Evaluating Financial Literacy Impact On Business Performance, The Zimbabwean Smes Experience

ABSTRACT

The research study was an evaluation of financial literacy’s impact on business

performance, the Zimbabwean SMEs experience. The study was based on a survey of

SME businesses across Zimbabwe who were reached for responses through structured

questionnaires and interviews. The researcher used both primary and secondary data

sources from a sample of 300 respondents. The sample was chosen from various value

chain players across industries dominating the Zimbabwean SME landscape. The data

collected were analysed using the SPSS Statistics Version 21 application to conduct the

reliability tests (Cronbach Alpha), correlation and regression analysis which produced

descriptive statistics such as frequencies, simple percentages out of which the

comparatives between the variables of the model were tested using multiple linear

regression analysis. Testing the firsts to third hypotheses, at 5 % level of significance,

the p-values (0.0005) were all lower than the significance level and concluded that at

the 95% significant level financial literacy impacts business performance of SMEs to a

greater extent. For all the hypotheses tested the null hypothesis was accepted and the

alternative hypotheses rejected. After testing the second hypothesis, it was concluded

that financial literacy is highly and positively correlated with business performance.

The probability value of the regression analysis was used to test the third hypothesis at

the same level of significance and since the p-value was also lower than the significance

level, it was concluded that there are other factors that impact on business performance

such as the internal and external factors to business. Overally it was therefore concluded

that financial literacy level impacts highly on business performance of SMEs and

among key recommendations is that governments prioritise literacy training of SMEs

as they are critical to economic growth. The study also recommended that future studies

look at other aspects such as the impact that external factors have on SME business

performance