DIGITAL FINANCIAL INCLUSION AND THE PERFORMANCE OF MICRO, SMALL, AND MEDIUM ENTERPRISES IN NIGERIA: AN EMPIRICAL ASSESSMENT USING SECONDARY MACRO-LEVEL DATA

Abstract

Over the past ten years Nigeria's financial system has been reshaped by digital technology, yet the micro, small, and medium enterprise (MSME) sector, the source of most of the country's jobs, still points to limited access to finance as the single biggest obstacle to its operations. This paper investigates how digital financial inclusion (DFI) relates to MSME sector performance in Nigeria, drawing on secondary macro-level time-series data from 2014 to 2024 sourced from the Central Bank of Nigeria (CBN), the Nigeria Inter-Bank Settlement System (NIBSS), the National Bureau of Statistics (NBS), the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), and the Enhancing Financial Innovation and Access (EFInA) Access to Finance surveys. DFI is captured through mobile money transaction value, NIBSS Instant Payment (NIP) transaction volume, and the EFInA-reported formal financial inclusion rate, while MSME performance is captured through the sector's contribution to Gross Domestic Product (GDP) and its share of national employment. A descriptive trend analysis of the assembled data shows digital payment infrastructure and certain MSME output indicators moving in the same broad direction, although the relationship is uneven rather than linear across the period, shaped by the disruptive effects of the COVID-19 pandemic, the currency redesign policy, and general macroeconomic instability on the size of the MSME population. The central argument is that digital financial inclusion helps but is not sufficient on its own to drive MSME performance gains in Nigeria; complementary work on infrastructure, credit guarantee schemes, and digital literacy is still needed to turn payment-system access into real enterprise growth. The paper closes with policy recommendations aimed at the Central Bank of Nigeria, SMEDAN, and deposit money banks.