Assessment Of Financial Education And Financial Literacy (Knowledge, Behaviour And Attitude) Of Micro And Small Enterprises Operators: A Comparative Study Between Hawassa City And Dale Woreda, Sidama Regional State, Ethiopia

Abstract

Assessing the levels of financial literacy in the population is a key component of a successful national strategy for financial education, enabling policy makers to identify gaps and design appropriate responses. MSEs are taking up huge role in the economy in creating job opportunity, but still struggling to be included in the formal financial sector. Available literatures confirm that no studies were conducted in the study area. Hence, this calls for an in-depth study. The objective of the study was to examine access to financial education and financial literacy of MSEs. To that end, the study followed the mixed approach. A total of 352 samples were contacted to collect data. The stratified random sampling is considered to be the right sampling technique to identify relevant respondents. Interview technique was utilized for the collection of primary data. The OECD/INFE (2020) interview schedule was adapted for this study.  The collected data was fed to the SPSS and STATA soft wares for analysis purpose. The data was later analyzed with the help of descriptive and inferential statistics. The study identified that, of the required financial knowledge, the respondents know almost half of it (59%). The respondents were found to be showing only 3 of the 9 required behaviors. The respondents showed an average of only 1 of the required 3 good financial attitude. The grand mean financial literacy was found to be 6.89 which well below the expected average of 8.5 [half of the maximum 17]. The mean financial literacy at Dale town is 5.8, which is lower than the Hawassa city literacy level which is 7.4 out of the maximum 17 score.  The independent sample t-test result shown below revealed that the financial literacy levels in the study areas have statistically significant difference. This study identified that living in relatively bigger cities plays positive role in financial literacy. Of the total respondents, 60.8% of the respondents replied that they had access to financial education; the other 39.2% had no prior chance for financial education. The overwhelming majority 84.1% have no knowledge to place complaints if treated unfairly by a financial provider. Despite the lack of knowledge, only 36.6% of the respondents replied they train themselves to learn more about dealing with business finances. Hence, it is better to include financial literacy course as an independent subject in the curriculum to all educational levels. All the stakeholders (including the various NGOs, Labor and social affairs office, the Small and Micro enterprises organizing office…) need to take notice of findings of this study and do further so as to provide further financial education for the operators of the MSEs. Financial education should be taken into account in the regulatory and administrative frame work and considered as a tool to promote economic growth, confidence and stability, together with regulation of financial institutions and consumer protection (including the regulation of financial information and advice).