FINANCIAL LITERACY AND PERFORMANCE OF SMALL AND MEDIUM SCALE ENTERPRISES (SMEs) IN MUBI NORTH LOCAL GOVERNMENT

Abstract

The study examined financial literacy and performance of SMEs in Mubi North local government. Specifically, the study examined the effect of financial literacy on the performance of SMEs. The study used survey method in achieving the objectives through the use of primary data. The population of the study consist of 570 SMEs which includes: sachet water factories, Beauty salons, Barber shops, POS, Restaurants/Bars, Supermarkets, Boutiques, Photo studios, Brick layers and computer centres. Simple random sampling technique was used to select 115 SMEs as samples for the study. Questionnaire were administered to 115 respondents from the sample size. However, 110 questionnaires was returned and descriptive statistics and one sample Kolmogorov- smirnov test were utilized to analyse the data using SPSS. The findings of the study revealed that financial knowledge by SMEs can have influence on their performance. Consequently, analysis of the study revealed that inadequate financial literacy among SMEs has contributed to poor performance which affect profitability and in the long run the going concern of the business. The study concluded that financial literacy among SMEs is a necessity for improved performance and continuity. Hence, the study recommends that there is need for mandatory proper record keeping by SMEs which can be achieved through improved and strict government policies with adequate monitoring and supervision. Financial institutions can also make it a policy to organize seminars and workshops for SME owners as a form of their social responsibility to educate them on financial skills