FINANCIAL ILLITERACY AMONG ZAMBIANS WORRIES KABWITA

By Lumbiwe Mwanza

FINANCIAL illiteracy among some entrepreneurs has continued to limit many businesses from becoming financially-secure and contribute effectively to economic growth, Economist Noah Kabwita has observed.

Mr. Kabwita told The Scoop that lack of basic understanding of financial terminology, statements, and concepts, and knowing how to use this information to make a financial impact had led to business failures among local entrepreneurs.

“Those who set up long-lasting successful businesses for generations are financially literate and are able to identify the various business opportunities. However, financial illiteracy continues to limit the growth of some businesses among the young people. It is not about being an accountant to be financially literate, but about developing interest in reading and understating the various financial statements,” Mr. Kabwita explained.

He said financial literacy helped entrepreneurs to succeed in any area of business, and elevated the decision-making, negotiation, and leadership skills.

He said that the impact of slow savings rates, potential for stock market panics, and increased potential for losses due to frauds and trickery, were all experienced when there were high levels of financial illiteracy among businesses.

He said that as Zambia was known to be an entrepreneurial country in which small enterprises which were usually run by individuals constituted the main component of the Zambian economy by supporting the employment sector and contributing to the Gross Domestic Product (GDP), it was important that entrepreneurs were well equipped with the right information.

“The small scale enterprises in Zambia are acknowledged as significant contributors to economic growth. However, they are faced with numerous challenges. It  is  estimated that majority of Small and Medium-sized Enterprises  (ЅMEs)  do not survive the first five  years since establishment and three out of five new businesses fail within the first few months of operation due to poor management skills and being financial illiterate,” he explained.