By NIyi Jacobs
Donald Trump’s re-election as U.S. President, defeating Vice President Kamala Harris, has sparked discussions on how his policies might impact global investments, especially for countries like Nigeria. Trump’s first term saw a remarkable surge in foreign capital inflows into Nigeria, with the country receiving $10.5 billion compared to just $2.39 billion under President Joe Biden.
Analysts say that this disparity reflects more favorable investment conditions under Trump, marked by U.S. monetary policies that encouraged foreign investment in emerging markets, Nigeria’s higher interest rates, and a relatively stable currency. These factors created an environment where American investors felt confident in the returns they could achieve in Nigeria.
Capital Inflows Comparison: Trump vs. Biden
A look at the data shows that during Trump’s administration, Nigeria’s annual capital inflows grew significantly:
2016: $950 million
2017: $2.47 billion
2018: $3.58 billion
2019: $4.5 billion
In 2019, U.S. investment alone in Nigeria reached $4.5 billion, a level that far surpasses the current total under Biden’s administration.
Key Drivers of Capital Under Trump
Two main factors contributed to this surge:
- Interest Rates: Trump’s presidency maintained relatively low U.S. interest rates, encouraging U.S. investors to seek higher returns in emerging markets. Nigeria, in turn, offered attractive rates on government securities, which drew substantial foreign portfolio investments during 2017-2018.
- Exchange Rate Stability: From 2017 to 2019, the Central Bank of Nigeria (CBN) kept the naira stable at around N360/$1, reducing currency risk for foreign investors. Currency stability is crucial in emerging markets, where depreciation can sharply impact investor returns.
The Biden administration saw a different approach, as the U.S. Federal Reserve raised interest rates to combat inflation, drawing investors back to the U.S. for safer, higher returns. Coupled with a stronger dollar, this policy shift reduced the appeal of riskier assets in markets like Nigeria. Additionally, Nigeria’s currency has faced greater depreciation pressures, adding unpredictability to the investment climate.
Trump’s return could signal a potential increase in capital inflows to Nigeria if he reverts to policies favoring low U.S. interest rates. For Nigeria, this presents a chance to attract renewed foreign investment—provided it can create a favorable business environment through stable exchange rates, competitive interest rates, and economic reforms.
Trump’s presidency could open doors for Nigeria, but policymakers will need to take strategic steps to maximize this opportunity. Stabilizing the naira, maintaining attractive interest rates, and implementing business-friendly reforms will be essential to making Nigeria a viable choice for foreign investors. While Trump’s re-election offers a promising path for Nigeria to increase capital inflows, the country’s readiness to adapt its policies will be the true determinant of success in this renewed investment era.
