Throughout its sixteenth annual summit in Kazan, Russia, Brics – a bunch of rising economies decided to behave as a counterweight to the west and to whittle down the affect of world establishments – invited Nigeria and eight different international locations to hitch it as “associate” international locations. Nigeria formally accepted the invitation in January 2025. That invitation has generated questions on how Nigeria stands to profit, particularly when US president Donald Trump is threatening to sanction members of the group in the event that they change the US greenback as reserve foreign money. It was established in 2006 and initially composed of Brazil, Russia, India, and China. South Africa joined in 2010 and the bloc added 4 new members (Egypt, Ethiopia, Iran and the United Arab Emirates) in 2023. On this interview, growth economist Stephen Onyeiwu argues that Nigeria stands to achieve from a Brics partnership, however must fastidiously steadiness its home pursuits with these of its western allies and Brics.
What does it imply to be a Brics ‘associate’ nation?
The introduction of Brics partnership is an growth mechanism designed to herald extra individuals with out giving them full membership. It’s akin to “observer” standing.
Brics companions can take part in particular periods of summits and international ministers’ conferences, in addition to different high-level occasions. Companions may contribute to the organisation’s official paperwork and coverage statements.
However companions can’t host annual Brics summits or decide the venue. Neither can they choose new members and companions.
How useful is Brics partnership to Nigeria?
The primary profit can be entry to finance supplied by Brics’ New Development Bank.
The New Growth Financial institution was established as a substitute for western-dominated worldwide monetary establishments just like the World Financial institution and Worldwide Financial Fund. These establishments are generally utilized by the main western international locations to maintain growing international locations in line on international points.
Some growing international locations are reluctant to criticise western international locations for concern of dropping entry to funding by western-backed worldwide monetary establishments.
Nigeria has been operating a funds deficit of about 5% of GDP since 2019, and it wants funding to pay for the deficits. The New Growth Financial institution could possibly be an necessary supply of funding for funding in Nigeria’s infrastructure, manufacturing, agriculture, and so forth.
New Growth Financial institution loans are additionally accessible in member international locations’ native currencies. They don’t should earn international trade to repay the loans. This fosters trade charge stability and promotes financial development. The New Growth Financial institution raises funds in member international locations’ native currencies, and lends them to member international locations.
Nigeria may use its Brics partnership to garner the group’s help in issues that have an effect on Nigeria globally. As an illustration, there have been requests for African international locations to be included as permanent members (with out veto energy) of the UN safety council. South Africa and Nigeria have been touted as potential candidates. Ought to this subject be raised on the UN, Nigeria can depend on the help of its Brics allies, which incorporates two everlasting members (China and Russia) of the safety council.
Mutual understanding and cooperation with different Brics members and companions would possibly spill over into financial, commerce and funding agreements. Pleasant international locations usually tend to commerce with one another and spend money on one another’s financial system.
How can Nigeria maximise its standing as a Brics associate?
Nigeria ought to use it to draw international direct funding in strategic sectors of the financial system, resembling infrastructure, manufacturing, agriculture and expertise.
Some Brics members, like China, India, and the UAE, have traders which might be in search of funding retailers overseas. Nigeria may use the bloc’s annual summits to showcase funding alternatives.
The worldwide financial system is transitioning into “frontier industries and applied sciences”, resembling large knowledge, synthetic intelligence, photo voltaic, drones, gene modifying, 3D printing, blockchains, Web of Issues (IoT), 5G, robotics and nanotechnology. China, India and Brazil are already effectively superior in these applied sciences.
Nigeria ought to use its partnership with these international locations to construct capabilities in frontier industries and applied sciences. It may get beneficial phrases within the switch of those applied sciences.
Nigeria seeks to diversify its financial system from reliance on the export of hydrocarbons. However Nigerian producers have had a tough time accessing international markets. The nation ought to negotiate commerce offers that present entry to Brics markets, particularly agricultural and agro-processed merchandise, arts and crafts.
However Nigeria has to advertise financial development and structural transformation at residence. If the Nigerian financial system falters, it’s unlikely the nation shall be invited to turn into a full member of Brics.
Would including new members and companions scale back western dominance?
Brics has to date not been capable of considerably change the dynamics of the worldwide political financial system. Including new members and companions, whereas symbolic, is not going to act as an efficient counterweight to the affect of the G7 and G20 teams of countries.
Many of the international locations and companions in Brics are both allies of western international locations or impartial on international points. They’re unlikely to help selections or actions which might be grossly inimical to western pursuits.
Egypt and the UAE, for example, obtain army assist from the USA. Ethiopia and Nigeria are top recipients of international assist in Africa, a lot of it from western-backed monetary establishments.
The one outlier within the combine is Iran, whose membership was promoted by Russia. However Iran has no leverage to affect others within the bloc.
On steadiness, due to this fact, Brics is not going to be a risk to western international locations.
Brics aspires to weaken the dominance of the US greenback for worldwide transactions. Near 90% of worldwide commerce transactions are performed with the US greenback.
Brics international locations plan to cut back greenback dominance by encouraging member international locations to settle their commerce and monetary transactions utilizing their home currencies. As an illustration, South African companies may buy Chinese language items utilizing the South African rand, whereas the Chinese language may do the identical for South African items utilizing the Chinese language yuan. The extra members you’ve in Brics swapping their currencies, the much less necessary the US greenback shall be.
It’s unlikely, nevertheless, that a rise within the variety of Brics members and companions will weaken the greenback. Most will proceed to have important financial relationships with the west, together with commerce and international assist.
They can even proceed to conduct enterprise with many non-Brics international locations, which even have financial relationships with the west. They are going to want the US greenback to transact with many different international locations.
So growing the variety of Brics members and companions doesn’t pose a risk to greenback dominance.
