Financial literacy and financial performance of small and medium enterprises in Uganda:

Abstract

The study was carried out to examine the effect of the financial literacy on financial performance of Small and Medium Enterprises in Uganda a case study of Iganga District Local Government. More specifically, the study examined the effect of financial knowledge on financial performance, evaluated the effect of financial behaviour on financial performance and assessed the effect of financial attitude on financial performance of SMEs in Iganga District. The researcher used a descriptive research design. A sample of 52 SMEs was selected using simple random sampling technique. The study employed questionnaires to collect data from the field. Data was typeset using SPSS to ease preparation of the report. Data was then tabulated and presented using descriptive statistics. The results of the research indicate that financial knowledge, financial behaviour and financial attitude have a statistically significant and positive effect on financial performance of SMEs. The study recommends local governments to strengthen financial knowledge and budgeting skills, improving bookkeeping literacy to ensure accurate record-keeping and accountability, should also cultivate disciplined spending, structured saving, and strategic investing practices and finally enhance the perception of money, build financial confidence, and reinforce core financial principles. In regards to the study findings, the study concluded that financial literacy has got a significant positive effect on the financial performance of SMEs.