BENEFITS, CHALLENGES AND STRATEGIES OF UTILIZING DIGITAL FINANCIAL TRANSACTIONS BY SMALL AND MEDIUM-SCALE ENTERPRISES IN ODEDA LOCAL GOVERNMENT COUNCIL

Research Problem: Small and Medium-scale Enterprises (SMEs) in rural Nigeria, particularly in Odeda Local Government, face significant barriers to adopting digital financial transactions, such as low financial literacy, infrastructural deficits, and cultural preferences for cash. Despite global and national pushes for digital finance, localized studies on rural SMEs’ adoption dynamics are scarce, limiting targeted interventions for financial inclusion and economic growth. Methods/Theory: This study employs a descriptive survey design, sampling 200 SMEs via stratified random sampling (Krejcie & Morgan, 1970). Data were collected through structured questionnaires and interviews, analyzed using descriptive statistics, regression models, Chi-square tests, and thematic analysis. No explicit theoretical framework was applied, but findings align with Diffusion of Innovations theory, adapted to rural contexts. Results: Digital transaction adoption reached 71%, correlating with a 52% revenue increase (from ₦264,724 to ₦331,440). Challenges include low financial literacy (mean=2.92/5), infrastructural gaps (mean=3.04/5), and cybersecurity concerns. Statistical tests confirmed a significant relationship between adoption and SME growth (T-test: p=0.001; Chi-square: p=0.015). Conclusion: Digital financial transactions significantly enhance SME performance in Odeda, but barriers impede full adoption. Key Contribution to Knowledge: This study extends FinTech literature by providing rural-specific insights, addressing urban biases in prior research, and highlighting socio-cultural influences on adoption. Recommendation: Expand broadband through public-private partnerships, conduct vernacular financial literacy workshops, and offer tax incentives to boost adoption.