FINTECH PENETRATION AND UNEMPLOYMENT IN NIGERIA: A TODA-YAMAMOTO CAUSALITY ANALYSIS OF THE DIGITAL-LABOUR MARKET CHANNEL

Does the spread of mobile phones and the internet help explain movements in Nigeria's unemployment rate? This paper answers the question with Granger causality tests of the kind proposed by Toda and Yamamoto, which remain valid whatever the integration and cointegration properties of the data. The system covers 1996-2023 (the longest period for which all of the required series are continuous) and contains the ILO modelled unemployment rate, a principal-component index of mobile and internet penetration, output growth, consumer price inflation and remittance receipts; a first-order vector autoregression is augmented with one extra lag to reflect the highest order of integration detected. Causality is insignificant in both directions (p = 0.945 from the fintech index to unemployment and p = 0.378 in reverse). Impulse responses show only a negligible, slowly accumulating fall in unemployment after a fintech shock, and the index accounts for less than one per cent of the forecast error variance of unemployment even at an eight-year horizon. The unaugmented levels system has a near-unit root, which is informative about the trending index and is also the reason the augmented procedure is preferred. The findings are interpreted through creative destruction, skill-biased technical change and the conditional view of digital financial inclusion, and are compared with mostly positive cross-country evidence linking ICT to youth employment. Expanding mobile and internet infrastructure alone is unlikely to shift national unemployment. Connectivity, while necessary is not sufficient, and requires complementary policies on digital skills, start-up finance, and fintech support.