Importance Of Financial Literacy to the SME Sector
With most parts of the world still under the grip of the Covid-19 pandemic, conversations have shifted from hope to survival and seeing tomorrow. And with the extensive increase in the cost of commodities that has accelerated the cost of living in different countries, there has never been a better time to talk about financial literacy than now.
The fact is that the world cannot do without money and investments. Everyone needs financial literacy if they are to plan carefully for their expenses to ensure they stay out of debt.
Financial literacy is the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing. It is the foundation of your relationship with money, and it is a lifelong journey of learning. The earlier you start, the better off you will be because education is the key to success when it comes to money.
Given the importance of finance in modern society, lacking financial literacy can damage an individual’s long-term financial success.
It can lead to several pitfalls, such as being more likely to accumulate unsustainable debt burdens through poor spending decisions or a lack of long-term preparation. This, in turn, can lead to poor credit, bankruptcy, and other negative consequences.
Research shows that the lack of financial literacy is prevalent in Kenya, especially in the SME sector. Most businesses cannot run and manage their finances appropriately. This has led to the collapse of many companies due to the debt burden and eventual bankruptcy.
Kenya thrives on the wheels of the SME sector, which provides 86 percent of employment opportunities and 45.5 percent of the country’s GDP, yet it is the most struggling sector in terms of financial challenges.
This is why it’s essential to have a conversation on how to equip the sector with financial literacy fully.
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SMEs should be familiar with healthy borrowing habits, choosing a responsible loan provider, consumer protection principles, data protection policies, financial planning to build resiliency, and strategies to help both families and businesses grow their finances.
The boundaries between industries, customer segments, etc. are fast disappearing, and the focus is on understanding the customer and what they need. Regardless of the industry, the business must understand the dynamics to remain relevant.
Thankfully, there are now more resources than ever for those wishing to educate themselves about the world of finance. One such example is “Master Of Money,” a book written by KC Rottok Chesaina, an award-winning chartered accountant and entrepreneur with a master’s degree in Commerce.
KC Rottok Chesaina, a former partner at an International Audit firm, RSM, and founder of The African Professional Magazine and The SA Professional Services Awards is a fellow of the Bloomberg Media Initiative and currently serves as a financial reporting advisor at W Consulting.
He is an accredited advisor by the Johannesburg Stock Exchange to offer IFRS consulting to listed entities. He has won several awards, including the top 35 under 35 Chartered Accountants South Africa and Top 40 under 40 Business Daily Kenya. Order for it.
Talking about money isn’t easy. Our concept and appreciation of money are primarily through experience, and it’s never good. The book Master of Money explores the strategies for success from the CROs of South Africa’s biggest companies and applies to anyone seeking to grasp matters finances. Going for just 2000 shillings, the book is a sure tool for improving your financial literacy.
It’s time to start learning and practicing various skills related to budgeting, managing and paying off debts, understanding credit, and investment products, and being diligent about timely payments and prudent about saving money.
