Financial literacy and Performance of Women-Owned SMEs in Garissa County, Kenya

The SME sector is crucial for Kenya's government, driving inclusive economic growth, regional development, employment, and poverty reduction. Women-owned SMEs face challenges, including limited risk tolerance, hindering expansion. Financial skills, operating costs, and other issues contribute to their struggles. This paper explored the impact of financial literacy on the financial performance of women-owned SMEs in Garissa County, Kenya. The study focused on budgetary proficiency and debt navigation skills. Using a descriptive survey design and anchored on the Dual Process Theory, the research involved 399 sampled women owned SMEs out of a population of 763. The findings revealed significant relationships between budgetary proficiency and financial performance (Pearson’s r= 0.690, p<0.000) and debt navigation skills and financial performance (Pearson’s r=0.515, p<0.000). These predictors explain approximately 26.5% of the variance in women-owned SME performance (R Square = 0.265). The regression coefficients indicate that budgetary proficiency has a minimal effect (β = 0.010, p=0.027<0.05), influencing performance by 1.0%, while debt navigation skills have a moderate effect (β = 0.351, p=0.000<0.05), influencing performance by 35.1%. The study recommends strengthening financial management training, customizing financial literacy programs to address diverse gaps, and promoting inclusive budgeting practices among women-owned SMEs. Enhancing debt navigation skills is particularly emphasized for a more positive impact on the financial performance of women-owned SMEs in Garissa County.