The recent re-election of Donald Trump, defeating Vice President Kamala Harris, is prompting questions about the potential impact of his policies on global investment, with particular interest in emerging markets like Nigeria. During Trump’s first term, Nigeria saw a notable surge in capital inflows from the U.S., drawing in approximately five times more foreign investment compared to the levels seen under President Joe Biden’s administration.
Data highlights that Nigeria received $10.5 billion in U.S. foreign capital during Trump’s initial four years, whereas the total under Biden so far stands at $2.39 billion. Analysts point to a mix of U.S. monetary policies, Nigeria’s interest rate strategies, and currency stability as key drivers of this discrepancy, suggesting that Trump’s policies created a more favorable climate for foreign investment.
Breaking down the data from Trump’s previous term reveals a pattern of growth in U.S.-Nigeria capital flows:
2016: $950 million
2017: $2.47 billion
2018: $3.58 billion
2019: $4.5 billion
By the end of 2019, Nigeria’s capital inflows from the U.S. had peaked at $4.5 billion, while total foreign inflows reached $23 billion. Under Biden, Nigeria has attracted only about a quarter of that amount, experiencing $2.39 billion in inflows so far.
Factors Boosting Capital During Trump’s First Term
Interest Rates: The Trump administration maintained lower U.S. interest rates, which made emerging markets like Nigeria attractive to American investors seeking higher returns. Nigeria, offering competitive interest rates from 2017 to 2018, saw a boost in foreign portfolio investments due to high yields on government securities.
Exchange Rate Stability: The Central Bank of Nigeria (CBN) managed to maintain the naira’s value around N360/$1 between 2017 and 2019, which provided predictability for foreign investors wary of currency fluctuations in emerging markets.
With Biden’s term seeing a shift in U.S. policy, as the Federal Reserve raised interest rates to curb inflation, investors have generally favored safer domestic returns, drawing funds away from riskier emerging markets. This trend, combined with a stronger dollar, has further reduced Nigeria’s capital inflows amid the naira’s increasing instability.
Potential Impact of Trump’s Second Term on Nigeria’s Investment Climate
As Trump prepares for his second term, analysts are watching for signs that he may re-establish a policy stance supportive of low interest rates, which could renew investor interest in Nigerian markets. However, Nigeria’s ability to attract foreign capital will largely depend on its internal economic policies—especially those that address exchange rate stability, inflation control, and competitive interest rates.
To fully leverage the opportunity, Nigerian policymakers may need to focus on creating a more favorable investment environment, ensuring exchange rate stability, attractive interest rates, and progressive reforms that enhance the country’s appeal to international investors.