Five things to change after Trump’s inauguration

…New US president promises to pump more oil

…Panic over deportation of illegal immigrants

As Donald Trump begins his second term as President of the United States, returning to the White House for a historic, non-consecutive term, his new policies—especially on immigration, energy, and trade—are set to have significant effects, not only in the U.S. but around the world.

For Nigeria, this could mean both challenges and new opportunities. Here are what Nigeria should watch out for.

Firstly, Trump’s planned tax cuts could harm Nigeria’s foreign investments. When the U.S. cut its corporate tax rate in 2017, it led American companies to bring back $777 billion, which caused Nigeria’s foreign investments to drop from $4.65 billion in 2017 to $2.23 billion in 2018.

If similar tax cuts happen again, Nigeria could face even more risk with foreign investments shrinking. To address this, Nigeria needs to attract investment from Europe, Asia, and other countries by improving its infrastructure, offering better regulations, and creating more incentives to attract investors, analysts say.

Oyekan Idris, a capital market analyst, said these steps are critical for Nigeria’s growth.

Secondly, Trump’s trade policies, including higher tariffs, could hurt Nigeria’s exports like oil and agricultural products. This could make Nigerian goods more expensive in the world market, affecting vital sectors.

To protect itself, analysts warn that Nigeria must strengthen trade ties within Africa by using agreements like the African Continental Free Trade Area (AfCFTA) and look for new markets in Europe and Asia. Investing in local production, such as refining oil and processing agricultural products, could also help Nigeria protect itself from trade disruptions, experts noted.

An anonymous commodity market analyst suggested, “Value-added production, such as local oil refining, could help Nigeria withstand external shocks and create more stable revenue streams.”

Thirdly, Nigerian banks, which depend heavily on oil and agriculture, could face tough times if foreign investments drop and trade problems continue. If U.S. companies pull out or tariffs harm trade, it could hurt Nigeria’s banking sector.

To reduce these risks, Nigerian banks need to diversify their investments into new sectors like technology and renewable energy, experts say.

Partnering with fintech companies can also help find new sources of income. Expanding into markets that are currently underserved can make banks more stable and resilient, analysts noted.

Fourthly, Trump’s policies on immigration and taxes could lead to fewer remittances from Nigerians in the U.S. and a decrease in foreign aid, putting more pressure on Nigeria’s finances. To cope, experts say that Nigeria should focus on boosting its own income by improving how it collects taxes.

“Steps like expanding the tax base, formalising the informal sector, and using digital tools to stop tax evasion will help Nigeria raise more money. Additionally, focusing on industries like mining, manufacturing, and renewable energy can reduce Nigeria’s reliance on foreign money and make the economy stronger,” one Lagos-based economist said.

Nigeria’s path to growth

With ongoing reforms and the non-oil sector now making up over 90% of the country’s GDP over the last decade, Nigeria has the potential to improve even more.

By embracing change and investing wisely in key areas, Nigeria can turn challenges into opportunities for long-term growth.

Strategic reforms, stronger risk management, and smart investments will help Nigeria adapt to this new global environment and come out stronger in the end.

Trump to pump more oil

During his inauguration as the 47th president of the United States on Monday, Trump promised to push more Shale to the global market.

“I will direct all members of my cabinet to marshal the vast powers at their disposal to defeat what was record inflation and rapidly bring down costs and prices. The inflation crisis was caused by massive overspending and escalating energy prices. That is why today I will also declare a national energy emergency. We will ‘drill, baby, drill!,’” he said.

‘Drill, baby, drill’ is Trump’s way of saying that he will pump more oil to earn more revenue for the American economy.

For most producers, ‘drill, baby, drill’ will depend on the oil price signals, drilling economics, and market fundamentals of supply and demand.

He promised to deport criminals and illegal immigrants in the US, sparking fears among Nigerians abroad. One Nigerian in Los Angeles said he is afraid that some legal immigrants will also be affected by the policy.

According to Trump, “For many years, a radical and corrupt establishment has extracted power and wealth from our citizens while the pillars of our society lay broken and seemingly in complete disrepair. We now have a government that cannot manage even a simple crisis at home while at the same time stumbling into a continuing catalogue of catastrophic events abroad.”

He further said the American government had failed to protect law-abiding American citizens but provided sanctuary and protection for “dangerous criminals—many from prisons and mental institutions—who have illegally entered our country from all over the world.”

“All of this will change starting today, and it will change very quickly. My recent election is a mandate to completely and totally reverse a horrible betrayal—all of these many betrayals that have taken place—and to give the people back their faith, their wealth, their democracy, and indeed, their freedom.”