Analysis of Nigeria’s Economy (1981–2023)

2025-09-22T14:33:49+00:00

The study examines the relationship between trade imbalances and inflation in Nigeria from 1981 to 2023, using the Nonlinear Autoregressive Distributed Lag (NARDL) model. It finds that positive trade imbalances (PTI) have a short-term deflationary effect on inflation, while negative trade imbalances (NTI) show delayed inflationary effects due to currency depreciation and increased import costs. The study highlights the asymmetric nature of trade imbalances' influence on Nigeria's economy. The study also reveals that macroeconomic variables like money supply, trade openness, foreign direct investment, and real GDP influence inflationary pressures. Increased money supply exacerbates inflation in the short and long run, while trade openness contributes to short-term inflation due to global price volatility. Foreign direct investment offsets short-term inflationary pressures with long-term economic benefits, and real GDP growth contributes to demand-pull inflation in the short term. Diagnostic tests confirm the model's robustness, despite residual autocorrelation. The findings also align with Balance of Payments theory, Monetary Theory of Inflation, and Structuralist perspectives. The study recommends policy measures to manage trade imbalances, stabilize inflation, and promote sustainable economic growth in developing economies, including diversifying exports, enhancing domestic production, and implementing effective monetary and fiscal policies.

Keywords: Trade Imbalance, Inflation, Asymmetric Effects, NARDL Model, Monetary Policy

Does Spending Efficiency Moderate the Relationship Between Government Expenditure and Economic Growth In the EAC Region?

2025-09-25T10:40:08+00:00

expenditure and economic growth in East African Community (EAC) countries from 1970 to 2022. The study adopted a correlational research design and employed a two-stage methodology: Data Envelopment Analysis (DEA) was used to generate SE scores, which were then incorporated into a fixed-effects panel regression model. The findings reveal that while GE has a positive and significant effect on EG, this relationship is strengthened in contexts where SE is higher. The results confirm that efficient allocation and utilization of public resources enhances the impact of government spending on growth, supporting Keynesian and endogenous growth theories. This moderating role of SE highlights the importance of fiscal quality, not just the amount of spending, in promoting economic growth. The study recommends institutional reforms focused on improving expenditure effectiveness through better governance, targeted social investments, and ongoing performance monitoring. Further, the study suggests that EAC governments strengthen public financial management systems, improve allocative efficiency, and institutionalize SE monitoring frameworks. Such reforms would not only amplify the growth dividends of public spending but also support ongoing regional integration and sustainable development goals. These insights contribute to both fiscal policy formulation and broader discussions on sustainable development in emerging regions.

Keywords: Spending Efficiency, Government Expenditure, Economic Growth, East African Community, Panel Data, DEA, Public Finance

Evaluating the Impact of Artificial Intelligence on Product Management in Nigerian Digital Finance

2025-09-25T10:37:03+00:00

This study evaluates the impact of Artificial Intelligence (AI) on product management within Nigeria’s rapidly growing digital finance sector. Employing a mixed-methods approach, the study examines AI applications in formulating ideas, development, and adaptation of financial products by Nigerian Banks and Fintechs. Findings indicate that AI adoption is progressing, particularly in personalization and customer insights, though its maturity remains uneven. The study highlights the importance of data analytics, automaton, and AI literacy for product managers. It concludes that AI enhances product development through improved segmentation and infrastructure to ensure competitive, inclusive, and resilient digital finance innovation in Nigeria. The study offers recommendations for organizational leaders, digital finance professionals, and policymakers to facilitate effective AI adoption and responsible use.

Keywords: Artificial Intelligence, Automation, Digital Finance, Fintech, Predictive Analytics

Green Supply Chain Practices and Organizational Performance of Supermarkets in Nairobi City County, Kenya

2025-09-22T14:46:39+00:00

Growing concerns over the long-term environmental effects of resource extraction, value addition, and distribution have driven organizations to adopt Green Supply Chain Practices (GSCPs). Beyond reflecting environmental responsibility, GSCPs may influence organizational performance outcomes. This study examined the relationship between GSCPs, green purchasing, green packaging, green warehousing, and reverse logistics, and organizational performance of supermarkets in Nairobi City County, Kenya. Further, the study sort to find out the level of adoption of these GSCPs. Descriptive research design was employed, targeting a population of 64 supermarkets. Based on the structure of supermarkets and study variables, five respondents were picked from each, giving 320 respondents. Primary data were collected using structured questionnaires, analyzed using descriptive and inferential statistics. Response rate of 56.25% was achieved. The results revealed a positive and statistically significant relationship between GSCPs and organizational performance. The GSCPs collectively accounted for 49.1% of the variation in organizational performance (R² = 0.491). The study recommends supermarkets to implement GSCPs to enhance performance. Green packaging practices should be critically reviewed to prevent potential negative impacts on performance. These findings contribute to literature by empirically establishing the strategic value of GSCPs and providing practical insights for policymakers and retail managers.

