The Impact of Exchange Rate Fluctuations on Import-Dependent Small and Medium Enterprises in Lagos State

This study examines the impact of exchange rate fluctuations on import-dependent small and medium enterprises (SMEs) in Lagos State, Nigeria. The persistent volatility of the naira against major international currencies has created significant operational challenges for SMEs that rely on imported raw materials and finished goods. Drawing on data collected from 120 SME owners and managers across Apapa, Ikeja, and Lagos Island through structured questionnaires, the study evaluates how currency depreciation affects procurement costs, profit margins, and business sustainability. A descriptive survey research design is adopted, and data are analysed using frequency tables, percentages, and regression analysis. Preliminary observations suggest that most SMEs in the sampled areas lack formal hedging strategies, leaving them acutely vulnerable to exchange rate shocks. The study further explores how access to foreign exchange through official and parallel market channels influences business decisions. Findings are expected to reveal a significant negative relationship between naira depreciation and SME profitability. The research contributes to existing literature on currency risk management within developing economy contexts and provides practical recommendations for SME operators, financial institutions, and policymakers on building exchange rate resilience. The study concludes that targeted foreign exchange support schemes and financial literacy programmes are essential for sustaining SME growth in Nigeria's volatile macroeconomic environment. Keywords: exchange rate, SMEs, Lagos, import dependency, currency risk