American wanted a leader who cared more about their interests. In addition to Trump’s win, Republicans are in control of the Senate and the House. Trump’s stance on what America should be about, in addition to Britain’s decision to exit the EU, will mean countries like Nigeria must now look to become more independent of foreign assistance to achieve sustenance.
Currencies across the world experienced significant changes as soon as Trump attained the 270 electoral college votes required to succeed President Obama. The dollar weakened while the Mexican peso suffered a terrible hit. Although the naira moved from 465/dollar to 460/dollar, experts say it had nothing to do with the election.
Due to the uncertainties that cloud Trump’s policies, investors might tend to avert risk. They might look towards more certain and favourable economies to put their money. If at this time, Nigeria’s bid to increase local production receives the much needed political will and favourable policies, the country could enjoy an investment boom. Nonetheless, upon Trump’s ascendency, normalcy will return as investors become more confident when they can deduce reliable trends from Trump’s decisions.
Immigration and Deportation
Obama has laid an incredible precedent by being responsible for the highest number of deportation by any United State President. Obama, over the past two tenures has deported at least 2.5 million people. With Trump in power, getting into the United States might be more difficult. Nigerians may face extra scrutiny before being allowed into the country. Although Trump promises to deport about 11 million people, analysts report that Trump will not find that number erring on immigration regulations. Even so, Trump is determined to introduce immigration policies to restrict movement by foreigners into the country.
The United States had initially cut down on crude oil import from Nigeria. Trump’s bid to increase production level in the United states means there will be no going back on cutting down on importation. Trump’s will to take on OPEC cartels and limit importation from them might affect prices which are already at a low. Trump would adversely affect Nigerian oil trade if he fully pursues shale oil production. He promised to lift restrictions on American energy in addition to lowering price of energy during his campaign in Pittsburg.
However, low crude oil prices might be Trump’s biggest obstacle. US had reopened oil trade with Nigeria when the cost of shale of production became expensive and as a result suffered a deficit which Nigeria was listed to fill. If oil prices remain low, Trump might be forced to continue importation of oil. This decision would favour Nigeria’s declining economy. Antithetically, his desire to increase energy production across the country might see him forgo the expenses and devise means to continue local oil production while seeking methods to make it less expensive. Nigeria could return to the stacking oil barrels on the sea and in dire need of buyers for its oil. China would have alternatively buffered the loss of US consumption but are quickly seeking alternatives to fossil fuel energy. Since crude oil remains the major foreign exchange earner of Nigeria, Nigeria’s economy might further slump and there could be increased unemployment rates and government insolvency.
AGOA and FDI
The African Growth and Opportunity Act (AGOA) was only recently extended in 2015 by another ten years. In any case President Trump, who appears averse to free trade deals, clamps down on the deal, a number of countries will be affected. Nigeria has largely underutilized the provision, hence the change might not be noticeable in the economy. Nonetheless, if Trump ends AGOA, Nigeria’s export potential earnings would further diminish. In addition, Trump’s policies could also mean lesser foreign investment as American investors would find it less easy to invest in non-American ventures. Nigeria experienced a 27 percent FDI downturn, in 2015, this could continue to plunge under President Trump.
The emergence of Trump who is pro-coal could mean Nigerian can get support with its scheme to create more power using coal. Although President Buhari was present at the United Nations Framework Convention on Climate Change held in Paris from 30 November to 13 December 2015, Nigeria is yet to ratify, accept or approve the Paris Agreement which would see Nigeria cut down on greenhouse gas emission towards 2030. If the Buhari administration intends to launch more coal-to-power projects, Trump’s pro-coal policies would offer a leeway for investors to associate with Nigeria for such projects.
Over the past few regimes, United states spending on defence and military increased when Republican Presidents, Ronald Reagan and George Bush were in power. Trump plans to end terrorism by increasing funding for the military and stiffening immigration regulations. Boko Haram’s affiliation with ISIS means Nigeria might get increased support from the United States in the fight against terrorism.
A Republican dominated government and a Trump presidency offers different strokes to Nigeria’s relationship with the United States. The current administration’s will to encourage local production and self-sufficiency, if taken seriously, can help Nigeria overcome some shocks from a Trump induced behaviour of the international market.
Olumayowa Okediran is a Policy Fellow at the South African Institute of Race Relations.