An evaluation of financial literacy among business owners of micro, small and medium enterprises in Rwanda

Abstract

This paper is an evaluation of financial literacy among business owners of Micro, Small and Medium Enterprises in Rwanda. The objectives of the study were to determine: Levels of financial knowledge; levels of financial skills; nature of attitude towards financial  matters and nature of financial behaviour. The study is hypothesized on the fact that a combination of high financial knowledge level,  high financial skill level, good financial behaviour and positive attitude towards financial matters results in high level of financial literacy.  The study employed a crosssectional survey design covering 200 participants. This sample was determined using Sloven’s formula. Data  was collected using a questionnaire and analyzed using MS Excel. The key findings were that 72.7% of micro business owners have a high  financial knowledge level, 77.7% have a high skill level, 69.3% have good attitude towards financial matters and 69.7% were practicing good financial behaviour. Also, 73.7% of small business owners have high financial knowledge, 79.5% are skilled in financial matters,  71.0% have good attitude towards financial matters and 76.2% were practicing good financial behaviour. Other findings are that 85.5% of  the medium business owners have high financial knowledge level, 87.8% have high financial skill level, 73.7% have good attitude towards  financial matters and 77.1% were exhibiting good financial behaviour. The study recommends that the government should identify the  13.5% of micro business owners, the 15.1% of small business owners and the 9.8% of medium business owners who are not  knowledgeable and educated them on financial matters so that they also become knowledgeable; identify the 9.4% of micro business  owners, 9.9% of small business owners and 6.4% of the medium business owners who are not skilled, and train them in appropriate financial skills so that they become adequately skilled; identify the 19.7% of the micro business owners, the 19.7% of small business owners and the 20.9% of the medium business owners who have poor attitude towards financial matters, and then sensitize them so as  to change their mind set for them to adopt a good attitude; identify the 18.5% of the micro business owners, the 14.2% of the small  business owners and the 16.4% of the medium business owners who practice bad financial behaviour and then educate them on good  financial behaviour.