Strengthening MSME Financial Literacy after Disasters as a Strategy for Local Economic Recovery

Abstract

Disasters pose significant challenges to local economic sustainability, particularly for Micro, Small, and Medium Enterprises (MSMEs) operating in vulnerable regions. In post-disaster contexts, MSMEs often face disrupted cash flows, limited capital, and weak access to formal financial systems, conditions that are exacerbated by low levels of financial literacy. This community service program aims to strengthen MSME financial literacy as a strategic intervention to support local economic recovery in disaster-affected areas of Aceh, Indonesia. The program employed a qualitative descriptive approach within a community service framework, combining preliminary assessment, structured financial literacy training, continuous mentoring, and reflective evaluation. Training and assistance focused on basic bookkeeping, cash flow management, cost classification, profit calculation, and the separation of personal and business finances. The results indicate substantial improvements in participants’ financial recording skills, financial management practices, and awareness of financial planning and risk management. Enhanced financial literacy also improved MSMEs’ ability to access post-disaster recovery financing and sustain business operations under uncertain conditions. Overall, the program demonstrates that strengthening financial literacy is a critical pathway for enhancing MSME resilience and accelerating sustainable local economic recovery in disaster-prone regions.