FINANCIAL LITERACY AND MICROENTERPRISE GROWTH IN ANGOLA: Barriers to the transition of informal micro-entrepreneurs into the formal financial system
Pedro da Silva Artur
Abstract
Micro, small and medium enterprises (MSMEs) are the backbone of Angola’s business fabric, yet many urban
micro-entrepreneurs still save and borrow outside the formal financial system, through kixiquila and other
rotating schemes. This paper asks what role financial literacy plays in their move to the formal system, a
necessary step for financing, registering and growing a microenterprise.
The data come from 101 questionnaires administered to urban informal savers in January-February 2026 and
were analysed with a Logit model estimated by maximum likelihood. Three factors are tested: financial
literacy, income/education and institutional trust. Only financial literacy is statistically significant (β = 0.352;
p = 0.036; odds ratio 1.42; marginal effect of about 8.8 percentage points per index point). Of respondents,
97% would switch, or would consider switching, to the formal sector if barriers were reduced; lack of
information (33.7%) and bureaucracy (19.8%) are the main barriers; 62.4% distrust formal institutions.
The paper proposes a conceptual “Literacy-Formalisation-Growth” chain and a pilot financial literacy
programme for microenterprises, with measurable targets, partners and indicators. It is worth saying upfront
what the study does not do: it does not measure firm growth directly, and it treats financial transition as a
necessary, not sufficient, condition for it.