The Impact of Cashless Policy on Financial Performance of SME in North-West, Nigeria

This study examined the impact of the cashless policy on the financial performance of SME in North-West Nigeria. The objectives were to assess the extent to which cashless payment adoption influences profitability, revenue growth, and operational efficiency of SMEs, and to determine the challenges affecting policy implementation in the region. A descriptive survey research design was adopted, and primary data were collected from 250 SME operators across the seven states of North-West Nigeria. The data were analyzed using Structural Equation Modeling (SEM) via Smart-PLS version 3.2.7. The results reveal a positive and significant relationship between cashless policy adoption and SME financial performance (β = 0.482, t = 6.214, p < 0.05). The measurement model satisfied reliability and validity requirements, while the structural model demonstrated moderate explanatory power (R² = 0.372), a moderate effect size (f² = 0.228), and adequate predictive relevance (Q² = 0.241). The study also identified challenges such as limited digital literacy, inadequate network connectivity, high transaction costs, and inconsistent power supply, which constrain the full benefits of the policy. The findings suggest that the cashless policy significantly enhances SME profitability, efficiency, and revenue generation in North-West Nigeria. The study recommends improved digital infrastructure, capacity-building programmes, and supportive policy measures to maximize the benefits of cashless transactions for SMEs. This research contributes to the understanding of digital financial systems and their role in improving SME performance in emerging economies.