Financial Literacy, Financial Inclusion and Performance of Micro-Enterprises in the Cape Coast Metropolis, Ghana.

Abstract

Financial literacy and financial inclusion are essential for micro businesses' sustainable growth and expansion. The inability of the managers/owners to make prudent financial decisions can compromise the performance of their businesses. To this end, the study examined the effect of financial literacy on the performance of micro-enterprises in the Cape Coast Metropolis. The human capital, theory of planned behaviour and resource-based theories underpinned the study. The study used a quantitative approach involving 167 micro-enterprise managers/owners sampled from 508 registered members in the Cape Coast Metropolis. The level of financial literacy was analysed using criterion analysis. Precisely, descriptive statistics were used. The study found that micro-enterprise managers/owners in the Cape Coast Metropolis have low level of financial literacy. There was low performance of micro enterprises. Regarding financial inclusion, the evidence shown that the respondents access the financial various products and services. It evident that financially literate micro enterprise managers/owners were more financially included and access the financial products and services. Finally, it became evident that financial literacy has a positive effect on the performance of micro-enterprises. In conclusion, financial literacy improves the performance of micro-enterprises. As a result, it is recommended that micro-enterprise manager/owners should be more educated on financial literacy to help them become abreast with the basic financial concepts and practices in financial decision-making to spur growth and expansion of business activities.