Examining the Effect of Financial Literacy on Indigenous Business Growth in the Hospitality Sector: A Case Study of Selected Lodges in Kamwala South

Small and medium-sized enterprises (SMEs) in the hospitality sector are vital drivers of employment, local economic activity, and cultural tourism in Zambia’s urban centres, particularly in Lusaka. Examining the effect of financial literacy on indigenous business growth remains a major socio-economic concern in Zambia, particularly in urban areas such as Kamwala south. Small and Medium Scale Enterprises (SMEs) in hospitality sector are recognized as key contributors to job creation, especially for youth and women. Yet despite their importance, many indigenous hospitality operators face persistent constraints to growth, including irregular cash flows, weak financial recordkeeping, limited access to formal finance, and low uptake of basic financial management tools such as cash-flow forecasts, budgeting, and profit analysis. Financial literacy has therefore emerged as a critical determinant of SME sustainability. This study was motivated by the need to examine the effect of financial literacy on indigenous business growth.

The general objective of this study was to examine the effect of financial literacy on the growth of indigenous businesses in the hospitality sector, focusing on a comparative analysis of Maria dams Lodge, Shamrock Lodge, and Mwayose Lodge in Kamwala South. Specifically to assess the levels of financial literacy among owners and managers of indigenous lodges operating in Lusaka’s hospitality sector, to investigate the relationship between financial literacy components, such as budgeting, recordkeeping, and credit management, and business growth indicators, including profitability, customer base expansion, and reinvestment capacity and to analyze the financial performance and growth patterns of Mariadams Lodge, Shamrock Lodge, and Mwayose Lodge in relation to the financial literacy of their owners or managers. A comparative, mixed-methods case study design was adopted for this research to provide a comprehensive understanding of financial literacy practices and their influence on business performance among indigenous lodges. This design allows the study to delve deeply into the experiences and strategies of lodge owners and managers while simultaneously capturing measurable outcomes such as profitability, cash flow management, and operational efficiency. By combining qualitative and quantitative approaches, the study goes beyond superficial observations to examine both the behavioral and numerical dimensions of financial decision-making.

The findings offers practical recommendations to strengthen SME support mechanisms and guide policy interventions aimed at promoting inclusive job growth through retail trade enterprises.