This study investigated the effect of financial literacy on performance of SMES in Kawempe division. Specifically the study established the relationship between financial knowledge, financial behaviour and financial awareness and performance of SMES in Kawempe division. A cross-sectional study design was employed, utilizing a mixed approach. The study used a triangulation of qualitative and quantitative approaches. A sample of 169 respondents participated in the study. Data was collected using questionnaires from traders in the CBD of Kampala city. Results show that financial knowledge had a significant effect on performance of SMEs (p =.004<.05) and so was financial awareness at (p =.004<.05). The most significant was financial awareness (p =.000<.05). Generally, financial literacy was found to have a significant effect on performance of SMEs of 33.6 percent. The study found that SME owners' confidence in their financial knowledge positively impacts their business performance. The study showed that SME owners' ability to interpret and analyze financial statements effectively contributes to more proactive financial management. The study revealed that financial behaviour plays a crucial role in financial literacy and influences SME performance. SME owners' commitment to maintaining accurate financial records, regular expense monitoring, adherence to budgetary constraints, and active cash flow management positively impact their financial performance. The study highlighted the need for increased awareness of financial support programs among SME owners. Policymakers, financial institutions, and industry associations should prioritize the promotion of financial education and training programs for SME owners. More so, efforts should be made to enhance the dissemination of information about various financing options and support schemes. Financial institutions, industry experts, and market analysts can collaborate to provide SMEs with access to market intelligence, economic forecasts, and industry trends

show more