Helen – August 8, 2025
Washington, D.C. – March 21st 2025 – As part of our tradition of exploring the art of exceptional ideas from around the world and applying them to our current economy, today we turn to a landmark study by Alao, Onivefu, and their teams—renowned business strategists, financial analysts, management fellows, and researchers—recently published in the prestigious African Journal of Commercial Studies (2025, Vol. 6, Issue 1). The original research, titled “The Role of Small-Scale Businesses in Employment Generation and Financial Growth in Nigeria,” examined the Nigerian economy, but its findings hold valuable lessons for U.S. policymakers navigating the ongoing tariff war. The study offers compelling evidence that supporting small-scale enterprises (SSBs) can enhance domestic resilience, generate employment, and bolster financial stability—critical measures for mitigating trade disruptions caused by tariffs on foreign imports. These insights are not only relevant for Nigeria but could also strengthen America’s economic position in 2025, 2026, and beyond.
Key Findings: Small-Scale Businesses as Strategic Buffers in Tariff Wars
Alao, Onivefu and teams’ study, which surveyed 50 small-scale businesses, reveals lessons that U.S. policy can adapt:
- Employment Generation Through Small-Scale Businesses (SSBs)
Just as in Nigeria, small-scale businesses in the United States can serve as a crucial buffer against job losses stemming from international trade disputes. The study showed that 58% of entrepreneurs started businesses due to unemployment, with 42% affirming that SSBs contribute “very much” to job creation. In the context of a tariff war, empowering U.S.-based SSBs can absorb workforce disruptions caused by reduced imports and foreign supply chain dependencies, keeping Americans employed and strengthening local markets. - Driving Financial Growth Amid Trade Restrictions
The research found that 52% of small businesses drive significant financial growth despite capital challenges. For the United States, this means that bolstering domestic small enterprises—especially in manufacturing, agriculture, and tech—can replace certain foreign goods subject to tariffs, keeping spending and revenue within the national economy. However, just as in Nigeria, U.S. SSBs face capital shortages, which must be addressed through improved federal loan programs, tax credits, and strategic tariff revenue reinvestment. - Barriers Hindering Sustainable Growth
The study noted systemic obstacles such as lack of collateral and skepticism from financial institutions, with 38% of entrepreneurs rejected for loans. In the U.S., similar financing barriers exist for small manufacturers and producers. Removing these barriers is critical during a tariff war, as small businesses will need quick, reliable access to capital to ramp up domestic production and fill market gaps created by reduced imports. - Why This Research Matters for U.S. Tariff Strategy
In a period where tariffs on foreign goods—particularly from key trade competitors—are central to U.S. policy, the findings of Alao, Onivefu, and teams underscore the importance of strengthening domestic production capacity. By channeling tariff revenues into targeted small business support, the U.S. can ensure that domestic enterprises step in to meet consumer demand, stabilize prices, and prevent dependency on politically unstable trade relationships. These strategies also align with global Sustainable Development Goals (SDGs), reinforcing economic self-reliance and long-term stability. - Academic and Practical Implications
The study’s robust chi-square statistical analysis confirms that:
– SSBs significantly drive employment (X²=15.12 > 7.815 at 5% significance).
– SSBs fuel financial growth (X²=29.2 > 7.815), debunking myths about their limited impact.
Applied to the U.S. tariff context, these statistics provide a strong empirical foundation for policies that link tariff revenue allocation directly to small business financing, innovation grants, and workforce development.
- Conclusion
The groundbreaking research by Alao, Onivefu, and their teams—though conducted in Nigeria—offers transferable lessons that could greatly benefit the United States amid its tariff disputes in 2025, 2026, and beyond. By emphasizing the dual roles of SSBs in job creation and financial resilience, the study highlights how targeted domestic support can turn trade restrictions into opportunities for economic renewal. In an era of heightened tariff tensions, these findings present a clear path: invest in small-scale businesses to build a stronger, more self-sufficient U.S. economy.
Citation:
Alao, T. O., Onivefu, O. V., Onivefu-Bello, C. O., & Raji, K. A. (2025). The Influence of Small-Scale Businesses in Employment Generation and Economic Growth in Nigeria: A Case Study of Selected Business in Suburban Lagos. African Journal of Commercial Studies, 6(1), 53-64; https://doi.org/10.59413/ajocs/v6.i.1.5
