U.S. Military Threat Could Deepen Nigeria’s Economic Strain and Shift Ties Toward China
The recent threat by former U.S. President Donald Trump to intervene militarily in Nigeria over alleged attacks on Christians has sparked major economic and diplomatic concerns. According to Prof. Muhammed Muttaka Usman, an economist at Ahmadu Bello University, the move could severely undermine Nigeria’s ongoing economic reforms — including the recent 15% import duty on petroleum and diesel — and derail efforts to strengthen ties with global partners such as China. The warning, he says, represents more than political rhetoric; it has the potential to shift the balance of power and trade influence in Africa.
This tension arrives at a time when Nigeria is increasingly engaging with BRICS nations, especially China, for trade and investment. A fallout with Washington could accelerate this pivot, intensifying global competition for influence across Africa. Economically, this could weaken the U.S. dollar’s dominance in regional trade and open new — but riskier — credit and debt channels for Nigeria. For Washington, it means a loss of leverage; for Nigeria, a potential overdependence on Chinese financing and markets.
Prof. Usman warns that such diplomatic strains could lead to a decline in U.S. foreign direct investment (FDI) in Nigeria. American firms, wary of reputational and political risks, might delay or suspend investment decisions in energy, telecoms, agribusiness, and fintech sectors. This hesitation would be a significant blow, as bilateral trade between the two nations was valued at approximately $13 billion in 2024, according to the U.S. Trade Representative. Should the U.S. revoke Nigeria’s African Growth and Opportunity Act (AGOA) privileges — which allow duty-free exports to American markets — the impact on non-oil exports could be devastating, particularly for sectors like textiles, cocoa, and agro-processing.
The uncertainty is already shaking investor confidence. Nigeria’s plans to issue $2.3 billion in Eurobonds may face setbacks as global investors grow cautious, pushing borrowing costs higher and weakening fiscal stability. The resulting capital flight could also drive up domestic yields, worsen inflation, and put pressure on the naira. Rating agencies and multilateral lenders may interpret Trump’s remarks as signals of increased geopolitical risk, thereby downgrading Nigeria’s investment outlook.
Despite ongoing efforts to diversify the economy, Nigeria’s reliance on oil and gas leaves it exposed to external shocks. Any U.S.-led intervention or sanctions could disrupt exports and insurance coverage, limiting foreign exchange inflows. While higher global oil prices might seem beneficial, Nigeria could paradoxically earn less if production falls or buyers demand heavy discounts. Prof. Usman cautions that the combination of declining reserves, inflationary pressures, and a weaker naira could force the Central Bank of Nigeria to intervene heavily, deepening the country’s economic vulnerability at a critical moment.
source: Dailytrust