Trump's 'America First' Policies Threaten African Currencies

Trump's 'America First' Policies Threaten African Currencies

The “America First” policies of the Trump administration pose significant risks to African currencies, especially the Nigerian naira. These policies could lead to currency devaluation, which would, in turn, increase the cost of servicing national debts across Sub-Saharan Africa.

Trump's aggressive stance on boosting U.S. oil production and pressuring other major producers to lower their prices could severely affect Africa’s top oil exporters, compounding the financial challenges facing the continent.

Ugodre Obi-Chukwu, CEO of Nairametrics, a leading Nigerian financial media platform, cautioned that if Trump moves forward with his proposed tariffs on countries he perceives as shortchanging the U.S., it could further destabilize the economies of many African nations.

In particular, Nigeria, which recently renewed its currency swap agreement with China, faces a tough dilemma. It must decide whether to adhere to Trump’s demands to maintain access to the U.S. market or shift towards the BRICS bloc, risking potential sanctions from the United States.

In addition to potential tariffs, the Trump administration may revoke access to the U.S. market for African nations under the Africa Growth and Opportunity Act (AGOA). Obi-Chukwu suggests that the U.S. could even eliminate AGOA entirely, leading to a sharp decline in exports from Sub-Saharan Africa to the United States.

Meanwhile, Obi-Chukwu addressed the potential for interest rate hikes in Nigeria during the country’s first monetary policy committee meeting in 2025. He anticipates that inflation will influence the Central Bank of Nigeria's decision, but he expects rates to remain stable for now, with a possibility of a decline later in the year.

This article sheds light on the potential economic impact of the Trump administration's "America First" policies on African economies, particularly the challenge these policies pose for Africa's oil-dependent economies and their currencies.