Financial Literacy and Performance of Small and Medium Scale Enterprises in Abuja, Nigeria

Abstract

Many Small and Medium Enterprises (SMEs) failed because they lack financial knowledge, attitudes, behaviours and influence to be a successful entrepreneur, those that are successful are traced with insufficient business acuity, as well as basic accounting knowledge, undermines entrepreneurial activity. Therefore, this study examined financial literacy and performance of SMEs in Abuja, Nigeria. The study used survey method in achieving the objectives through the use of primary data collection. Questionnaire were administered to 550 respondents in all the six areas council of Abuja, Nigeria while 469 was usable and analysed for the study. The data analysis method used was multiple regression due to the nature of the data collected. The findings from the study revealed that respondents have adequate financial knowledge of their various businesses as such impact positively on their businesses in Abuja, Nigeria. Also, it was revealed that financial behavior of SMEs owners in Abuja had a positive significant impact on their businesses performance. However, financial attitudes of the business owners and operators in Abuja improves the performance of their businesses. It was revealed from the analysis of the study that the financial influence of the SMEs owners contributed at a low rate to the performance of their businesses in Abuja. The study concluded that financially literacy of SMEs owners in Abuja contributed positively to the growth of their businesses. The study recommended that government agencies along with micro finance institutions and deposit money banks should organize financial education programmes that will create more awareness and growth on areas that are lacking in financial literacy.