Relationship between financial literacy and Entrepreneurial Success in Nairobi County Kenya
Abstract
Kenya is an entrepreneurial country and the SME sector is one of the key drivers of
Kenyan economy. Majority of Kenyans whether educated or not want to be
entrepreneurs by engaging in various business activities ranging from farming to
offering professional services such as lawyers and doctors. However, not all
entrepreneurs succeed in growing their small enterprises to successful business. In fact
most of new businesses end up as a failure within the first five years after the
commencement.
The objective of this paper is to find out whether there is a relationship between
entrepreneurial success and SMEs success by interviewing a sample of seventy nine
entrepreneurs who are registered and operates in Nairobi County. The samples were
randomly picked from a population of 27,485 SMEs where questions in both financial
literacy and SMEs success are asked.
The data collected was then analyzed to establish relationship between financial
literacy and SMEs success. From the research findings, all the SMEs interviewed were
found to have some level of financial literacy and on average most entrepreneurs
scored well above average in financial literacy. Highly successful entrepreneurs scored
highly in financial literacy and demonstrated high understanding of finance. In
contrast, less successful entrepreneurs exhibited stagnant growth, and low level of
financial literacy majority of whom were found to be in informal sector.
This study concludes that there is a positive relationship between financial literacy and
entrepreneurial success in Nairobi County. It further suggests that financial literacy
plays a key role in SMEs success both in formal and informal sectors.
Citation
Master Of Business Administration, University Of Nairobi, 2013.Publisher
University of Nairobi School of Business