Digital Financial Inclusion and Small and Medium Enterprise Growth in Sokoto State, Nigeria: An Econometric Analysis

Abstract

Digital financial inclusion has become an important channel for improving access to financial services among small and medium enterprises, especially in developing economies. In Sokoto State, Nigeria, SMEs contribute significantly to employment generation and income creation, yet many continue to face constraints linked to limited access to formal financial systems. This study examines the effect of digital financial inclusion on SME growth in Sokoto State using an econometric framework. Cross sectional data were obtained from 397 SMEs throughstructured questionnaires administered across selected sectors. Digital financial inclusion is measured using indicators such as mobile banking usage, digital payments, mobile money services and access to fintech credit, while SME growth is proxied by revenue performance, business expansion and
employment size. An Ordinary Least Squares  model is applied to estimate the relationship between digital financial inclusion and SME growth, controlling for firm specific characteristics. The results show that digital financial inclusion has a positive and statistically significant effect on SME growth. Internet access and firm age also exert positive effects, while firm size is negatively associated with growth. The model explains about 79.6 percent of the variation in SME growth. The findings indicate that digital financial services play a key role in improving SME performance through enhanced financial access and operational efficiency. The study provides evidence relevant for policy formulation on financial inclusion and SME development, with implications for SDG 8 and SDG 9.