International Journal of Arts and Humanities

Cashless Policy and Profitability in Nigeria and Some Challenges in its Adoption by Micro, Small, and Medium Scale Enterprises

Abstract

The purpose of the study was to determine the relationship between cashless policy and profitability in Nigeria and some challenges in its adoption by some micro-, small- and medium-scale enterprises in Nigeria. The study adopted a descriptive correlational research design method. The target population consists of MSME owners and managers across various sectors, including, but not limited to, agriculture, trade/commerce, manufacturing, services, and other specific sectors in the selected geopolitical zones of Nigeria, where cashless transactions are commonly used.  A stratified random sampling technique was used to ensure diverse representation across business sectors and locations. The sample size was determined using Yamane’s formula (n=N/(N+1(e A total sample size of 600 MSMEs was selected from major commercial cities in the selected LGA of the geopolitical zones in Nigeria. A structured questionnaire was administered to MSME owners/managers to collect data on perceptions of the cashless policy on their profitability.  Data collected were analysed using percentages, mean, and standard deviation to summarise responses, while regression analysis was used to assess the relationship between cashless policy adoption and financial performance.  Results summarise responses, Results revealed that MSMEs in Nigeria have adopted the cashless policy, Internet banking and mobile banking as the most used mobile There is a high positive relationship between cashless policy and the profitability of MSMEs in Nigeria, and cyber fraud, high costs, There, the high cost of electronic devices and high electronic charges are some of the challenges facing the adoption of cashless policy in Nigeria. Based on the findings, the following recommendations were made: government agencies and financial institutions should invest in more reliable digital infrastructure to lessen network failures, which will in turn promote smoother operation of digital payment systems, and the Nigerian Communications Commission (NCC) should consider reviewing electronic payment fees and charges to make cashless systems more affordable for micro businesses.

Keywords: Cashless Policy, Small and Medium Enterprises, Internet Banking