FINANCIAL LITERACY AND ENTREPRENEURIAL PERFORMANCE IN BWARI AREA COUNCIL: THE MEDIATING ROLE OF CAPITAL ACCESS
Financial literacy has been widely recognised as a critical determinant of entrepreneurial success, yet limited access to capital continues to constrain the performance of Small and Medium Enterprises (SMEs) in semi-urban Nigerian communities. This study examined the relationship between financial literacy and capital access among entrepreneurs in Bwari Area Council, Federal Capital Territory (FCT), Abuja, with specific attention to how interest rates, financial skills in cash flow management, and finance utilization jointly shape entrepreneurial performance. Adopting a cross-sectional survey design, data were collected from 300 registered entrepreneurs across the manufacturing, retail/wholesale, and services sectors using a structured, validated questionnaire. Simple linear regression was used to test the direct effects of financial knowledge on loan accessibility, budgeting and cash flow management skills on operational performance and sustainability, and financial record-keeping on business growth, while hierarchical regression and the Sobel test assessed the mediating role of capital accessibility in the financial literacy–performance relationship. The study was anchored on Human Capital Theory (Becker, 1964) and Financial Intermediation Theory (Gurley & Shaw, 1960). Results showed that financial knowledge significantly and positively affected loan accessibility (β = 0.631, p < 0.001); financial skills in cash flow management significantly improved operational performance and sustainability (β = 0.704, p < 0.001); finance record keeping significantly enhanced business growth (β = 0.681, p < 0.001); and capital access significantly mediated the relationship between financial literacy and entrepreneurial performance (Sobel z = 5.97, p < 0.001), raising the explained variance from 47.3% to 61.0%. The study concluded that financial competence, not merely access to funds, is the critical lever of entrepreneurial success in Bwari Area Council, and recommends that financial institutions, government agencies, and educational bodies prioritise targeted financial literacy training, affordable lending policies, and structured finance-utilization support for entrepreneurs.
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