The Effect Of Financial Management Practices And Skills Of Small And Medium Enterprise’s In Oshakati Town

ABSTRACT

The study utilised the Small Business Uniqueness theory and the theory of Financial Management to analyse and explain the findings of this study. The main finding was that small businesses do not share the same financial management problems with large businesses. The small and medium enterprise (SME) sector in Namibia has contributed to the national economy of the country in various ways, including employment creation, adding value to the Gross Domestic Product (GDP) of the country and helping towards the realisation of the Namibian government vision 2030 agenda. Despite all these efforts, the SME sector in Oshakati has not grown to its full potential. This study explores the effect of financial management practices and skills on SMEs operating in Oshakati. Consequently, the study sought to seek answers to the following questions: (1) what are the effects of financial management practices and skills on SMEs operating Oshakati? (2) How poor financial management practices and skills are inhibiting SMEs to grow and prosper? (3) What possible suitable training can be offered to SMEs owners or managers on financial management practices and skills development? This study used the mixed design approach through the use of both quantitative and qualitative research design. The literature review suggested that an absence of financial management practices and skills contributes to the poor performance of the SME sector and those SMEs that possess financial management skills enhance growth and profitability of the sector. Findings of this study revealed that the SME sector in Oshakati lacks appropriate skills in financial management practices. The study also established that sufficient training in financial management is needed for the SMEs in Oshakati. This study recommends that the SME owners-managers need to take greater responsibilities for their own learning.