Financial Literacy and the Growth of SMES in Plateau State

Small and medium-scale enterprises (SMEs) play a pivotal role in Nigeria’s economic development, yet their growth is frequently hindered by persistent financial management challenges. Financial literacy—comprising financial knowledge, financial behaviour, and financial attitude—has been increasingly recognised as a critical capability for enhancing SME performance. This study investigates the effect of financial literacy on the growth of SMEs in Plateau State, Nigeria. Using a descriptive survey design, data were collected from 376 SME owners selected through stratified random sampling from the commerce, manufacturing, agriculture and services sectors. A structured questionnaire, validated through expert review and reliability-tested using Cronbach’s Alpha (α ≥ 0.70), provided the primary dataset. Multiple linear regression analysis (OLS) was employed to examine the relationship between financial literacy dimensions and SME growth. Empirical results reveal that financial knowledge (β = 0.42, p < 0.05), financial behaviour (β = 0.36, p < 0.05), and financial attitude (β = 0.28, p < 0.05) each exert significant and positive effects on SME growth. The model accounts for 51.3% of the variance in SME growth (R² = 0.513), underscoring the importance of financial capability in business development. The findings demonstrate that cognitive financial understanding, disciplined financial practices, and positive financial dispositions jointly enhance business performance and growth trajectories. The study concludes that strengthening financial literacy is essential for improving SME resilience, profitability, and long-term sustainability. It recommends targeted financial education interventions by government agencies, financial institutions, and business associations to support SME development in Plateau State.