From “America-First” to “Nigeria-Next”- these are the incoming opportunities for a stronger Naira   

The recently concluded US Elections in November 2024 defied many political analysts’ predictions that it would be a close election.

Rather, the result was a complete blowout victory for Mr. Trump whether you look at it by popular votes (i.e. 77.3 million for Mr. Trump vs. 75 million for Mrs. Harris) or by Electoral College votes (312 vs 226).  

Let’s not even speak about his degree of victory by land mass whereby only a handful of counties in coastal states did not feel the red wave. 

Thus, for the first time in over 20 years (2004: George Bush Jr.), a Republican was more popular at the ballot box than a Democrat. Even more notable is that the 77.3 million votes cast for Mr. Trump is the highest number of votes received by any Republican presidential candidate ever.  

To reference a word made popular in this decade by President Obama, the November 2024 US elections was a “shellacking” doled out by the Republican party, such that in January 2025, the republican party will control the US Presidency, the US Senate, and the US House of Representatives. 

In summary, this was a clear message by American voters that there is overwhelming support for President Trump’s America-First message.  

So, what exactly is this America-First message and what does that mean for Nigerians? 

America First agenda has the stated objective of prioritizing US domestic policies which directly impact US citizens, at the expense of global objectives for international countries.

These include prioritizing both economic and political policies that favor the US domestically. 

Naijaonpoint audience can read more here, and here. Our audience will also recall our recent webinar touched on the definition of America-First. 

Most economists are in consensus that an America-First agenda is broadly in conflict with the Globalization agenda that has been prevailing for multiple decades. 

Specifically, for multiple decades, the United States has been promoting globalized and multi-nation cooperation on a variety of issues such as global security (U.N.), world heath standards (W.H.O.), global project financing (IBRD, IMF), world education (UNESCO), world poverty (UNDP) including a push for international trade (W.T.O.), et al.  

Whereby from an international trade perspective, the messaging has been that countries who have a comparative advantage in producing certain goods should focus on making those goods and then export them to other nations for them to import.  

The reality of that is under current scrutiny, it is arguable from US policymakers’ perspectives that the average US consumer’s insatiable desire for cheap goods has created a trade imbalance scenario whereby US imports persistently and dramatically exceed US exports (see the chart below). 

This trade imbalance scenario is causing a cascading set of issues for the US, ranging from a decline in US manufacturing to a stifling effect on wage growth as well as limiting job prospects for blue-collar workers without college degrees.  

This trade imbalance scenario is causing a cascading set of issues for the US, ranging from a decline in US manufacturing to a stifling effect on wage growth as well as limiting job prospects for blue-collar workers without college degrees.  

Thus, causing a rising wave of dissatisfaction amongst the American populace. Read more here  

As the US tries to reverse these multi-year trade imbalance scenarios, all Nations that have trade deficits with the United States need to rapidly evaluate their bilateral relationships with the US, primarily to assess what this incoming America-First ethos could mean to their nation. 

Notably, Nigeria is one of about 48 countries that has trade deficits with the United States of America.  

Consequently, the US-Nigeria relationship needs to be continually nurtured in the coming years to mitigate any adverse impact on the Nigerian economy 

Chart 2: Nigeria Trade vs USA 

From Nigeria’s perspective, evaluating our relationship with the United States of America should mean exploring opportunities to boost economic cooperation and attract more inflow of economic activities into Nigeria. 

The question to ask is whether there is readily available data that can be monitored to evaluate changes in the Nigeria-US relationship whether positive or adverse. 

Interestingly, economists opine there are key economic indicators that can be used to assess bilateral relationships between countries.  We can quickly review four (4) of these indicators  

1. Capital Importation: This refers to the net difference in investments by non-residents of a country. i.e. how much are foreigners investing in Nigeria across FDI, FPI and Other Investments   

The graph below tells us that over the past decade between 2014 to 2019, over $ 17.8 billion of capital was inflowed into Nigeria from the USA, comprising 20% of total capital import.  

The incoming America-First administration has promised to reduce regulatory burdens for US companies, combined with an expected global low-interest rate environment and the need for the US to counter China’s effort in Africa should create opportunities for more capital to be allocated to sub-Saharan African nations including Nigeria and the Naira. 

Chart 3: Capital Importation into Nigeria 

2. Trade balance with USA (as a percentage of Nigeria’s Total Trade): This refers to how much of Nigeria’s trade is done with the United States. 

The incoming America-First administration has promised to leverage technology to help make made-in-America goods more globally competitive thus presenting an opportunity for commodity exporters such as Nigeria to target the US markets and its supply chain.  

Chart 4: Nigeria’s Foreign Trade  

 3. Diaspora remittances:  In simple terms, this refers to when citizens of a nation who have migrated to other nations continue to send funds back to their home country.  

The key theme is that the US is the largest source of diaspora remittances globally whilst Nigeria is the largest recipient in Sub-Saharan Africa.  

The graph below shows that in the first half of the past decade, between 2014 and 2019, diaspora remittances averaged $22.3 billion. This compares to only $ 18.9 billion between 2020 and 2023 in the second half (i.e. recent years are lower by 17%).  

Nigeria’s central bank has made a bold step of introducing several policy measures in this direction such as the non-resident BVN registration which facilitates eases account opening.

According to the apex bank, international money transfer inflows via official sources have grown from $200 million monthly to about $600 million.

 Chart 5: Nigeria Diaspora remittances