NAIRA DEVALUATION AND SMES PERFORMANCE IN NIGERIA: A CASE STUDY OF MINI IMPORTERS IN LAGOS STATE

NAIRA DEVALUATION AND SMES PERFORMANCE IN NIGERIA: A CASE STUDY OF MINI IMPORTERS IN LAGOS STATE

ABSTRACT

This study was conducted to investigate the alleged link between Naira devaluation and the performance of Small and Medium Enterprises. The SME group’s focus was on exporters. The study’s specific goal was to look at the influence of Naira devaluation on import frequency as well as the impact of Naira devaluation on small and medium-sized business operations. The study used a survey research design. Using judgemental sampling, a total of 100 entrepreneurs in the Lekki area of Lagos state were contacted and given approval to participate in this study. Using the chi-square statistical method, the results of this study demonstrated that Naira depreciation had a detrimental influence on the performance of small and medium-sized businesses. Specifically, SMEs in Nigeria are harmed by the high cost of commodities, as imports are discouraged, resulting in a scarcity of items. Furthermore, specific data revealed that some SMEs’ patronage fell, resulting in high operating costs. According to the report, before devaluing the currency, the government should promote self-sufficiency through practical ways. This is because a country that is unable to generate its own food would inevitably have to rely on other economies for survival.

Chapter one

INTRODUCTION

1.1 Background of the Study

Nigeria, with its abundance of resources such as crude oil, is considered blessed. Her tremendous commercial resources have elevated her to the top ranks of the world’s oil producing nations. Her oil and gas business, which has been described as the nation’s financial lifeline, has contributed to her current enviable position.

There are various periodicals dedicated to this topic, as well as its function and significance in modern Nigeria. This has resulted in the formation of four primary economic groups in Nigeria: oil-related businesses, the public sector (governments and parastatals, which are still strongly reliant on oil derivatives), the organised private sector, and the informal sector (World Bank 2002).

The initial component of economic activity is primarily reliant and centred on oil. The most dominant aspect of this sector is its share of oil profits as a percentage of exports, as oil presently accounts for more than 80% of the country’s export earnings/income.

Oil price drops have recently caused economic crises in countries such as Nigeria, which run an oil-based economy with undiversified economies. This issue caused by exchange rate swings will eventually lead to the devaluation of the Naira.