Impact of Inflation on the Growth and Survival of Small and Medium Enterprises (SMEs) in Nigeria

Abstract

This study examines the impact of inflation on the growth and survival of Small and Medium Enterprises (SMEs) in Nigeria. SMEs play a vital role in economic development through job creation, poverty reduction, and contribution to national output. However, persistent inflation in Nigeria has raised concerns about their sustainability. The study specifically investigates how inflation affects SME growth, survival, and operational performance. A descriptive research design was adopted, and data was collected using structured questionnaires administered to SME owners and managers. The data were analyzed using descriptive statistics and multiple regression analysis. Findings from the study reveal that inflation has a significant negative effect on SME growth by increasing the cost of raw materials, reducing profit margins, and limiting business expansion. It also significantly affects SME survival by weakening financial stability, reducing consumer demand, and increasing the risk of business closure. F urthermore, inflation was found to create serious operational challenges, including high transportation costs, unstable cash flow, difficulty in accessing credit, and increased overall business expenses. The study concludes that inflation is a major constraint to SME performance in Nigeria. It recommends effective inflation control policies, improved access to affordable credit, provision of incentives, and infrastructural development to support SME sustainability. These measures will enhance the resilience and growth of SMEs in Nigeria.