Abstract:
Small, Medium, and Micro Enterprises (SMMEs) are critical for both economic and
social development in developing countries. The SMME sector contributes significantly
to the Gross Domestic Product (GDP) through lowering unemployment, alleviating
poverty, and encouraging entrepreneurship. The purpose of the study is to assess the
impact of funding sources and financial literacy on SMMEs growth in Stadium Area
Constituency Maseru Lesotho. Quantitative approach was used in this study and data
collection was through close-ended questionnaires. Data is analysed and presented in
the form of Structural Equation Modeling (SEM). The study addressed the questions
such as how sources of funding and financial literacy impact SMMEs growth. The study
revealed that, the correlation coefficient between internal financing and entrepreneurial
skills is very weak (𝑟 = 0.15), though it is positively correlated with the significant value
of (𝑃 < ,001) , and external financing has a significant positive correlation with
entrepreneurial skills(𝑟 = 0.91), with the significant value of (𝑃 < ,001). It is therefore
concluded that,if more resources can be put in external financing, that is, if SMMEs
owners can get external funding either from commercial banks, or from any financial
institutions to acquire entrepreneurial skills, this may lead to SMME growth and its
sustainability which can impact positively to the country’s economy. It is recommended
that, policymakers and decision makers should help entrepreneurs, by designing
curriculum for entrepreneurial skills short courses, to equip SMMEs owners with skills
and knowledge, on how to run their businesses effectively and efficiently, as the way for
sustainability, viability and growth of their businesses.
