By Chinwendu Obienyi
The Chief Executive Officer, Cowry Asset Management Limited, Johnson Chukwu, has said that Donald Trump’s anti-immigration policies, set to be implemented after his inauguration on Monday, could indeed have significant economic implications for Africa and Nigeria, particularly regarding remittances and foreign reserves.
Amid the swearing-in ceremony, which had dignitaries in attendance, Trump took his oath of office inside the Capitol Rotunda building. With several congratulatory messages from other presidents as well as analysts, Chukwu noted that Trump’s administration plans to launch large-scale operations to detain and deport undocumented immigrants, with major urban centers expected to be targeted shortly after the inauguration.This aggressive approach to immigration enforcement, he said, could lead to a reduction in remittances sent from the United States to African countries, including Nigeria.
“On the global stage, America’s President-elect, Donald Trump’s anti-immigration policies in 2025 could reduce remittance inflows into Africa and Nigeria, potentially depleting foreign reserves and limiting the CBN’s ability to defend the naira,” Chukwu stated.
While stating that the FX market in 2024 was influenced by improved foreign portfolio inflow, FGN foreign currency borrowing, and an increase in remittance inflow, translating into reserves surpassing $40 billion, Chukwu projected that exchange rate volatility could likely persist due to increased demand from FPIs whose investment will mature the year, limiting net FX position and possibly increasing imports.
He added, “The naira is projected to trade within a band of N1,400 (best case) to N1,900 (pessimistic case) in the year, assuming there are no market distortions. Hence, we think that bolstered crude oil production and addressing the high level of insecurity in the northern regions remain critical to exchange rate stability.”
On monetary policy, Chukwu projected that the apex bank will maintain a hawkish monetary policy stance in 2025 in an effort to contend with inflationary pressures and foreign exchange volatility.
He also stated that the CBN may reduce the Cash Reserve Ratio (CRR) from the current 50% to reflect the banks’ liquidity and encourage them to reduce lending in 2025.