The impact of financial literacy on the growth of small scale businesses in Iganga.
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Date
2024-09-18
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Ucu
Abstract
ABSTRACT
The study looked at how financial literacy affects the growth of small-scale enterprises (SSEs) in
Iganga District, Uganda. SSEs are vital to the local economy. Their growth is often stunted due
to inadequate financial literacy among business owners. The primary objective of the research
was to examine the impact of financial literacy on the growth of SSEs. It sought to achieve the
following objectives, to examine how financial knowledge influences the growth of small-scale
enterprises, to examine the effect of financial attitude on the growth of small-scale enterprises in
Iganga district, to examine the effect of financial behavior on the growth of small-scale
enterprises in Iganga district. The study was limited to Iganga District, specifically its Central
Division, where a variety of SSEs operate.
The study used a mixed-methods design to achieve these goals. It combined quantitative and
qualitative approaches. Stratified sampling was used to select a sample of 67 small-scale firms
from 80 registered in Iganga Municipality. Data was collected using structured questionnaires,
interviews, and document reviews. This gave both quantitative data and qualitative insights into
the study topic. Descriptive statistics analyzed the data. They summarized financial literacy and
business growth. The results were presented through detailed tables and descriptive narratives.
The study shows that financial literacy boosts the growth of SMEs. Entrepreneurs with strong
financial knowledge have better growth. This is true, especially for budgeting, cash flow, and
planning. Positive financial behavior, like reinvesting profits and managing cash flow, improves
business performance. However gaps in financial attitude, especially in credit management and
risk assessment, may hinder SSEs' growth.
The study shows that financial literacy is vital for small businesses in Iganga District. It is vital
for their growth and survival. It recommends targeted financial education programs. They should
address gaps in knowledge about credit management, interest rates, and risk assessment.
Standardized financial tools can help entrepreneurs improve their finances. These include
budgeting templates and risk assessment frameworks. Peer learning and mentoring programs can
also help the region's economic development.