Financial literacy and financial resilience of youth led enterprises in Uganda : a case of Gulu city

Abstract

In Uganda, a significant proportion of youth-led businesses encounter substantial financial risks and vulnerabilities, posing formidable challenges to their capacity for maintaining financial resilience. This research examined the effect of financial literacy on the financial resilience of youth-led enterprises in Gulu City. The study was guided by four objectives; (i) To examine the effect of savings literacy on financial resilience of youth-led enterprises in Gulu City, (ii) To establish the effect of investment literacy on financial resilience of youth-led enterprises in Gulu City, (iii) To investigate the effect of credit management literacy on financial resilience of youthled enterprises in Gulu City and (iv) To assess the joint effect of saving literacy, investment literacy, and credit management literacy on financial resilience of youth-led enterprises in Gulu City. Employing a cross-sectional survey research design integrating both qualitative and quantitative methodologies, data was gathered through surveys and interviews from a sample of 148 firms, representing a study population of 240. Key respondents comprised owners or managers of youth-led enterprises. Data analysis was conducted using SPSS software (V. 23.0). The findings revealed a significant influence of savings literacy (β=0.493, P<0.05), Investment literacy (β=0.531, P<0.05) and Credit management literacy (β=0.493, P<0.05) on financial resilience. The study therefore concluded that enhancing financial literacy, particularly savings, investment, and credit management, is paramount for bolstering the financial resilience of youth-led enterprises. Drawing from these insights, recommendations are provided, and the study recommends the implementation of training programs fostering saving literacy, investment literacy, and credit management for owners and managers of youth-led enterprises. Furthermore, integrating financial literacy training into governmental initiatives supporting youth-led enterprises should be done to enhance success rates. This study emphasizes the pivotal role of financial literacy in fostering financial sustainability of youth-led enterprises in Uganda.