Financial literacy challenges and financial management of selected spaza shops in KwaZulu-Natal : a case study of Gamalakhe

Abstract

Township spaza shops play a crucial role in the local economy, providing essential goods and services to residents while also generating income and employment opportunities. However, these small enterprises often face significant challenges related to financial literacy and financial management. This research aimed to investigate the impact of financial literacy on the financial management practices of spaza shop owners in South African townships; identify the key challenges they face; and propose strategies to enhance their financial capabilities. The objective of this study was to examine the financial literacy challenges and financial management of selected spaza shops in KwaZulu Natal, Gamalakhe Township. In this study, the researcher examined the influence of financial literacy in the success of spaza shops and established the relationship between financial literacy and the application of financial management to the success of spaza shops. The quantitative research method was chosen for this study, and the purposive sampling technique was adopted to select study participants. The study collected primary data from respondents who were spaza shop owners and spaza shop operation runners in Gamalakhe township. A total of 100 research questionnaires were administered to the study participants. The collected data was reviewed and analysed using quantitative analysis. The findings of this study indicated that financial literacy significantly and positively influenced financing choices and the selection of investment options, education level was determined to be a significant predictor of financial literacy, and spaza shops apply different financial management control around financial planning and budgeting, financial control, investing, and financial risk management based on their surroundings. Based on the actual findings the study further recommended the use of training programs focusing on improving financial literacy, combining formal education with experiential learning opportunities like mentorship, and providing ongoing support and refresher sessions to spaza shops.