The impact of exchange rate depreciation on small and medium sized enterprises performance and development in Nigeria

This paper examines the impact of exchange rate depreciation on the performance and development of Manufacturing Small and Medium Sized Enterprises (SMEs) in Nigeria. Data were obtained from a questionnaire survey of 500 manufacturing SMEs in Nigeria and analyzed using descriptive statistics. Chow test was used to determine whether there was structural change in Nigeria’s non-oil export after the deregulation of exchange. The results of the data analysis suggest a very high sensitivity of SMEs’ performance and cost of operations to exchange rate fluctuations. The results further suggest that SMEs’ efficiency did not improve; neither were they able to take advantage of the liberalized trade to export their products. The policy did not positively affect Nigeria’s non-oil export. Considering Nigeria’s re-basing of its GDP and in effect becoming Africa’s largest economy, there is a real interest in understanding how fluctuations in exchange rates impact on SMEs activities which account for a substantial part of Nigeria’s economic activities.