Abstract:
This study investigated the level of financial literacy among business owners within the
Kumasi Metropolitan Assembly. It also identified the factors affecting the level of
financial literacy among small and medium businesses. Questionnaires were developed
and administered to 100 selected business owners within the study area. Multiple
Regression analysis was performed to test for the relationship between factors that affects
people’s financial literacy. Results indicate that majority of respondents have not had any
form of education. Business owners (respondents) were asked to state whether or not they
are responsible for managing the finances of their enterprises. The results show that 74%
of the respondents are the financial managers of their business as against 26% who said
they employ the services of professionals to manage their finances for them. It was
revealed that most of the respondents do not apply best practices in managing their
businesses. They do not have business plan for their businesses and also do not prepare
cash flow forecast. A multiple regression analysis conducted found respondents’ level of
education (b = -0.345, p = 0.000), to be the only factor which influences their level of
financial knowledge. Other factors such as age, gender, field of study and years in
business have no influence on respondents’ level of financial knowledge. Based on the
results of this study, workshops should be organised by the Association of Ghana
Industries (AGI) on proper financial management so as to ensure prudent and efficient
financial management practices among business owners. The study also recommend that
business owners and potential business owners should be educated by the AGI on some
of the basic financial issues and best practices in the course of their studies or training
irrespective of their field of study, so as to develop a nation of financially literate
business people.
