The level of financial literacy of agribusiness entrepreneurs in Zimbabwe

Abstract

Agribusiness is the cornerstone of the Zimbabwean economy as most people survive on agricultural related activities, and it is regarded as the first step to fighting poverty among the rural population. However, the sector has not been performing well in terms of productivity due to various factors, which include poor management of borrowed funds, higher loan defaults, and financial exclusion. The study sought to assess the level of financial knowledge, financial behaviours, and financial attitudes of agribusiness entrepreneurs. Pragmatism research philosophy guided this research. The study made use of the mixed method approach and sequential mixed method research design. Quantitative data was first collected using a questionnaire, followed by interviews that were conducted to build upon quantitative results. Multistage cluster sampling and convenience sampling were used to select research participants. The study also sought to determine the major factors affecting the financial literacy of agribusiness entrepreneurs and the nature of financial products demanded by agribusiness entrepreneurs. Research findings established that agribusiness entrepreneurs: (1) have low financial knowledge, (2) exhibit poor financial behaviours, and (3) have good financial attitudes except for diverting a portion of business loans for personal use. The general level of financial literacy was very low among agribusiness entrepreneurs but extremely low among women, lowincome earners, those with low levels of education, and those living with several dependants below 18 years. Most smallholder agribusiness entrepreneurs earned very low incomes of less than US$500 per month due to lower yields and, therefore, could not afford bank loans usually charged at very high interest rates. Agribusiness entrepreneurs usually relied on non-financial products like rotational savings (mukando in Shona), selling something owned and family and friends to make ends meet. There was a disassociation between financial products needed by agribusiness entrepreneurs and the products offered by financial institutions. The study developed and recommended a financial literacy operationalisation model for agribusiness entrepreneurs for consideration by policy makers.