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How It Will Set Nigeria Back 20 Years
Things haven’t been easy in Nigeria since President Donald Trump threatened military intervention over the alleged persecution of Christians in Nigeria. Trump claimed on social media that “radical Islamists” in Nigeria were responsible for the “mass slaughter” of Christians. Just a week ago, he reiterated this threat after the Nigerian presidency suggested a meeting to address the issue.
In his post, Trump warned that if Nigeria does not put an end to the killings, the United States would take action, stating that it would be “fast, vicious, and sweet, just like the terrorist thugs attacking our CHERISHED Christians.”
Since these statements were made, the atmosphere in Nigeria has changed, dramatically. Many individuals, both in government and the private sector, have expressed panic over the potential implications of a U.S. invasion. Analysts have voiced concerns about the threat and its impact on Nigeria, particularly on its economy, which has only recently begun to recover.
Nigeria boasts the largest economy in Africa and is projected to become the third most populous country globally by 2050. This large and growing market presents significant opportunities for American exports, expertise, and foreign direct investment in various sectors, including technology, infrastructure, agriculture, and the creative industries.
Outlined below are the major setbacks that could arise from a potential U.S. attack on Nigeria and the effects it could have on its citizens and economic growth.
One of the initial proposals from the U.S. is to establish a military base in the Niger Delta, an oil-rich region. This prospect has sparked intense debate on social media, especially following Trump’s threats to send troops to tackle alleged persecution of Christians.
Many Nigerians view this move as an attempt to take control of the country’s primary source of income. This would not be the first time the U.S. has pursued such actions, and a lot of people in Nigeria are uneasy about it. They believe this poses a significant threat to the country’s growth and to the well-being of its citizens.
Another reason for concern is the impact on the Dangote Refinery, which has significantly contributed to the growth of the economy by producing the petrol that the majority of Nigerians use. This has also helped stabilize the Naira.
Before Dangote started refining petrol for the Nigerian market, petrol marketers relied heavily on importing refined products, primarily from the US, which, in turn, contributed to the growth of the US economy. It has been suggested that to truly grow the Nigerian economy, the country must consume what it produces and also engage in some exportation, which Dangote is a major player in. Many analysts believe that some developed countries are unhappy with the Nigerian government’s efforts to reduce dependence on them.
Did you know that Africa’s top crude oil producer was recently removed from the Financial Action Task Force (FATF) grey list after two years? This removal is expected to boost investment and attract private capital into the country; however, remarks made by Donald Trump have the potential to undermine that optimism.
Christopher Akinbobola, a Lagos-based finance policy analyst and tax expert, stated that the statement issued by the US president could lead to a retreat by foreign portfolio investors, resulting in increased equity volatility, wider bid-ask spreads, and rising bond yields. He further noted that foreign direct investment may also be strained.
“Foreign direct investment may become more vulnerable than before. The severity of the allegations presents a reputational risk, prompting multinational firms to delay or suspend investment decisions across various sectors, including energy, telecoms, agribusiness, and fintech,” Akinbobola explained. “The naira may face significant downward pressure as capital outflows intensify, potentially necessitating more substantial intervention by the Central Bank of Nigeria (CBN).”
Another danger if Donald Trump were to attack the country is that Nigeria could lose its sovereignty. If intervention occurs, the United States could install its own government, determined by American interests, and Nigeria may never fully recover from that scenario.
Since Bola Tinubu’s election in 2023, investors had become more optimistic about Nigeria, following his implementation of tough economic reforms, including eliminating a costly fuel subsidy and liberalizing the currency market.
The average spread on Nigeria’s sovereign dollar bonds over U.S. Treasuries has dropped to about 400 basis points, down from nearly 1,000 basis points in 2023. This level is typically seen as an indicator of debt distress. Additionally, the Nigerian stock market has begun attracting more investor interest, experiencing a nearly 60% gain in dollar terms this year. However, some fear that the Nigerian stock exchange may never fully recover once U.S. economic challenges impact the country. Many investors might permanently withdraw their investments and cut ties with Nigeria, posing a significant risk to the nation’s growth and potentially delaying stabilization for a very long time.
Another setback concerns Nigeria’s vast mineral resources, especially gold, lithium, and other critical materials, which have become a focal point for international competition. Insecurity in mineral-rich regions like Zamfara, Nasarawa, and Niger States has enabled networks of local and foreign actors to engage in unregulated mining and smuggling, often with the backing of powerful interests.
If the U.S. decides to intervene, there is a risk that the country’s resources will be exploited, leading to serious consequences for Nigeria’s overall growth. A U.S. intervention, particularly if it relies on private military contractors—similar to recent Western engagements in Africa—could exacerbate these issues and replicate the severe negative outcomes seen with Russian involvement through groups like Wagner.
One of the main attractions for U.S. interests in Nigeria is lithium, which is abundant in the country. Lithium is essential for producing energy-dense rechargeable batteries used in electronics such as laptops and electric vehicles, as well as in specialized glass and ceramics, high-temperature lubricants, and certain aerospace alloys. This makes lithium a prime target for U.S. investment in Nigeria. Over the past few years, Nigeria has been working to harness this resource to boost its economy, but if U.S. military action occurs, these resources may be extracted and exported to the U.S.
Lithium is particularly found in states like Kaduna, Nasarawa, Kogi, Kwara, Ekiti, and Ogun, although mining activities have been limited. The deposits are concentrated in an area known as the Nigerian Lithium Belt, which is part of the Pan-African Basement Complex. While substantial reserves exist, Nigeria’s lithium is primarily seen as a potential resource rather than a significant contributor to global markets at this time.
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