The role of financial literacy in shaping financial management, financing and investment decisions in spaza shop businesses: Evidence from Gamalakhe Township, South Africa

Mkhize, Mondli B. and Mugova, Shame and Mashizha, Margaret (2026) The role of financial literacy in shaping financial management, financing and investment decisions in spaza shop businesses: Evidence from Gamalakhe Township, South Africa. The Southern African Journal of Entrepreneurship and Small Business Management, 18 (1). ISSN 2522-7343

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Abstract

Background: Financial literacy (FL) is increasingly recognised as a key determinant of financial decision-making and business sustainability among informal micro-enterprises. Despite the importance of spaza shops in South African townships, limited evidence exists on how FL influences their financial management, financing and investment decisions. Aim: This study examines the role of FL in shaping financial management practices, financing choices and investment decisions among spaza shop owners. Setting: The study focused on spaza shop businesses in Gamalakhe Township, South Africa. Methods: A quantitative design used survey data from 100 spaza shop owners. Financial literacy and financial decision-making variables were measured using validated Likert-scale items. Descriptive statistics and ordinal logistic regression assessed the influence of FL on budgeting, record-keeping, financing behaviour, investment decisions and financial risk management. Results: Financial literacy had a statistically significant positive effect on key financial decisions. It significantly predicted the likelihood of selecting more favourable financing options (β = 1.636, p ≤ 0.001) and higher-level investment decisions (β = 1.942, p ≤ 0.001). Financial literacy was also positively associated with budgeting, record-keeping and risk mitigation. Conclusion: Financial literacy functions as both a strategic resource and behavioural enabler, shaping financial decisions central to the sustainability of informal enterprises. Contribution: The study provides empirical evidence from an under-researched township context and integrates resource-based and behavioural perspectives to explain financial decision-making among spaza shop businesses.

Item Type:	Article
Identification Number:	10.4102/sajesbm.v18i1.1241
Dates:	Date Event 6 March 2026 Accepted 23 September 2026 Published Online
Uncontrolled Keywords:	financial literacy, spaza shops, township entrepreneurship, financing decisions, investment behaviour, informal economy, South Africa
Subjects:	CAH17 - business and management > CAH17-01 - business and management > CAH17-01-07 - finance
Divisions:	Business School > Accountancy, Finance and Economics
Depositing User:	Gemma Tonks
Date Deposited:	28 Sep 2026 10:15
Last Modified:	28 Sep 2026 10:15
URI:	https://www.open-access.bcu.ac.uk/id/eprint/17254

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