As Donald Trump steps back into the global arena as the 47th president of the United States, his victory has sparked discussions on the potential reverberations worldwide, with Nigeria poised as a prime example of a nation likely to feel the adverse impacts of a new ?America First? energy strategy. A Trump presidency that aims to increase domestic oil production would undercut global oil prices, directly challenging Nigeria?s dependence on oil revenue amid already contracting production levels and a vulnerable currency.

Under Trump?s previous administration, U.S. energy policies favoured aggressive domestic production, with widespread leases for drilling across environmentally sensitive territories and expedited permits for pipeline construction. These actions flooded the global oil market, driving prices down?a scenario Nigeria remembers all too well. With Trump?s commitment to renew this approach, Nigeria?s oil sector, which currently produces around 1.32 million barrels per day (mbpd) against a budgeted target of 1.7 mbpd, could struggle further. Analysts anticipate that lower oil prices will deepen the gap in Nigeria?s revenue, straining foreign reserves, weakening the naira, and stoking inflation.

?As a nation where oil accounts for around 90 percent of export revenue, any sustained dip in global oil prices jeopardises fiscal stability, pushing the economy into a vicious cycle of depreciation and inflation.?

While some U.S. allies might benefit from lower energy costs, Nigeria remains at risk. As a nation where oil accounts for around 90 percent of export revenue, any sustained dip in global oil prices jeopardises fiscal stability, pushing the economy into a vicious cycle of depreciation and inflation. Lukman Otunuga, senior market analyst at FXTM, aptly observes, ?A Trump administration intent on boosting U.S. oil supply could drive prices lower in the long run, which would squeeze foreign reserves for countries like Nigeria.?

Compounding this challenge is the strong likelihood of renewed U.S. protectionism. Trump?s previous term brought tariffs, immigration restrictions, and a reduced focus on Africa, emphasising domestic concerns over global collaboration. These tendencies could sharply reduce the flow of Nigerian diaspora remittances, a vital source of foreign currency and economic support for countless families. A tighter immigration stance from Washington would shrink the volume of remittances, constraining Nigeria?s foreign currency reserves further and compounding inflation.

The potential rollback of trade concessions under the African Growth and Opportunity Act (AGOA) presents another risk. For Nigeria, this could limit export opportunities and further challenge industries reliant on U.S. market access. Samson Simon, chief economist at ARKK Economics, notes that ?Trump?s protectionist approach would likely intensify, reducing access for African nations to U.S. markets, with Nigeria especially vulnerable.? Losing preferential trade terms would stifle revenue and exacerbate economic pressures at home.

Moreover, a Trump-led shift in monetary policy could strengthen the U.S. dollar, amplifying the challenges facing Nigeria?s import-heavy economy. As the naira weakens against a robust dollar, import costs would soar, straining consumer budgets in a country already contending with food inflation of 32.7 percent. Rising import prices would add to Nigeria?s inflationary pressures, leaving fiscal policymakers with little room for manoeuvre in a high-debt environment.

While some regions may anticipate short-term benefits from a recalibrated U.S. foreign policy, Nigeria finds itself at a crossroads, confronting the reality that its dependency on oil renders it acutely vulnerable to external economic shifts. As Kingsley Moghalu, former Deputy Governor of the Central Bank of Nigeria, asserts, ?A Trump-led U.S. administration may refocus on the Middle East and Europe, with consequences for Nigeria?s oil revenue and economic stability.?

Trump?s victory should serve as a wake-up call for Nigerian policymakers to prioritise economic diversification. Over-reliance on oil exports exposes Nigeria to international market shocks that domestic policy alone cannot counterbalance. A concerted push to develop sectors like technology, agriculture, and manufacturing is essential for building resilience. Only a diversified economy will allow Nigeria to weather external headwinds, ensuring that its future is not dictated by the policies of far-off nations. (BusinessDay Editorial)

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