IMPACT OF DIGITAL FINANCIAL INCLUSION ON SMALL AND MEDIUM ENTERPRISE (SME) GROWTH AND JOB CREATION IN LAGOS AND OGUN STATES

Abstract

Small and Medium Enterprises (SMEs) play a central role in employment generation and economic
growth in Nigeria, yet limited access to finance continues to constrain their expansion. This study
examines the impact of digital financial inclusion on SME growth and job creation in Lagos and
Ogun States, using firm-level data from 400 SMEs across key economic sectors. Digital financial
inclusion is measured through the usage of mobile banking, USSD services, fintech applications,
and digital payment platforms. Employing a mixed-methods approach, the study applies
descriptive statistics, multiple regression, and mediation and moderation analyses to evaluate
growth and employment outcomes. The results reveal that digital financial inclusion has a positive
and significant effect on SME growth and job creation. SME growth partially mediates the
relationship between digital financial inclusion and employment generation, indicating that labour
expansion largely occurs through improved business performance. Furthermore, digital literacy
and trust in digital platforms strengthen these relationships. The findings provide empirical
evidence that effective use of digital financial services can promote inclusive economic
development by enhancing SME scalability and labour absorption. Policy implications highlight
the need for capability-building, consumer protection, and infrastructure support to maximise the
developmental impact of Nigeria’s digital finance ecosystem.