Digital Microfinance Innovation and Financial Inclusion of Rural Entrepreneurs in North Central Nigeria

Abstract

Abstract Rural entrepreneurs in developing economies continue to face severe exclusion from formal financial systems, a gap that stifles innovation, investment and long-term business sustainability. This study examines how digital microfinance innovations such as mobile money, agent banking, digital wallets and crowdfunding enhanced financial inclusion among rural entrepreneurs. Guided by Rogers’ Diffusion of Innovation (DOI) theory, the study explores how perceived advantages and compatibility of these innovations accelerate adoption and inclusion outcomes. A cross sectional survey research design with quantitative approach was adopted. The studys’ population comprised registered rural entrepreneurs, from which a stratified random sampling technique was used to ensure sectoral representation. A total sample of 400 respondents was surveyed using structured questionnaires, and the data were analyzed through multiple regression to test the hypothesized relationships. The regression results revealed that mobile money and digital wallets with (β = 0.28, p < 0.001) and (β = 0.25, p < 0.001) respectively were the strongest drivers of inclusion, while agent banking (β = 0.22, p = 0.002) and crowdfunding (β = 0.18, p = 0.001) also exert significant but comparatively moderate effects. The overall model is robust, explaining 52% of the variance in financial inclusion (R² = 0.52, p < 0.001). The findings confirmed that innovations with clear relative advantage and lower complexity diffuse more rapidly, consistent with DOI theory. The study concludes that digital microfinance innovations are transformative in bridging rural financial gaps. It recommends scaling mobile money and digital wallet services, expanding agent banking networks, and establishing trust-building frameworks for crowdfunding to strengthen inclusive entrepreneurial ecosystems.