The era of President Donald J. Trump of the United States of America presents mixed expectations for Nigeria’s key economic sectors such as oil, international trade, foreign direct investment, capital market and financial services.
Economists and policy analysts are divided on the impact of Trump presidency on Nigeria but most of them agree that it may no longer be business as usual for Africa’s biggest economy.
“Trump’s presidency could reduce the tempo of economic activities because he’s coming with a protectionist mind-set,” said Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI), told BusinessDay.
“This will likely affect commodity prices. Already a lot of players are in anxiety, because he held a press conference and the stock market fell,” Yusuf said.
He added the African Growth and Opportunity Act (AGOA), which is a United States Trade Act meant to encourage African countries to export to the US, may no longer be there.
Nigeria’s export to the US stood at N192 billion in the first quarter (Q1) of 2016, out of which crude oil made up N135 billion. But import from the US in Q1 of 2016 stood at N127 billion, according to the National Bureau of Statistics (NBS). The country’s export to the US was N235 billion in the second quarter (Q2) of 2016, out of which N224 billion was crude oil. Africa’s biggest economy imported goods worth N199 billion from the US in Q2 of 2016.
The US was Nigeria’s 7th export destination in the second quarter of 2015, importing products from Nigeria worth N115 billion, out of which only N32.4 billion was crude oil. Also, imports from the US was N165.5 billion in Q3 of 2016 while export stood at N308 billion, out of which crude oil was N300 billion.
Nigeria’s export to the US in the third quarter of 2015 was N86 billion, out of which crude stood at N27.4 billion. Import from the country into Nigeria in Q3 2015 stood at N161 billion.
After a supply glut that saw oil price hover around $40 for much of 2016, the Organisation of Petroleum Exporting Countries (OPEC) agreed to cut production by 1.8million bpd last year.
Shale producers in the US have a break-even cost of between US$20 – US$55 and unlike in the past where it took weeks for shale producers to mobilise to their platforms, advanced fracking technology is letting them achieve this in a matter of days.
Opeyemi Agbaje, chief executive of Resource and Trust Company, a Lagos-based advisory firm, said Trump is likely to be more aggressive in his energy policy which may result in yet lower oil prices.
Doyin Salami, a renowned economist and member of the Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC), said the international environment is no longer favourable to Nigeria any longer.
Speaking at an economic conference organised at the Redeemed Christian Church of God (RCCG), Victoria Island Lagos on Saturday, January 14, 2016, Doyin said that Trump’s economics doesn’t portend the best of times for Nigeria as taxes will reduce and US government spending on infrastructure will rise along interest rates.
Trump has threatened to tear the North American Free Trade Agreement (NAFTA) between the US, Canada and Mexico, and impose 35 percent tariffs on imports from Mexico. He labels China a currency manipulator, an wants to block Chinese imports into the US with high tariffs.He is gearing up to scrap the free trade agreements r renegotiate them.
“The global economy faces real dangers if Trump pursues his proposed policies,” said Olu Fasan, a trade expert and Visiting Fellow in the International Relations Department of the London School of Economics.
Patrick Enwerem, a social policy analyst, said Trump could reduce the tenor of Nigerian visa to the US from two years to six months.
“I see a cut in aids to Nigeria. He will focus more on ‘give and take’ bilateral trade relations and will pay particular attention to what the US stands to gain from any trade relations.
However, some analysts say Nigeria has nothing to lose with the coming of Donald Trump. They say the $17.83 billion inflows from the US into Nigeria will remain unscathed.
Eguarekhide Longe, managing director, AIICO Pension Managers Limited, said Trump presidency has no impact on the country.
“We don’t need to worry about Trump. We have our own challenges and nobody is going to help us. In my view Obama did not help Africa. If Obama did not help Africa, Trump will do even less,” Longe said, urging Nigeria to do its homework by looking inwards like Cote D’Ivoire and Ghana.
Christian Orajekwe, head of research and strategy, Cordros Capital Limited, said “ After Trump election, the global market in Europe, Asia and the Americas reacted. In Africa, only the South African market reacted mildly. Nigeria, Ghana, Kenya, and other leading African markets did not react.”
In 2016, Dehab Ghebreab, former deputy Consul-General of the US in Lagos, stated while making a presentation that the current number of Nigerians in the US stood at about 300,000.
Three hundred and seventy six thousand first and second generation Nigerian immigrants are estimated to be residing in the US presently, making Nigeria the largest source of African immigration to the US, according to a publication by the Migration Policy Institute prepared for the Rockefeller Foundation-Aspen Institute Diaspora Programme (RAD), and released in June, 2015.