Sustaining Informal Sector Women Entrepreneurs through Financial Literacy

Abstract

The United Nations’ Millennium Development Goals seek to address poverty among other things. It is assumed that addressing poverty issues through financial literacy will bring growth to a country’s economy. The informal sector is one avenue that has been observed to be contributing highly to the creation of employment opportunities, economic development and empowerment in South Africa, especially for women. However, the informal sector is heterogeneous which makes it difficult to quantify its profile, and due to the nature of its existence, informal sector entrepreneurs are often characterised by low levels of skills, limited access to organised markets, and low and unstable incomes. This is influenced by their lack of knowledge and skills in business management. It is believed that financial literacy can improve the performance of informal sector entrepreneurs and sustain business information and skills. By means of financial literacy, their basic life skills such as numeracy and literacy, communication skills and information searching skills will be improved which, in turn, will improve their confidence, generate good income and Millennium Development Goals 1−3 , namely that of poverty alleviation and equal education opportunities for women, though not all will be reached. The study uses focus group discussions, interviews and observations to explore financial literacy levels and their impact on informal sector women entrepreneurs (ISWEs) in South Africa. The purpose of this study is to determine their mathematical literacy, money management behaviour and skills, selection and utilisation of financial products, and access to and utilisation of information and advice. There were young, middle-aged and older ISWEs in the three focus groups. Participants had some limited skills such as personal, business operation and mathematical literacy. It was also interesting to determine the ISWEs’ realisation of their lack of awareness of business information services, and of their need for training interventions.