Effect of Financial Literacy on the Performance of Women Owned SMEs in Nigeria: A Study of Awka, Nigeria

Abstract

The primary aim of this research was to investigate the effect of financial literacy on the performance of selected women-owned SMEs in Awka, Anambra State. Utilizing a descriptive cross-sectional survey design, the study collected both quantitative and qualitative data, examining the impact of three specific financial literacy components: debt management literacy, budgeting skills, and book-keeping skills. Regression analyses were employed to ascertain the relationships between these financial literacy aspects and SME performance. Findings revealed a nuanced influence of financial literacy on SME performance. Notably, debt management literacy exhibited a negative yet significant relationship with SME performance, indicating challenges in effectively implementing financial knowledge. Book-keeping skills also had a negative but significant impact on SME performance, suggesting an overemphasis that might divert attention from other growth opportunities. In contrast, the effect of budgeting skills was found to be non-significant, pointing to its potential overshadowed role or regional variations in its application. Based on these outcomes, specific recommendations were posited. Women entrepreneurs are advised to undergo holistic financial training that focuses on the strategic application of knowledge, particularly in debt management. Additionally, while the importance of book-keeping remains undebated, diversifying skills to encompass other business aspects is crucial. Lastly, a renewed approach integrating traditional budgeting with local challenges is advocated to make budgeting more impactful for SMEs in Awka.