Role of financial and economic literacy in improving youth entrepreneurship

Financial literacy is a combination of awareness, knowledge, skills and behaviors that a potential entrepreneur should have in order to make effective financial decisions to start, run and grow their business. Potential entrepreneurs need a variety of skills including: skills in developing long-term financial strategy and business prospects; skills to understand financial instruments and changes in economic conditions; as well as financial management skills, people skills and sector-specific skills.

This policy brief has been prepared incorporating insights from the policy dialogue held in Colombo on the 20th of January 2023, under the theme of “Role of Financial and Economic Literacy in Improving Youth Entrepreneurship”. This was the fourth of a series of policy dialogues organized by the Ceylon Chamber of Commerce in association with the Central Bank of Sri Lanka, under the aegis of the South Asia Leadership in Entrepreneurship (SALE) Program. The SALE Program is implemented in Sri Lanka and Nepal, by the International Labour Organization, with the financial assistance of the United States Department of State. The main objective of SALE is to promote youth entrepreneurship, by facilitating a change in the entrepreneurial ecosystem and encouraging youth transition into the entrepreneurial world.

The key issues identified at the fourth policy dialogues were primarily related to financial literacy and record keeping, informality of MSMEs, lapses in laws and regulations to prevent financial frauds and scams, multiplicity of institutions involved in entrepreneurship promotion, lack of community engagement, culture of enjoying the flexibility in informality and lack of commercialization of innovation in financial markets.