Project – Adult Literacy and Financial Decision-Making among Women Traders: A Study of Market Women in Oyingbo, Lagos State

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Literacy is an important foundation for individual participation in economic, social and civic activities because it enables adults to read, interpret information, communicate effectively and apply knowledge to everyday situations. Adult literacy extends beyond the ability to read and write to the practical use of literacy skills in occupational and economic activities. In Nigeria, the National Bureau of Statistics has historically treated adult literacy as an important development indicator and conducted the National Literacy Survey to determine the level and distribution of adult literacy and identify issues requiring attention in adult literacy development. Functional literacy is particularly relevant to adults who engage in income-generating activities because their daily responsibilities require them to interpret written information, keep records, calculate transactions and interact with institutions. Igbalajobi and Fajonyomi (1990) similarly identified functional literacy as an important component of adult education in Nigeria, while the National Bureau of Statistics (2009) emphasized the need to understand the magnitude and distribution of adult literacy as a basis for improving literacy programmes.

For women who operate small businesses, literacy has implications that extend into the management of daily commercial activities. Women traders routinely deal with prices, quantities, customer records, suppliers, receipts, credit arrangements, savings contributions and other forms of business information. The ability to read and understand such information can help traders organise their activities and distinguish between different financial options. Olaniyi’s study of adult learners in Nigeria found that literacy education was perceived as contributing to individual financial management and economic activities, indicating that adult education can have practical economic consequences beyond formal educational attainment. Thus, adult literacy may provide women traders with a basic cognitive and practical foundation for dealing with the financial information associated with their businesses.

The relationship between literacy and financial decision-making becomes more significant when financial decisions involve budgeting, saving, borrowing, investment, record keeping and management of business income. Financial literacy generally involves the knowledge, skills, attitudes and behaviours required to make informed financial choices. Evidence from Nigeria indicates that financial literacy remains an important challenge. The IMF, drawing on EFInA data, reported that more than half of Nigerian adults had limited financial literacy and capability, particularly in areas such as financial planning and prudent management of financial risks. The report also noted an association between financial illiteracy and lower educational attainment. These findings are important for women traders because limited literacy can make it more difficult to understand financial information, compare alternatives, assess costs and benefits, and make deliberate choices concerning business and household finances.

Financial decision-making among women traders also involves the practical management of business resources. A trader may have to decide how much money to reinvest in stock, how much to save, whether to purchase goods on credit, whether to borrow, how to manage debt and how to separate business funds from household expenditure. Research among Nigerian female micro-entrepreneurs found that financial literacy was associated with business performance, suggesting that financial knowledge and related capabilities have implications for women’s capacity to manage their enterprises. Ndaghu et al. (2022) specifically examined financial literacy and business performance among female micro-entrepreneurs and identified financial literacy as relevant to the ability of women entrepreneurs to realise their business potential. Similarly, Hassan and Sofoluwe (2022), in a study of small-business entrepreneurs in Nigeria, examined financial knowledge, financial attitude and management practices, reinforcing the importance of financial capabilities in small-business management.

The importance of financial literacy is also evident in women’s access to and use of formal financial services. Financial inclusion provides individuals with opportunities to save, borrow, make payments, manage risks and access other financial products, but access alone does not necessarily guarantee effective use. EFInA’s Access to Financial Services in Nigeria survey reported that formal financial inclusion increased from 56% in 2020 to 64% in 2023, while financial exclusion declined from 32% to 26%. However, the continued existence of financially excluded and underserved adults indicates that access and capability remain important issues. The World Bank has also identified financial literacy and financial planning as important components of women’s economic empowerment initiatives in Nigeria, including efforts to increase savings mobilisation and strengthen women’s connections with financial service providers. For market women, these issues are particularly relevant because many operate businesses where daily cash flows, informal savings arrangements and short-term borrowing are central to business survival.

Women’s financial decision-making can also be affected by barriers that extend beyond literacy itself. The IMF reported that Nigerian women’s participation in formal financial services has historically been constrained by factors including lower income, education and trust in financial service providers. More recent EFInA evidence similarly indicates that only a small proportion of adult women accessed credit from formal financial service providers in 2023 and identified insufficient financial literacy, inadequate business management skills, limited documentation and lack of awareness as among the factors affecting women’s access to productive credit. These conditions suggest that improving women’s ability to understand and use financial information may be important for their participation in formal financial systems and for the quality of the financial decisions they make in their businesses.

