Analyzing the Effects of Financial Literacy on Entrepreneurial Growth in Zambia: A Case Study of SMEs in Chalala

This research focused on the effects of financial literacy on entrepreneurial growth among SMEs in the Chalala area within Lusaka Province of Zambia. The study had three objectives which were to evaluate the level of financial literacy among SMEs, to assess the impact of financial literacy on growth, and lastly to assess the challenges faced by SMEs in accessing financial literacy. The study used a mixed-method approach and the sample size was 50 respondents. Data was collected through questionnaires and interviews. Data analysis was conducted using Stata software, Excel, and the Pearson Chi-Square test of independence to examine the relationship of the variables using a significance value level of α = 0.05.From the results and findings when data was analyzed for the first objective it was found that 40% of SMEs never practiced bookkeeping and the same exact percentage did not invest Profits, with these practices showing statistically significant deviations from uniform distributions (χ² = 18.67–26.52, p < 0.05). for the second objective on the impact of financial literacy on SMEs performance , 80% of SMEs showed expansion and growth in their business operations and this was attributed to financial literacy which was supported by a significant chi-square result (χ² = 48.93, p = 0.000). on the last objective which looked at the challenges faced by SMEs in Chalala, 30% reported high training costs and 24% reported limited time as a main hindering factor, with these distributions being statistically significant (χ² = 28.73–32.45, p < 0.05).The study thereby came to a conclusion that financial literacy has a positive impact and effect on SME growth and performance if taken and applied seriously, especially through bookkeeping, saving, investing, and budgeting practices. It is recommended that educational programs and training sessions should be made available to enhance and promote financial literacy throughout Chalala.