FINANCIAL INCLUSION AND THE PERFORMANCE OF SMES IN GOMBE STATE

Abstract

This study empirically examines the effect of financial inclusion on the performance of small and medium enterprises (SMEs) in Gombe State, North-Eastern Nigeria. Financial inclusion was measured across five dimensions: access to credit, savings mobilization, insurance uptake, digital financial services adoption, and financial literacy. SME performance was measured using four indicators: business growth, profitability, employment generation, and productivity. A quantitative cross-sectional survey design was employed. Primary data were collected from 384 SME owners/managers across the three senatorial zones of Gombe State using a structured questionnaire. Data were analysed using descriptive statistics, Pearson correlation, and multiple regression analysis. The findings reveal that financial inclusion has a statistically significant positive effect on SME performance (R² = 0.624, p < 0.001). Access to credit (β = 0.342, p < 0.001) and digital financial services (β = 0.287, p < 0.001) were the strongest predictors, followed by financial literacy (β = 0.198, p < 0.01). Savings mobilization and insurance uptake showed weaker but positive effects. Despite these positive relationships, significant barriers persist, including high interest rates, collateral requirements, limited digital infrastructure, and low financial literacy among micro-enterprises. The study concludes that improving financial inclusion, particularly credit access and digital financial services, significantly enhances SME performance in Gombe State. Recommendations include SME-friendly loan schemes with reduced collateral, expansion of agent banking and USSD-based digital services, targeted financial literacy programmes delivered in local languages, and stronger coordination between financial institutions and the Gombe State government.