Accounting Project Topics

A Critical Investigation of Financial Literacy and Its Performance on Small Scale Business in Nigeria

A Critical Investigation of Financial Literacy and Its Performance on Small Scale Business in Nigeria

A Critical Investigation of Financial Literacy and Its Performance on Small Scale Business in Nigeria

Chapter One

Objectives of the Study

This study aimed to achieve the following specific objectives:

  1. To assess the level of financial literacy among small-scale business owners in Nigeria.
  2. To examine the extent to which financial literacy influences IT performance in small-scale businesses.
  3. To evaluate the impact of financial literacy and IT performance on the overall business performance of small-scale enterprises in Nigeria.



Conceptual Review

Financial Literacy

Financial literacy is a multifaceted concept that encompasses various knowledge and skills essential for effective financial decision-making (Worthington, 2021). At its core, financial literacy involves the understanding of fundamental financial concepts, such as budgeting, saving, investing, and debt management (Sabri & MacDonald, 2020). It also includes the ability to interpret financial statements, evaluate investment options, and assess financial risks (Potrich et al., 2022). Moreover, financial literacy extends beyond mere knowledge to encompass practical skills and behaviours related to financial planning and management (Musie, 2021).

The components of financial literacy can be broadly categorized into three main areas: financial knowledge, financial skills, and financial attitudes and behaviours (Ibitomi & Ijaiya, 2018). Financial knowledge refers to the understanding of basic financial concepts, principles, and terminology (Rahmandoust et al., 2021). This includes knowledge about interest rates, inflation, taxation, and financial products and services (Tuyisenge et al., 2023). Financial skills, on the other hand, involve the ability to apply financial knowledge in real-world situations (Tagoe et al., 2021). This encompasses skills such as budgeting, goal setting, cash flow management, and investment decision-making (Tamimi & Kalli, 2019). Finally, financial attitudes and behaviours encompass individuals’ beliefs, attitudes, and habits related to money and financial management (Tagoe et al., 2021). This includes attitudes towards saving, spending, borrowing, and risk-taking, as well as behaviours such as planning for the future, avoiding debt, and seeking financial advice (Njoroge, 2023).

Financial literacy plays a crucial role in empowering individuals to make informed and responsible financial decisions throughout their lives (Rahmandoust et al., 2021). It equips individuals with the knowledge and skills necessary to navigate the complexities of the modern financial landscape (Sabri & MacDonald, 2020). Moreover, financial literacy can help individuals build wealth, achieve financial goals, and mitigate financial risks (Monticone, 2020). By promoting sound financial practices and behaviours, financial literacy contributes to financial well-being and resilience, both at the individual and societal levels (Oseifuah, 2020).

However, despite its importance, financial literacy levels remain low across many populations, including small-scale entrepreneurs in Nigeria (Sucuahi, 2023). Limited access to quality financial education, cultural attitudes towards money, and socioeconomic factors contribute to this pervasive lack of financial literacy (Tuyisenge et al., 2023). Consequently, many individuals struggle to manage their finances effectively, leading to financial insecurity, debt problems, and missed opportunities for wealth creation (Potrich et al., 2022). Addressing these challenges requires concerted efforts from policymakers, educators, and other stakeholders to promote financial education and improve financial literacy levels among the population (Wise, 2023).




Research Design

A survey research design is chosen for this study, as it enables the collection of data from a large sample size efficiently and cost-effectively (Bell, 2022). The use of a survey design allows for the systematic gathering of information on the relationship between financial literacy and IT performance in small-scale businesses.

Population of the Study

The target population for this study comprises small-scale businesses in Nigeria. Given the diverse nature of small-scale enterprises in the country, a large population size of 1200 respondents is deemed appropriate to ensure adequate representation across various sectors and regions.



 Data Presentation




Summary of Findings

The study aimed to investigate the relationship between financial literacy, IT performance, and overall business performance among small-scale enterprises in Nigeria. Through a comprehensive analysis of survey data collected from 108 small-scale business owners, the study generated valuable insights into the interplay between these critical variables.

The findings revealed a significant positive relationship between financial literacy and IT performance in small-scale businesses. Specifically, entrepreneurs with higher levels of financial literacy were more likely to effectively utilize IT resources such as tools and software to manage their business finances and performance. This highlights the importance of financial literacy in enhancing the understanding and utilization of technology, ultimately leading to improved operational efficiency and competitiveness.

Moreover, the study identified a strong association between financial literacy and overall business performance among small-scale enterprises in Nigeria. Small business owners who exhibited greater financial literacy skills demonstrated better financial management practices, strategic decision-making abilities, and resilience in the face of economic challenges. This suggests that investments in financial education and training can yield significant benefits in terms of sustainable growth, profitability, and long-term viability.

Furthermore, the findings underscored the importance of IT performance in driving business outcomes among small-scale enterprises. Businesses that effectively leveraged IT solutions to streamline operations, enhance customer experiences, and capitalize on emerging market trends were more likely to achieve superior financial performance and market success. This highlights the critical role of technology adoption and digital innovation in driving entrepreneurial success and economic development in emerging economies like Nigeria.

Additionally, the study revealed several factors influencing financial literacy and IT performance among small-scale entrepreneurs. These included educational attainment, years of experience in business, access to training and support programs, and perceived confidence in managing financial aspects and technology resources. Understanding these factors is essential for designing targeted interventions and support mechanisms to enhance financial literacy and technology adoption among small business owners.

