Towards Sustainable Micro, Small, And Medium Enterprise (Msme) Growth Through Financial Inclusion: Evidence From Selected African Countries
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Abstract
This study examines the role of financial inclusion in promoting sustainable MSME growth in 10 selected African countries over the period 2000 to 2025. Using the Panel Autoregressive Distributed Lag (PARDL) model as the baseline estimator, the analysis applies the Mean Group (MG), Dynamic Fixed Effects (DFE), and Pooled Mean Group (PMG) estimators to capture both short run and long run relationships, while Panel FMOLS and Panel DOLS are employed as robustness checks. The findings show that financial inclusion significantly influences sustainable MSME growth, although the magnitude and direction of the effects differ across indicators and estimation techniques. Financial literacy, mobile money adoption, deposit account ownership, automated teller machine penetration, and digital card ownership promote enterprise growth by improving access to formal financial services, reducing transaction costs, and strengthening financial management. However, the mixed effects of the aggregate financial inclusion index suggest that financial access alone is insufficient to sustain enterprise development without efficient financial intermediation, sound institutional quality, and macroeconomic stability. The study contributes to the financial inclusion literature by demonstrating that sustainable MSME growth depends on the effective utilisation of financial services rather than access alone. It therefore recommends strengthening digital financial infrastructure, expanding financial literacy programmes, improving MSME credit delivery, and implementing supportive institutional and macroeconomic reforms to promote inclusive and sustainable enterprise development across Africa
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