The Impact of Inflation on Small Business Performance in Nigeria

Ahmed Ibrahim Karage PhD; Umar Mustapha Kachalla PhD; Aishatu Hassan Dagona

doi:10.56201/wjeds.v11.no6.2026

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The Impact of Inflation on Small Business Performance in Nigeria

Ahmed Ibrahim Karage PhD, Umar Mustapha Kachalla PhD, Aishatu Hassan Dagona

Abstract

This study examines the impact of inflation on small business performance in Nigeria. The research was motivated by the persistent rise in inflation and its adverse effects on the business environment, particularly for small enterprises that are highly vulnerable to economic fluctuations. The study adopted a survey research design, utilizing primary data collected through structured questionnaires administered to small business owners across selected regions in Nigeria. A sample size of 385 respondents was determined using an appropriate statistical technique for an infinite population. Data were analyzed using an ordered probit regression model with the aid of statistical software to assess the relationship between inflation and small business performance. The findings reveal that inflation has a significant negative effect on small business performance, as it increases the cost of production, reduces purchasing power, and constrains profitability and growth. Additionally, the study found that cost of business operations negatively affects performance, while size and location of business have positive and significant influences. The study concludes that inflation is a critical macroeconomic factor that undermines the sustainability and expansion of small businesses in Nigeria. It recommends that policymakers implement effective measures to control inflation and provide support mechanisms such as subsidies, tax relief, and access to affordable credit to cushion its adverse effects. The study also suggests that small business owners adopt strategic cost management practices to enhance resilience in an inflationary environment.

References

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The Impact of Inflation on Small Business Performance in Nigeria

Abstract

References

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