Published September 6, 2025 | Version v1
Journal article Open

Exchange Rate Fluctuations and Cash Flow Management of Small and Medium Enterprises (SMEs) Southwest Nigeria

Authors/Creators

  • 1. Osgoode Professional Development, Osgoode Law School, York University, Toronto, ON Canada. fadeafolabi1@gmail.com; +1-647-710-1692
  • 2. Department of Management and Accounting, Lead City University, Ibadan, Nigeria, adeyombo.adegunju@gmail.com || +234 803 563 6175
  • 3. Department of Finance, Lagos State University of Science and Technology, Lagos, Nigeria ayoeso@hotmail.com; +234 802 291 3114
  • 4. Assistant Director Tax, Large Taxpayer Audit Department, Federal Inland Revenue Service, Lagos, Nigeria, +2348033670220; bkolawole.kb@gmail.com; bisiriyu.kolawole@firs.gov.ng

Description

Exchange rate fluctuations affected the cash flow management of SMEs, leading to higher 
production costs and reduced profitability. However, financial inclusion, through access to 
essential financial services, helped mitigate these adverse effects by providing SMEs with the 
necessary resources to manage risks and enhance operational efficiency. This study investigated 
the impact of exchange rate fluctuations on the cash flow management of Small and Medium 
Enterprises (SMEs) in Southwest Nigeria. The study employed mixed-methods research design. 
The population comprised all SMEs in the South-west geopolitical zone of Nigeria, from which 
399 participants were selected using purposive sampling and stratified random sampling 
techniques from a total population of 149,317. Data was collected using a structured questionnaire 
and focus group discussions, which were analysed using both descriptive and inferential statistics. 
Findings showed that exchange rate volatility significantly affected the cash flow management of 
SMEs in Southwest Nigeria. The study concluded that exchange rate fluctuations posed a 
significant challenge to the performance of SMEs in the region. The study therefore recommended 
enhancing financial literacy, adopting risk management strategies, implementing stabilising 
policies, and strengthening financial institutions to improve SME performance and resilience 
against exchange rate fluctuations. 

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