Exactly thirty-four days after President Bola Ahmed Tinubu presented Nigeria’s 2025 Appropriation Bill (on December 18, 2024) to the joint session of the National Assembly, Donald J. Trump was inaugurated as the 47th President of the United States of America. On that occasion on January 20, 2025, President Trump made far-reaching declarations and signed a number of Executive Orders whose implementation could extensively impact the entire world.
Specifically, with immediate effect, President Trump’s pronouncements and Orders had begun to impact prices of crude oil in the international market. The early part of January 2025 had seen the price of crude on a steady rise, crossing the 80 dollars per barrel (dpb) mark; the level last attained in 2022. This trend was attributed to geopolitical tensions, particularly sanctions imposed on Russian oil export in the face of its lingering war with Ukraine.
Nigeria’s 2025 Appropriation Bill was couched on the assumption of an oil price of 75 dpb. But as the price of the commodity was shooting around 80 dpb, its immediate impact was the response by the refining giant — Dangote Refinery — by adjusting its fuel (Premium Motor Spirit, PMS) price upwards. Dangote had been compelled by the complicated and difficult circumstances around local crude oil supply from Nigeria to largely depend on imported crude for its operations.
The Dangote Refinery’s response to the purely external headwind (of rising oil prices) promptly caused ripples, as importers and distributors of PMS in Nigeria also commenced marking up their fuel pump prices. This obviously went to worsen the augury that the high PMS prices have persistently presented in the past two years or so. More will be unfolding in this vein in the coming months, this year.
However, President Trump’s Executive Order to ‘unleash American energy’ by easing the barriers to oil and gas extraction and production is indeed a ‘bombshell’. Trump’s sweeping new energy policy aims to “encourage energy exploration and production on Federal lands and waters, including on Outer Continental Shelf, in order to meet the needs of our citizens and solidify the United States as a global leader long into the future.”
The U.S. president has followed up his Order with a message at the World Economic Forum in Davos, Switzerland, urging the Organisation of Petroleum Exporting Countries (OPEC) to bring down oil prices, citing the impact of high fuel costs on the Russia-Ukraine war. Trump said he intended to ask Saudi Arabia and OPEC to reduce oil prices, which he believed would help the conflict. And apparently in response to Trump’s views, oil prices began edging lower; already dropping to as low as 77 dpb in a matter of days.
This trend is certainly an external headwind that has the potential to distort the crude oil pricing and production projections in Nigeria’s 2025 Appropriation Bill. Nigeria projects to produce 2.06 million barrels of crude per day, and sell at 75 dpb. But, given President Trump’s determination to crash oil prices, it is certain that both the ambitious production level and price would turn unrealistic.
In the words of Trump: “We will bring prices down, fill our strategic reserves up again right to the top, and export American energy all over the world.” This, obviously, would translate to loss of market for Nigeria. According to recent data, in September 2024, Nigeria’s total exports to the U.S were valued at $124.86 million, with a significant portion of that being crude oil.
In fact, the U.S. is known to be one of Nigeria’s key export destinations, and crude oil is a major component of Nigeria’s exports to the country. But now, President Trump wants his country not only to be self-sufficient in their energy production/supply but also to flood the global market with their products. This therefore puts Nigeria’s entire 2025 budget in danger; and portends a dreary prospect for the entire economy.
On another plank, Nigeria is also facing the likelihood of receiving thousands of deportees from the U.S. any moment this year. This is because one of President Trump’s Executive Orders is directed at flushing illegal immigrants out of the U.S. in his efforts at ‘sanitizing’ the American society. It is estimated that about 4000 Nigerians in the U.S. are at the risk of being deported due to Trump’s crackdown on illegal immigration.
The Nigerians in Diaspora Commission (NiDCOM) says an inter-agency panel has been set up to manage the impending mass deportation. According to a document from U.S Immigration and Customs Enforcement (ICE), the Enforcement and Removal Operations (ERO) division is already processing individuals for deportation. The ICE report for 2024 shows that about 5000 Nigerians could be affected in the ongoing deportation exercise.
Another external headwind is also imminent from a seemingly unavoidable tariff war, also being triggered by President Trump’s move to impose very high tariffs on goods and services from certain parts of the world. Specifically, Trump is proposing a 60 percent tariff on imports from China; 25 percent tariff on imports from Canada and Mexico; and ten to 20 percent tariffs on imports from the rest of the world.
Obviously these targeted countries and the rest of the world are bound to react to Trump’s proposal, which he says would come into effect on February 1, 2025. With the onset of the tariff war, as the proverbial Elephants would be fighting, the grass would be suffering. Nigeria, as a largely import-dependent country, would be caught in the vortex of the war — especially reflecting in very high prices of imports from even its usual trading partners.
Already, Trump’s tariff proposals have sparked concerns among economists and trade experts, who warn that they could lead to higher prices, reduced economic growth, and job losses. In this regard, the chief executive of the World Trade Organisation (WTO), Ngozi Okonjo-Iweala, has warned that any tit-for-tat trade wars prompted by President Trump’s tariff threats would have catastrophic consequences for global growth, urging states to refrain from retaliation.
Okonjo-Iweala who spoke at the recent World Economic Forum (WEF) annual meeting in Davos, Switzerland, said: “If we have tit-for-tat retaliation, whether it is 25 or 60 percent tariff, and we go to where we were in the 1930s, we are going to see double-digit GDP losses. That’s catastrophic. Everyone will pay.
“We are very much saying to our members at the WTO, you have other avenues, even if a tariff is levied, please keep calm,” she said, asking states to study their options and use the WTO’s system for resolving disputes. Given Nigeria’s vulnerabilities, however, it is difficult for the country to escape from the unwholesome consequences of the emerging adversarial global trade relations.
Yet from another external front, the exit of three members of the Economic Community of West African States (ECOWAS) on January 28, 2025, from the regional bloc portends some challenges to Nigeria. Given the ‘key man’ position of Nigeria in ECOWAS, the withdrawal of Niger Republic, Burkina Faso and Mali from the fold is bound to create cracks.
Already, apparently incensed by Nigeria’s renewed cozy relationship with France, the former colonial masters of the three exiting ECOWAS members, the three countries are already contriving diplomatic tiff with Nigeria. The trio seem unease with Nigeria currying favour with France whose linkage and footprints they (three countries) want wiped out permanently from their lands.
As it is, some or all of these potential external headwinds would be impacting Nigeria in various ways — mostly, adversely. This is because neither the initiation, the implementation nor the management of the inducing policies (of the headwinds) is within the purview of Nigeria.
Trump’s pursuit of rabid nationalism, for instance, is a hurricane that no nation can douse. Nor can Nigeria still play ‘Big Brother’ to Niger, Burkina Faso and Mali, and expect to fully win their usual cooperation. Surely, Nigeria faces massive external headwinds, the dimensions and intensity of which are yet unfathomable and indeterminate.
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