Financial Literacy: A Strategy for Improving SMEs Performance in Tanzania Micro-Economic Facility

Abstract

Financial literacy is an important aspect of business prosperity; however, its importance has not been considered by many small enterprises in Tanzania. As a result, many fail to attain their business success or become stagnant in business growth. In realizing this, the study wanted (a) to investigate how bookkeeping literacy influences small-scale enterprises on performance (b) to investigate how budgeting literacy influences small-scale enterprises' performance and (c) to assess how loan repayment literacy influences small-scale enterprises' performance. The study employed a mixed research approach guided by convergent parallel design. Two methods were used to collect data including; questionnaires and interviews. On one hand, data which was collected through questionnaires were analyzed using descriptive statistics with the help of SPSS version 20. On the other hand, data that were collected through interviews were analyzed using thematic analysis in order of specific objectives. The findings revealed a positive relationship between bookkeeping skills, budget skills, loan repayment skills and small-scale enterprise performance. Subsequently, the study recommended equipping entrepreneurs with the financial literacy to access credit facilities from either financial institution. As a final point, there should be enhancement capacity-building workshops for small-scale enterprises to create awareness of the need to be equipped with these important skills for their business prosperity.