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Nigeria Missing as BRICS Moves to Build a New Economic Order

Though Nigeria is listed as one of the countries that have expressed interest in joining BRICS, a bloc of five major economies – Brazil, Russia, India, China and South Africa – whose focus is to reduce Western dominance and build a new economic order, its membership may have been stalled by its peculiar challenges.

The Guardian reports that experts have listed the low economic complexity of the country, weak productive capacity and fragile fiscal position as part of the hurdles the country will need to surmount to stand a chance of being enlisted.

There are no documented membership criteria, at least, none is accessible to the public, but almost all the BRICS members are ahead of Nigeria in terms of industrial development and economic base.

At some of its summits, leaders of the member nations said they would continue to develop processes and standards to expand BRICS Plus as an alternative for championing the growth of emerging markets.

Interest in the organisation has grown tremendously in recent years. Iran and Argentina are said to have applied for membership, while Bangladesh, Indonesia, Mexico, Turkey, Egypt, Algeria, Sudan, Syria, Saudi Arabia, Pakistan, Venezuela and Nigeria have also shown interest.

While it could not be confirmed that Nigeria has commenced the process of applying officially to join, unofficial sources, however, told The Guardian that “BRICS membership is the least subject the government is bothered about at the moment.”

Nigeria’s Ambassador to Russia, Abdullahi Shehu, had reportedly told international media recently that accession talks have not commenced. He, however, did not foreclose the possibility of doing so in the future.

“It is quite realistic and will depend on the membership criteria. Nigeria is not against becoming a member of BRICS to ensure its economic interests in cooperation with other partners in the world,” Shehu reportedly said.

Besides Shehu’s comment, which cannot be taken as the government’s position, there is no recent comment suggesting whether Nigeria considers BRICS membership as a priority or not.

Until South Africa’s application was ratified in 2011, there were speculations that Nigeria could emerge as the first African country to join the bloc.

Even former Goldman Sachs chairman, Jim O’Neill, who coined the acronym at the turn of the century, said: “If they could impose the level of leadership, a whole new way of governance in which corruption is dramatically reduced, Nigeria is, I think, very interesting. It’s 20 per cent of Africa’s population, which means it could be pretty powerful,” while reacting to accusations that he had omitted some countries from the emerging economies to watch out for.

With the deepening of frosty relations with traditional development partners, including the International Development Fund (IMF), many experts have identified the need to explore an alternative route, but they said the chances of Nigeria’s admission to BRICS may have been blighted by its lethargic governance and low international competitiveness.

“Nigeria will be a good mix in the BRICS expansion and the country can benefit if we get our economic issues sorted. A parallel reserve currency will be a good option because it will reverse dollar dominance in our transactions, but I don’t know how they will execute that.

“If they can agree on a parallel currency, the immediate benefit will be getting rid of the imported inflation that comes with the dollar. To be a player in the new arrangement, however, we must increase our exports and manufacturing to strengthen our currency,” Victor Ogiemwonyi, a retired investment banker, said.

Also, Vice President of Highcap Securities Limited, David Adonri, observed a remarkable difference between Nigeria’s economy and those of BRICS members. While Nigeria’s economy is primarily driven by commodity exports, he noted that others have transformed into fully industrialised economies, making them more globally competitive.

“The countries that makeup BRICS (Brazil, Russia, India, China and South Africa) are large producers of industrial goods. The countries that are now in consideration for membership are medium producers of industrial goods. The organisation does not appear to be interested in producers of primary commodities, like Nigeria, as members.”

According to Adonri, Nigeria’s membership in BRICS may be meaningless now because it does not have industrial goods to exchange with other members. Even without being a member, Nigeria is a dumping ground for industrial goods from BRICS. “Membership will not change this precarious situation; hence, it has no compelling reason to seek Nigeria’s membership. For Nigeria to qualify for membership, it must have the capacity for export of industrial goods, which other BRICS members need,” the economist noted.

Mazi Okechukwu Unegbu, a former president of Chartered Institute of Bankers of Nigeria (CIBN) and lawyer, insisted that Nigeria’s economic indicators do not place it in the same basket as BRICS countries, adding that the country has missed the golden opportunity to secure membership.

“Even South Africa is not at par with Nigeria in terms of competitiveness. They are ahead of us. And sadly, we are currently not in a position of improving. Look at the inflation, interest and exchange rates. These are red lights. When Bonny Light was the toast of the world, I suggested that we sold our oil in naira. That was an opportunity to have pushed our currency to the global market. But nobody listened to my advice,” Unegbu, a former bank chief executive, said.

He argued that Nigeria would need to develop a product that is needed in the international market to regain its pride among the comity of nations, insisting that the sliding economy has placed the country at a disadvantage in the global market.

A former presidential candidate and economist, Dr Tope Fasua, told The Guardian that BRICS would not consider a country with huge ‘innovation scarcity’ like Nigeria.

Arguing that Nigeria has the worst economic complexity (which measures the knowledge quotient of goods and services produced and exported by an economy) in the world, he wondered how any country would take Nigeria seriously.

He dismissed the idea of joining a bloc for the mere opportunity, insisting that Nigeria should also consider what it can contribute to the other members. According to him, the best place to start is to repair its relationship with China, a leading member of BRICS, which is said to have gotten tired of Nigeria.

Fasua said it was important to consider other sources of funding, businesses and technology as the West has not benefited the country. But the priority, he said, is to fix “our international challenges.

“We should think about what we are bringing to the table. What kind of economy is Nigeria? The BRICS economies are not commodity economies but manufacturing economies. They are ahead in terms of economic complexity. Apart from crude oil, which has become a liability to Nigeria, it is either cocoa, ginger or Sesame seeds. What are we offering? Joining a bloc should not be about ‘parasiting’ on others like we have always done.”

BRICS’s tall ambition of offering its members a new reserve currency and decimating the IMF’s Special Drawing Rights (SDR) has attracted global attention.

The organisation had planned to finalise arrangements for this New Development Bank (in the mould of the World Bank) by 2014. The process was to slow down disputes relating to burden sharing and location. The bank has expanded its reach beyond the traditional members of BRICS to the United Arab Emirates (UAE) and Bangladesh while Uruguay and Egypt are a prospect.

BRICS’ intrusion into the reserve currency order has only intensified the currency war. The IMF disclosed that Russia held nearly a third of the world’s renminbi (Yuan) in reserves at the end of last as the dollar’s share of global foreign-exchange reserves continues to fall.

According to data supplied by the IMF, as at 1999, the dollar controlled 70 per cent of global reserves but declined steadily to close last year at 59 per cent as Yen, Yuan, Pound and Euro catch up. South Africa is the only African country reported to have held part of its reserve assets in renminbi as nations continue to explore other currencies for stockpiling their reserves.

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