Financial Inclusion and the Performance of Micro, Small and Medium Enterprises (MSMES) in Ibadan Metropolis, Oyo State, Nigeria

Micro, Small and Medium Enterprises (MSMEs) constitute the backbone of the Nigerian economy, yet their profitability, growth and sustainability have declined in recent years despite successive financial inclusion interventions. This study examined the influence of financial inclusion on the performance of MSMEs in Ibadan metropolis, Oyo State, Nigeria. Specifically, the study examined the connection between access to credit and profitability, assessed the nexus between access to savings services and growth, evaluated the relationship between access to digital payment systems and sustainability, and determined the independent and joint effect of the three dimensions on overall MSME performance. A sample of 400 MSME owners and operators was drawn from six purposively and randomly selected Local Government Areas within Ibadan Metropolis using a multi-stage sampling technique comprising stratified, proportional, and convenience sampling technique. Pearson's Product-Moment Correlation, and multiple regression analysis with the aid of SPSS version 27. All items demonstrated acceptable internal consistency, with Cronbach's alpha coefficients ranging from 0.783 to 0.889 across constructs. The result of access to credit and the profitability of MSMEs showed a moderate, positive and significant correlation (r = 0.371, p < .001, n = 400), indicating that MSMEs with better access to credit facilities recorded higher levels of profitability. Also, the result of access to savings services and business growth showed (r = 0.304, p < .001), implying that access to formal savings services was significantly and positively related to growth. Again, the result of access to digital payment systems and business sustainability showed (r = 0.264, p < .001), proving that greater use of digital payment platforms was associated with more sustainable enterprises. Finally, the multiple regression result showed that independently, access to credit (β = 0.226, t = 4.644, p < .001), access to savings services (β = 0.221, t = 4.582, p < .001) and access to digital payment systems (β = 0.197, t = 4.318, p < .001) each made a statistically significant contribution to MSME performance while the three financial inclusion dimensions jointly and significantly predicted overall MSME performance (R = 0.442, R² = 0.195, Adjusted R² = 0.189, F(3, 396) = 31.975, p < .001). The study concluded that financial inclusion, disaggregated into access to credit, savings services, and digital payment systems, plays a significant and complementary role in enhancing the performance of MSMEs in Ibadan metropolis. This study recommended that financial institutions and fintech lenders should design more affordable and flexible credit products; that banks and microfinance institutions should deepen the penetration of formal savings products through simplified procedures and mobile-based platforms; that digital payment providers and the Central Bank of Nigeria should reduce transaction costs and expand digital literacy support; and infrastructure to maximise the developmental impact of financial inclusion on MSMEs.