THE EFFECTS OF FINANCIAL LITERACY TRAINING ON BUSINESS PROFITABILITY IN COASTAL REGION: A CASE OF KWALE COUNTY SMEs
Abstract
The study aimed at identifying the effects of financial literacy training on business profitability by SMEs in coastal region using Kwale County as a case study. The study used a sample of 74 SMEs drawn from the 3 Sub-Counties of Kwale which included Kinang, Matuga and Msambweni. The research design used was descriptive survey method which involved the use of questionnaires and interviews. The population included SMEs who benefited from the training offered by World Bank through the Kenya Coastal Development Project in Kwale County. Simple random sampling method was used to determine the sample size. The findings established that financial literacy training positively influenced the performance of SMEs and hence profitability. Four variables were investigated: working capital management, savings, bookkeeping and financial accessibility skills, profitability being the dependent variable. The results were found to be statistically significant for all the variables although with negative relationship with bookkeeping and savings. Based on the findings, it was concluded that financial literacy affected profitability of SMEs. The recommendations made were, Financial institutions to provide training to the SMEs to capacity build them on the available financial products and how to access them, Location of banking facilities far away from areas where SMEs conduct their business. Financial institutions to look in to the issue and ensure that bank branches or Agents are located in places nearer to the SMEs for ease of accessibility, Financial institutions need to reduce stringent rules and requirements on lending to SMEs as this limits the chances of accessibility to credit, Positive Savings culture by SMEs needs to be encouraged to create a larger pool of savings which will then be utilised as loans to those who require credit facility. This would be achieved if the bank allow /reduces stringent rules on lending hence more saving and more lending.
Key terms: Working Capital, Savings Skills, Book Keeping, Financial Services, Accessibility Skills, Profitability
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DOI: http://dx.doi.org/10.61426/sjbcm.v4i3.533
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