Keywords: Green Supply Chain Practices, Organizational Performance, Supermarkets, Nairobi City County, Kenya

Impact of Digital Financial Inclusion on Capital Formation in Nigeria

2025-09-22T14:51:40+00:00

This study investigates the impact of digital financial inclusion: digital banking, mobile money, and fintech platforms on capital formation in Nigeria, focusing on investment rates, asset accumulation, savings mobilization, credit access, and business investment. Using a quasi-experimental design with propensity score matching to mitigate selection bias, the research draws on data from 26,930 individuals across Nigeria’s six geopolitical zones, sourced from the Enhancing Financial Innovation and Access Survey, Central Bank of Nigeria, and World Bank Global Findex Database. Findings indicate that all digital financial inclusion components significantly boost capital formation, with fintech platforms showing the strongest impact, followed by mobile money and digital banking. Notably, women, rural populations, and lower-income groups experience disproportionate benefits. The study highlights how digital financial services enhance capital formation through reduced transaction costs, improved credit allocation, and enhanced savings mobilization, fostering economic development and inclusive growth by prioritizing underserved populations.

Keywords: capital formation; digital banking; financial inclusion; fintech platforms; mobile money

Influence of Financial Inclusion on Credit Risk Performance in Kenyan Commercial Banks

2025-09-22T14:55:55+00:00

The main aim of this study was to establish the influence of financial inclusion on credit risk performance in Kenyan commercial banks. The study was anchored on asymmetric information Theory. The study adopted a longitudinal correlational research design. The study target population consisted of 37 commercial banks in Kenya. The study employed a census sampling technique to gather all the required necessary data from the existing population. A balanced panel of secondary data from the published audited financial statements for the period 2018 to 2023. The collected data was subjected to a diagnostic test before applying regression analysis. The collected data was analyzed using EViews-12 Statistical Package and descriptive statistics were computed to determine data characteristics and multiple regression was used to test and report hypotheses. From the regression results, financial inclusion explains 82.43% (adj R2=0.8243, p=0.000) of variance in credit risk performance. The regression coefficient revealed (β=0.027624, P=0.0303) showing that a unit increase in financial inclusion would lead to 2.7624% significant change in credit risk performance. Therefore, the null hypothesis was rejected. The study finally concluded that financial inclusion is found to increase credit risk performance in Kenyan commercial Banks. The study recommended that commercial banks’ management should be very sensitive in advancing financial inclusion programs which if not well undertaken can lead to an increase in credit risk and eventually affect the sustainability of commercial banks. One issue noted is that commercial banks should develop stringent credit risk scoring models that have the capacity to capture the different unique risk profiles of the new customers to reduce information asymmetry. Additionally, Central Bank of Kenya should consider policies that can arrest transitional risk associated with increased financial inclusion that can reveal the credit history of formerly excluded population to ensure enhanced credit risk assessment.

Keywords: Financial Inclusion, Credit Risk Performance, Kenyan Commercial Banks

Professional Competence, Due Care and Financial Reporting Quality: Stakeholders Perception

2025-09-22T15:00:11+00:00

adopting a stakeholders-oriented approach to understand this relationship. A survey approach was employed to gather data from investors, analysts, auditors, regulators and management. The study was analyzed using descriptive statistics, confirmatory factor and path analysis, also used for the analysis is regression. The research findings show that stakeholders view on professional competence and due care have a significant bearing on the quality of financial reporting. Specifically, due care and continuing professional development are deemed essential for ensuring accurate, transparent and reliable financial reports. This study reveals that stakeholder assess financial reporting quality based on factors such as compliance with regulations, clarity of financial disclosures, auditor’s opinion and corporate governance. The results also indicated that poor professional competence and financial reporting quality can lead to loss of investor confidence, decreased market value, regulatory penalties and reputational damage. The research contributes to extant literature by providing insights into stakeholders’ perception on professional competence and due care and financial reporting quality. The findings have implications for professional organizations, regulatory bodies and companies highlighting the need for ongoing training, enhanced corporate governance and independent audit committees to ensure high-quality financial reporting..

Keywords: Professional Competence and Due Care, Financial Reporting Quality, Stakeholders’ Perception, Ethical Code, Accountant

Role of Private Equity in National Development: A Case Study of Zambia

2025-09-22T15:03:40+00:00

Private equity (PE) is a crucial financing tool for business expansion and sector diversification in developing economies, such as Zambia. It improves efficiency, boosts financial performance, and supports job creation. The study analyzed PE's impact on Zambia's development, finding that PE-backed companies experience faster growth, improved governance, and competitiveness, particularly in the agriculture, infrastructure, and manufacturing sectors. However, barriers such as regulatory inefficiencies, shallow capital markets, and economic instability hinder the effectiveness of PE. To promote PE growth, the study recommends strengthening the legal and regulatory environment, expanding capital markets, encouraging institutional investor participation, and providing government incentives, as well as improving financial infrastructure.