Overall, the findings of this study contribute to our understanding of the complex relationship between financial literacy, IT performance, and overall business performance in the context of small-scale enterprises in Nigeria. The results underscore the importance of investing in human capital development, promoting digital literacy, and fostering an enabling environment for entrepreneurship and innovation. Moving forward, policymakers, practitioners, and educators should collaborate to develop holistic strategies and initiatives aimed at empowering small-scale entrepreneurs, driving economic growth, and fostering sustainable development in emerging economies.


The findings from the hypotheses testing provide valuable insights into the relationship between financial literacy, IT performance, and overall business performance among small-scale enterprises in Nigeria. The significant positive relationship identified between financial literacy and IT performance highlights the critical role of financial knowledge and skills in leveraging technology resources effectively. Moreover, the strong association between financial literacy and overall business performance underscores the importance of equipping entrepreneurs with the necessary financial management competencies to navigate the complexities of business operations. Additionally, the study’s results emphasize the pivotal role of IT performance in driving business outcomes, indicating that businesses that effectively harness technology resources are more likely to achieve sustainable growth and competitiveness.

In conclusion, the findings suggest that investments in financial education, digital literacy, and technology adoption can yield substantial benefits for small-scale enterprises in Nigeria. Moving forward, policymakers, educators, and practitioners should prioritize initiatives aimed at enhancing financial literacy, promoting technology adoption, and fostering an enabling environment for entrepreneurial success. By addressing the identified gaps and leveraging the synergies between financial literacy and IT performance, stakeholders can contribute to the growth and resilience of small-scale businesses, thereby driving economic development and prosperity in Nigeria.


Based on the findings and conclusions drawn from the study, the following recommendations are proposed to enhance the financial literacy, IT performance, and overall business performance of small-scale enterprises in Nigeria:

  1. Implement targeted financial literacy programs: Government agencies, educational institutions, and industry associations should collaborate to develop and implement tailored financial literacy programs specifically designed for small-scale business owners. These programs should cover essential financial concepts, such as budgeting, financial planning, and investment strategies, to empower entrepreneurs with the knowledge and skills needed to make informed financial decisions.
  2. Provide access to affordable IT resources: Efforts should be made to improve access to affordable IT resources, including hardware, software, and internet connectivity, for small-scale enterprises. This may involve government subsidies, private-sector partnerships, or community initiatives aimed at bridging the digital divide and facilitating technology adoption among businesses in underserved areas.
  3. Offer training in digital skills: Training programs focusing on digital literacy and IT skills should be made available to small-scale business owners and their employees. These programs can help enhance their proficiency in using IT tools and software for various business functions, such as accounting, inventory management, and customer relationship management.
  4. Foster a supportive business environment: Policymakers should prioritize the creation of a supportive business environment that encourages entrepreneurship and innovation. This includes implementing policies that promote ease of doing business, reduce bureaucratic hurdles, and provide incentives for investment in technology and skills development.
  5. Facilitate access to finance: Access to finance remains a significant challenge for many small-scale enterprises in Nigeria. Financial institutions should develop innovative financial products and services tailored to the needs of small businesses, such as microloans, flexible repayment terms, and digital banking solutions. Additionally, initiatives aimed at improving financial inclusion, such as credit scoring systems and alternative lending platforms, should be encouraged.
  6. Promote collaboration and knowledge sharing: Industry associations, chambers of commerce, and business networks play a vital role in facilitating collaboration and knowledge sharing among small-scale enterprises. These organizations should organize regular networking events, workshops, and seminars where entrepreneurs can exchange ideas, share best practices, and learn from each other’s experiences. By fostering a culture of collaboration and continuous learning, small-scale businesses can collectively address challenges and seize opportunities for growth and success.


  • Abiodun, A. (2020). Financial literacy and SME firm performance. International Journal of Research Studies in Management, 5(1), 31-43.
  • Agarwal, S., Driscoll J., Gabaix, X., & Laibson, D. (2017). The Age of Reason; Financial Decisions over the Lifecycle. Harvard University.
  • Agyei, K. N. (2022). Small Scale Businesses Practice of Basic Financial Management about Liquidity. International Journal of Research in Social Science, 13(3), 345-356.
  • Aliyu S. A., Isiaka A. A. , Ibitomi T., & Eke, T. (2022). Nexus between entrepreneurship education and employability skills of tertiary institution students in Ilorin Metropolis. International Journal of Education and Knowledge Management (IJEKM), 5(1), 1-10.Atkinson, A., & Messy, F. (2022). Measuring financial literacy: results of the OECD/International Network on Financial Education (INFE) Pilot study (OECD No. 15). Paris.
  • Atkison, A., & Messy, F.A. (2020). Assessing Financial Literacy in 12 Countries; An PISA Pilot Exercise. Netspar.
  • Audet, J., & St-Jean, E. (2017). Factors affecting the use of public support services by SME owners: Evidence from a periphery region of Canada. Journal of Developmental Entrepreneurship, 12(2), 165–180.
  • Basu, S., (2021). White Paper: Financial literacy and the life cycle. White House Conference on Aging. Retrieved from
  • Beiske, B. (2017). Research methods: Uses and limitations of questionnaires, interviews, and case studies. GRIN Verlag.
WeCreativez WhatsApp Support
Our customer support team is here to answer your questions. Ask us anything!