The relevance of these issues is particularly pronounced in a major urban market such as Oyingbo in Lagos State, where women traders operate within a highly active commercial environment involving foodstuffs, provisions, clothing, household goods and other commodities. Market trading requires continuous financial choices concerning purchasing, pricing, sales, savings, credit, debt repayment, stock replacement and household-business financial relationships. Existing Nigerian studies have established relationships between financial literacy and women’s entrepreneurship or small-business outcomes, while national surveys have documented broader challenges concerning financial inclusion and capability. However, much of the available evidence focuses on women entrepreneurs generally, SMEs, financial inclusion or business performance rather than specifically examining how adult literacy relates to the financial decision-making of women traders operating in a major Lagos market. Therefore, examining adult literacy and financial decision-making among market women in Oyingbo can provide context-specific evidence on whether literacy-related capabilities are associated with the ways women traders manage savings, budgeting, borrowing, investment and other financial choices.

1.2 Statement of the Problem

Women traders make important financial decisions every day as they purchase goods, determine selling prices, manage business income, save money, obtain credit and respond to changing market conditions. These decisions can directly influence the continuity and sustainability of their businesses. However, the ability to make informed financial choices depends partly on access to understandable financial information and the capacity to interpret and apply such information. Nigerian evidence indicates that financial literacy and capability remain challenges for a substantial proportion of adults, particularly in areas involving financial planning and risk management. Where traders have difficulty reading, calculating, interpreting or comparing financial information, they may face difficulties in determining the real cost of credit, maintaining adequate records, planning expenditure or distinguishing between productive and unproductive uses of business income.

A second problem concerns the continued financial vulnerability of women despite improvements in Nigeria’s overall financial inclusion. EFInA’s 2023 survey reported substantial progress in formal financial inclusion, but financial exclusion remained significant. Furthermore, EFInA has identified insufficient financial literacy and inadequate business management skills among the factors limiting women’s access to productive formal credit, while only a small proportion of adult women accessed credit from formal financial service providers. For women traders, inadequate literacy may make it difficult to understand loan terms, interest charges, repayment schedules, savings products, transaction records and other financial requirements. Consequently, merely making financial services available may not be sufficient if users lack the literacy and practical capabilities required to evaluate and use those services effectively.

A third problem is the possibility of weak financial management practices among women operating small-scale trading businesses. Financial decisions in market businesses often combine personal, household and business resources, making budgeting, record keeping, savings and debt management particularly important. Research among Nigerian female micro-entrepreneurs has identified financial literacy as relevant to business performance, while studies of women-owned businesses have examined budgeting, bookkeeping and debt-management capabilities as components of financial literacy. Ndaghu et al. (2022) found a relationship between financial literacy and business performance among female micro-entrepreneurs, while Aiyedogbon et al. (2023) examined budgeting, bookkeeping and debt-management literacy among women-owned SMEs in Awka, Nigeria. Nevertheless, evidence from these studies cannot automatically be generalised to women traders in Oyingbo because the nature, scale, environment and financial practices of market trading may differ from those of formally classified SMEs or other categories of women entrepreneurs.

Finally, there is a contextual and empirical gap concerning women traders in Oyingbo market. Existing Nigerian literature has considered adult literacy, women’s entrepreneurship, financial literacy, financial inclusion and small-business performance, but relatively limited attention has been given to the specific relationship between adult literacy and financial decision-making among market women in Oyingbo, Lagos State. Studies such as Egbo et al. have examined financial literacy and access among women entrepreneurs in Enugu, while Ndaghu et al. investigated financial literacy and business performance among female micro-entrepreneurs. The absence of sufficiently specific evidence from Oyingbo creates a need for a study that examines whether adult literacy is associated with the financial decisions of women traders within this particular market environment. The study therefore seeks to investigate adult literacy and financial decision-making among women traders in Oyingbo, Lagos State, with particular attention to budgeting and financial planning, savings and investment decisions, borrowing and debt-management decisions, and record-keeping and financial information use.

1.3 Purpose of the Study

The main purpose of this study is to examine the relationship between adult literacy and financial decision-making among women traders in Oyingbo, Lagos State.

