THE IMPACT OF FINANCIAL LITERACY ON SMALL SCALE BUSINESS PERFORMANCE IN FEDERAL CAPITAL TERITORY, ABUJA
Abstract
Small-scale businesses are pivotal to economic growth in Abuja, yet many struggle with sustainability due to financial illiteracy. This study investigates the relationship between financial literacy—encompassing knowledge, behavior, and attitudes—and the performance of small-scale businesses in FCT, Abuja, focusing on profitability, growth, and resilience. Despite the proliferation of financial education programs, empirical evidence on their direct impact on micro-enterprises remains scarce, particularly in post-COVID-19 contexts.
The study adopts a descriptive survey design, collecting primary data from 384 small-scale business owners selected via purposive sampling across Abuja’s diverse sectors (retail, services, manufacturing). Structured questionnaires were administered to assess financial literacy levels (budgeting, savings, digital finance) and business performance metrics (revenue growth, profit margins, survival rates). Data were analyzed using SPSS v.25, employing descriptive statistics, Pearson correlation, and regression analysis to test three null hypotheses.
Preliminary findings indicate a strong positive correlation between financial literacy and business performance. Entrepreneurs with higher financial literacy demonstrated:
1. profitability due to improved cost management and pricing strategies.
2. 18% greater resilience during economic shocks (e.g., COVID-19), attributed to cash flow planning and digital tool adoption.
3. Higher credit access, with 65% of literate business owners securing formal loans versus 30% of illiterate peers.
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