Financial Literacy and Financial Sustainability of Micro-businesses at Bokamoso Entrepreneurial Centre in Namibia

Increased globalisation, sophistication, and fast development pace of financial systems worldwide in recent years demand entrepreneurs to make matching complex financial decisions and have sound financial literacy. Financial literacy is regarded as a critical asset and driving force in any business operation and a panacea to its success and graduation from micro-business to an established big corporate. It is considered that micro-businesses are not resilient to crises as compared to large firms and possibly due to high levels of financial illiteracy among their owners and managers. This study seeks to investigate the role of financial literacy on the financial sustainability of micro-businesses at Namibia’s Bokamoso Entrepreneurial Centre. Out of a population of 22 micro-business owners at the Centre, the response rate was 82%. The study employed interpretivism philosophy, inductive and deductive approaches, mono-qualitative method, survey and case study strategies, exploratory design, and self-administered interviews. Results from NVIVO thematic analysis show that 89% of micro-business owners have a low level of financial literacy, which possibly hinders the financial sustainability of Namibian micro-businesses. The study also revealed that all micro-businesses in the Centre do not have access to funds from the formal financial system. This may be caused by micro-business owners’ low level of financial literacy, which reduces their confidence to participate in the formal financial market, which ultimately influences their financial decision-making. It was also revealed that politics, high collateral security requirements, and lack of information are some of the major factors that prevent micro-businesses from accessing funds. Furthermore, evidence shows that 78% of micro-business owners have bad financial attitudes. As an antidote, the study recommends that financial education be introduced in schools from the primary school level. There is also a need for major players in the financial system to conduct seminars to create awareness and make information available to micro-business owners.