Specifically, the study seeks to:

1. examine the relationship between adult literacy and budgeting and financial planning decisions among women traders in Oyingbo, Lagos State;
2. determine the relationship between adult literacy and savings and investment decisions among women traders in Oyingbo, Lagos State;
3. assess the relationship between adult literacy and borrowing and debt-management decisions among women traders in Oyingbo, Lagos State; and
4. examine the relationship between adult literacy and record-keeping and financial information-use decisions among women traders in Oyingbo, Lagos State.

1.4 Research Questions

The following research questions will guide the study:

1. What is the relationship between adult literacy and budgeting and financial planning decisions among women traders in Oyingbo, Lagos State?
2. What is the relationship between adult literacy and savings and investment decisions among women traders in Oyingbo, Lagos State?
3. What is the relationship between adult literacy and borrowing and debt-management decisions among women traders in Oyingbo, Lagos State?
4. What is the relationship between adult literacy and record-keeping and financial information-use decisions among women traders in Oyingbo, Lagos State?

1.5 Research Hypothesis

The following null hypothesis will be tested at the 0.05 level of significance:

H₀: There is no significant relationship between adult literacy and financial decision-making among women traders in Oyingbo, Lagos State.

1.6 Significance of the Study

The study will be significant to women traders because it will provide evidence on the relevance of literacy to everyday financial decisions. The findings may help traders recognise the importance of developing practical literacy skills that support budgeting, record keeping, savings, borrowing and other business-related financial activities.

The study will also be useful to adult education practitioners and literacy programme providers. Findings from the study may provide evidence for designing functional literacy programmes that go beyond basic reading and writing to include practical financial skills relevant to the everyday economic activities of adult women.

The study will be relevant to financial institutions and financial inclusion stakeholders. Understanding the relationship between literacy and financial decision-making may assist banks, microfinance institutions, fintech providers and other financial-service organisations in developing financial education and communication strategies that are more accessible to women traders. This is consistent with Nigeria’s broader financial inclusion efforts, which recognise financial literacy and financial planning as important elements of women’s economic empowerment.

The study will also benefit government agencies and policymakers concerned with adult education, women’s economic empowerment, financial inclusion and small-business development. The findings may provide context-specific evidence that can support policies and programmes aimed at strengthening the economic capabilities of women operating informal and small-scale businesses.

Finally, the study will contribute to academic knowledge and future research by providing evidence from Oyingbo, Lagos State. It may serve as a reference for researchers investigating adult literacy, women’s entrepreneurship, financial literacy, financial inclusion and financial decision-making in Nigerian urban markets.

1.7 Scope of the Study

The study focuses on adult literacy and financial decision-making among women traders in Oyingbo, Lagos State. The geographical scope is limited to women traders operating within Oyingbo market.

The study will focus on adult literacy as the independent variable and financial decision-making as the dependent variable. The dimensions of financial decision-making covered by the study are budgeting and financial planning, savings and investment, borrowing and debt management, and record keeping and financial information use.

The study is limited to women traders because they constitute an important group of small-scale economic actors whose daily business activities require frequent financial decisions. The study does not seek to examine all aspects of adult education, women’s empowerment or financial inclusion; rather, it concentrates specifically on the relationship between adult literacy and financial decision-making.

1.8 Operational Definition of Terms

Adult Literacy: The ability of adults to read, write, understand, interpret and apply information in practical situations, particularly those relating to their personal, social and economic activities.

Financial Decision-Making: The process through which an individual evaluates alternatives and makes choices concerning the management and use of financial resources, including budgeting, saving, investment, borrowing and expenditure.

Women Traders: Adult women who engage in buying and selling goods or commodities for income within Oyingbo market.

Budgeting and Financial Planning: The process of estimating expected income and expenditure and deciding how available financial resources will be allocated to different needs and business activities.

Savings and Investment Decisions: Choices concerning the amount of money to reserve for future needs and the allocation of funds to activities or assets expected to generate financial returns or support business growth.

Borrowing and Debt Management: Decisions relating to obtaining loans or credit, assessing borrowing costs, selecting sources of credit and managing repayment obligations.

Record Keeping: The systematic documentation of sales, purchases, expenses, debts, savings and other financial transactions associated with a business.

Financial Information Use: The ability to obtain, understand, evaluate and apply financial information when making personal or business-related financial decisions.

Oyingbo Market: A major commercial market area in Lagos State where traders engage in the buying and selling of various goods and commodities and which serves as the geographical setting for this study.

Project – Adult Literacy and Financial Decision-Making among Women Traders: A Study of Market Women in Oyingbo, Lagos State