The effects of financial illiteracy on Small and Medium Enterprises (SMES) in Zimbabwe: a case study of listed companies in Zimbabwe. · Electronic Theses and Dissertations

Author

Mwera, Yeukai

Title

The effects of financial illiteracy on Small and Medium
Enterprises (SMES) in Zimbabwe: a case study of listed companies in Zimbabwe.

Abstract

This study investigates the effects of financial illiteracy on Small and Medium Enterprises (SMEs) in Zimbabwe, focusing on its impact on financial management practices, decision-making processes, and overall business performance. SMEs are extremely important for Zimbabwe economy because they additionally create the majority of employment and GDP. However, some SME owners and managers lack the necessary financial knowledge and skills, which undermines their ability to make informed financial decisions and achieve sustainable growth. The study uses a mixed-methods, combining quantitative surveys and in depth interviews with owners and managers from selected SMEs in various sectors, including manufacturing, retail, agriculture, and mining. The findings reveal that financial illiteracy is a significant barrier to effective financial management, leading to poor financial practices and uboptimal decision-making. Key factors contributing to financial illiteracy among SMEs include the informalization of the sector, restricted availability of formal financial services, and inadequate financial education. The study also highlights the adverse effects of financial illiteracy on business performance, such as increased financial risk and reduced competitiveness. Based on these insights, the research proposes targeted financial literacy programs and policy interventions to enhance the financial capabilities of SME owners and managers. By addressing financial illiteracy, these initiatives seek to enhance the strength and capability of SMEs in the country, by contributing to the broader economic development of the country.

Date

June 2024

Publisher

BUSE

Keywords

financial illiteracy, Small and Medium Enterprises, financial management practices

Supervisor

NIL