As Nigerian policymakers look to navigate the return of Donald Trump as the 47th President of the United States, analysts weigh in on how his policies might affect the country’s economic landscape.
One of the primary concerns among analysts is the potential for a stronger U.S. dollar under Trump’s administration.
Trump’s focus on boosting American industry through tariffs and supporting domestic production could drive up demand for the U.S. dollar, strengthening its value on global markets.
Nigeria’s naira has already lost more than 45 per cent of its value against the dollar this year, and a further appreciation of the greenback could put additional pressure on the naira.
Import costs would rise, pushing up inflation, and Nigeria’s debt servicing costs would increase since many of the country’s foreign debts are denominated in dollars.
Dr. Ayoade Oladapo, a senior economist at Lagos-based policy think tank, Nigerian Futures, explains: “A stronger dollar would create a vicious cycle for Nigeria: higher costs for fuel imports, consumer goods, and raw materials, alongside increased inflationary pressures.
“The Central Bank of Nigeria (CBN) would face mounting challenges to defend the naira, and the average Nigerian will feel the pinch through higher living costs.”
Historically, Trump has advocated for low interest rates in the U.S., which could continue under his second term.
However, analyst Chukwudi Okechukwu from Capital Insights Nigeria cautions, “While low U.S. interest rates could attract capital into Nigeria, the broader global economic volatility, coupled with the ongoing strength of the dollar, may make investors hesitant.
“Capital inflows will depend on how Nigeria manages its macroeconomic fundamentals and continues to offer competitive returns.”
Trump’s economic policies also include a strong emphasis on boosting domestic energy production in the U.S., particularly by increasing oil drilling and reducing regulations.
If Trump’s administration continues to pursue these policies, global oil prices could remain suppressed, which may have serious consequences for Nigeria.