Keywords: Private Equity, Business Growth, Employment Generation, Sectoral Development, Regulatory Barriers

Tax Incentives and Renewable Energy Development in Nigeria: Evaluating Effectiveness and Policy Gaps

2025-09-22T15:08:24+00:00

Nigeria possesses vast renewable energy potential but continues to face severe electricity deficits, with over 85 million citizens lacking access to grid power. To address this challenge and accelerate clean energy adoption, the Nigerian government has introduced various fiscal incentives, including tax holidays, VAT exemptions, and import duty waivers, aimed at attracting renewable energy investors. This paper critically evaluates the effectiveness of these incentives in driving investment, enhancing energy access, and stimulating local industry development. Drawing on official reports, stakeholder consultations, and international benchmarks from countries such as India, Kenya, Brazil, South Africa, and Morocco, the study finds that while fiscal tools offer promise, their impact is limited by weak institutional coordination, inadequate monitoring frameworks, and low awareness among developers. Key policy gaps include short incentive durations, insufficient support for off-grid systems, and minimal local content integration. The paper concludes with actionable recommendations focused on reforming Nigeria’s incentive structure, including establishing a centralized coordination agency, expanding the scope of incentives, and strengthening local manufacturing capacity to better align fiscal policy with the country’s energy and climate goals.

Keywords: Renewable energy, Tax incentives, Fiscal policy, Energy access, Investment

Testing the Awareness and Attitude towards Sukuk Bonds in the Kenyan Market: A Policy Brief

2025-09-22T15:12:10+00:00

The survey sought to establish the level of awareness and attitude of investors towards Sukuk bonds. Data was collected using questionnaires among investors in the Kenyan market. A response rate of 80% was obtained from the targeted 200 respondents. In terms of awareness, 55% were aware of sukuk bonds as investment options while 45% were unaware of the Sukuk bonds. The investors’ knowledge of sukuk bonds was tested and the findings depicted that Ijara bonds were rated the highest at 32%, Mudarabah (28.7%), Musharakah (32.8%), Murabaha (25.4%), Salam (19.7%), Istisnah (14.8%), Wakala (21.3%) and 41% had no knowledge of the types of sukuk bonds. The investors also identified factors which would influence their investing in sukuk bonds: unique features of sukuk (25.2%), transparency of investments (44.4%), religious/ ethical factor (62.9%), expected returns (42.4%), and sustainability (27.2%). This research investigated the awareness and attitude of Kenyan investors towards sukuk bonds with a view of coming with a policy framework which will guide issuance of Sukuks in Kenya.

Keywords: Sukuk bonds, Shariah, conventional bonds

The Moderating Role of Board Independence in the Credit Risk–Bank Rating Relationship: Evidence from West Africa

2025-09-22T15:18:21+00:00

This study investigates how board independence moderates the impact of credit risk on bank credit ratings in Ghana, Nigeria, and Togo. Using data from 28 banks between 2012 and 2023, a composite credit rating index was developed through Principal Component Analysis based on Standard & Poor’s, Moody’s, and Fitch data. The analysis, grounded in innovation, stewardship, and financial development theories, employed OLS regression with robust standard errors. Results show that credit risk has a significant negative effect on credit ratings, but this effect is mitigated by strong board independence. Firm size is positively associated with credit ratings, while regulatory differences, particularly in Ghana and Togo, also influence outcomes. The findings highlight the importance of board governance and effective credit risk management in enhancing banking sector stability. The study adds value by focusing on emerging markets and introducing a unified credit rating index as a tool for regional policy and academic inquiry.

Keywords: Credit Rating, Credit Risk, Board Independence, Corporate Governance, West Africa, Banks

Effect of Adaptive Capacity on Innovation Performance among Deposit Taking Savings and Credit Cooperative Organizations in Kenya

2025-09-23T15:00:39+00:00

This study investigates the effect of adaptive capacity on innovation performance among Deposit-Taking Savings and Credit Cooperative Organizations in Kenya. Using Dynamic Capabilities Theory, the study adopted an explanatory research design and focused on a population of 176 DT-SACCOs in Kenya. A total of 366 respondents was selected using simple random sampling from the relevant strata within the sampled DT-SACCOs. Primary data was collected using structured questionnaires. A multiple regression analysis was conducted, revealing that adaptive capacity accounts for 45.5% of the variation in innovation performance, with a significant positive relationship between the two. The study concludes that fostering adaptive capacity within DT-SACCOs is critical for enhancing innovation performance and ensuring their long-term sustainability. The study recommends that DT-SACCOs focus on strengthening their adaptive capacity through continuous training, increase investment in digital technologies, develop flexible strategic plans, and foster collaborations with fintech companies and regulatory bodies.

Keywords: Adaptive Capacity, Innovation Performance, DT-SACCOs, Strategic Flexibility, Dynamic Capabilities, Financial Inclusion.