The Impact of Access to Finance on the Micro-enterprises’ Growth in Emerging Countries Towards Sustainable Industrialization

Purpose: The effect of access to finance on microenterprises growth was assessed using financial literacy as a moderator in emerging countries, particularly, Tanzania. /Methodology/Approach: This research paper applied a quantitative research design and the data were collected from owners and managers of microenterprises in the city of Dar Es Salaam using a structured questionnaire. Structural Equation Modeling (SEM) using IBM AMOS version 23 and the Statistical Package for the Social Sciences (SPSS)version 26 were both used in the analysis of the 262 respondents who were randomly selected. Before starting to analyze the data, concerns about data screening, reliability, and validity were all addressed. Findings: The results show that financial literacy has a positive and significant effect on the growth of micro-enterprises, although access to financing and terms of interaction are not statistically significant. This suggests that financial literacy directly impacts micro-business expansion rather than moderating the relationship between access to credit and micro-business growth. Implications/Research Limitations: The study can be expanded further by combining micro, small, and medium-sized businesses and by applying a resource-based view theoretical lens to examine the moderating role of financial literacy between financial access and the growth of microenterprises. This can be equally crucial in identifying the impact of financial literacy on the relationship between financial access and business growth. Practical Implications: The study's findings will be useful for microbusiness owners and managers, legislators, and other stakeholders in the facilitation and regulation of financial services to develop strategic training programs on financial literacy. As a result, microbusiness owners and managers may have improved their financial literacy knowledge and capabilities, giving them access to more financial resources. Originality/Value: Past research has demonstrated that there scarce literature on the use of financial literacy to increase access to financing for micro, small, and medium enterprises in emerging countries, including Tanzania. The study is anticipated to contribute to knowledge and literature in the fields of financial literacy, access to financing, and micro-enterprise enterprises in developing nations based on past empirical and theoretical lenses. Similarly, financial literacy promotes the long-term growth of microenterprises through its impact on access to financing.