OPINION BY HON. FEMI ADEBISI
Against the backdrop of Nigeria’s economic challenges, including high cost-push inflation, a heavy debt burden, and a historically low value of the Nigerian Naira, the recent statement by Nigeria’s Honourable Minister of Foreign Affairs, Ambassador Yusuf Maitama Tuggar, who is currently on a working visit to Russia suggesting Nigeria’s intention to join the BRICS group within the next two years has sparked significant interest and debate. This potential move has the potential to reshape Nigeria’s economic landscape and position the country strategically within t, the global economy.
Nigeria, as the largest economy in Africa, faces a myriad of economic challenges that have hindered its growth and development. The current dollarization of the Nigerian economy has made it vulnerable to external shocks and fluctuations in the global currency markets, exacerbating inflationary pressures and weakening the Naira. In light of these challenges, the opportunity to join BRICS presents Nigeria with a viable pathway towards economic diversification and reduced dependence on the US dollar.
Membership in BRICS could offer Nigeria access to a platform that fosters economic cooperation and partnerships with some of the world’s largest emerging economies, including Brazil, Russia, India, China, and South Africa. Through enhanced trade relations, technology transfers, and investment opportunities, Nigeria could potentially stimulate economic growth, foster innovation, and bolster its competitiveness on the global stage.
Moreover, aligning with BRICS could provide Nigeria with a unique opportunity to engage in discussions on global economic governance, exchange best practices with other member countries, and explore new strategies for addressing its economic challenges. By participating in a forum that champions multilateralism and cooperation, Nigeria could benefit from shared expertise, resources, and initiatives aimed at fostering sustainable development and prosperity.
BRICS is an acronym that stands for an association of five major emerging economies: Brazil, Russia, India, China, and South Africa. The group was originally known as “BRIC” before the inclusion of South Africa in 2010, which expanded the group and changed the acronym to “BRICS.”
BRICS was established as a formal grouping in 2009 to bring together major emerging economies to discuss and cooperate on various economic issues. The idea was first conceived by Jim O’Neill, an economist working at Goldman Sachs, in a paper published in 2001.
One of the key motivations behind the formation of BRICS was to challenge the dominance of Western institutions like the International Monetary Fund (IMF) and the World Bank and to create a platform for these emerging economies to have a greater voice in global economic governance.
While BRICS has not explicitly set out to rival the US dollar, the member countries have expressed a desire to reduce their dependence on the dollar in international trade and finance. This has led to discussions about potentially using their currencies or creating alternative mechanisms for trade and investment among the BRICS nations.
The current members of BRICS are Brazil, Russia, India, China, and South Africa. These countries represent a significant portion of the world’s population and GDP, making them influential players in the global economy.
As for prospective members, there have been discussions about potentially expanding the group to include other emerging economies. Some countries that have been mentioned as potential candidates for BRICS membership include Mexico, Indonesia, Argentina, Turkey, and others
Given the current state of Nigeria’s economy, characterized by high inflation, a heavy debt burden, and a weakened national currency, the strategic move to join BRICS could catalyze economic transformation and resilience. By leveraging the collective strength and resources of the BRICS countries, Nigeria could enhance its economic stability, attract foreign investment, and diversify its trade relationships, ultimately paving the way for sustainable growth and prosperity.
The laudable objectives of BRICS include:
1. BRICS countries aim to strengthen economic ties among themselves through trade, investment, and other forms of economic cooperation.
2. The group seeks to enhance political dialogue on global issues and promote a multipolar world order.
3. BRICS countries collaborate on addressing global challenges such as climate change, terrorism, and cybersecurity.
One of the initiatives undertaken by BRICS countries is the creation of the New Development Bank (NDB). The NDB aims to provide financial resources for infrastructure and sustainable development projects in BRICS countries and other emerging economies. Additionally, the Contingent Reserve Arrangement (CRA) was established to provide a financial safety net for member countries in case of balance of payment crises.
In 2014, with $50 billion (around €46 billion) in seed money, the BRICS nations launched the New Development Bank as an alternative to the World Bank and the International Monetary Fund. In addition, they created a liquidity mechanism called the Contingent Reserve Arrangement to support members struggling with payments.
These offers were not only attractive to the BRICS nations themselves but also to many other developing and emerging economies that had had painful experiences with the IMF’s structural adjustment programs and austerity measures. This is why many countries said they might be interested in joining the BRICS group.
The BRICS bank is open to new members. In 2021, Egypt, the United Arab Emirates, Uruguay, and Bangladesh took up shares. However, these were much lower than the respective $10 billion investments made by the bank’s founding members.
Some of the benefits of BRICS membership for its members are as follows:
1. Economic cooperation: BRICS countries can benefit from increased trade and investment opportunities among themselves, leading to economic growth and development.
2. Political influence: By working together, BRICS countries can amplify their voices on the global stage and promote their interests in international forums.
3. Financial stability: The NDB and CRA provide member countries with alternative sources of funding and financial stability in times of economic uncertainty.
4. Knowledge sharing: BRICS countries can share best practices and experiences in various areas such as technology, healthcare, and education, leading to mutual learning and development.
Overall, BRICS aims to promote cooperation and collaboration among its members to achieve common goals and address global challenges effectively.
As Nigeria contemplates its potential membership in BRICS, the government must conduct challenges associated with joining such a diverse and influential group. Strategic planning, policy reforms, and stakeholder consultations will be essential in ensuring that Nigeria’s integration into BRICS is aligned with its national interests, economic objectives, and development priorities.
In conclusion, Nigeria’s potential entry into the BRICS group represents a strategic opportunity for the country to strengthen its economic resilience, expand its global influence, and unlock new pathways for sustainable development. By embracing this opportunity with foresight, determination, and strategic vision, Nigeria can position itself as a key player in the global economy, driving inclusive growth and prosperity for its people.
adebisiolufemi72@gmsil.com
March 8, 2024.