Efem Nkam Ubi, Research Fellow, Nigerian Institute of International Affairs
Subjects of Interest
- Economic Development
- Geopolitical Analysis
- International Affairs
- International Trade
BRICS' growing clout and why Nigeria is still excluded 19 Sep 2018
The BRICS club (Brazil, Russia, India, China and South Africa) held its 10th annual summit on July 25-27 in Johannesburg, under the BRICS Chairship of South Africa. The theme for the 2018 summit was “BRICS in Africa: Collaboration for Inclusive Growth and Shared Prosperity in the 4th Industrial Revolution.”
The first BRIC Summit, which held in 2009 in Russia, ended with a joint statement that laid the foundations for an agenda on cooperation, reform of international financial institutions, food security, energy security, climate change, and development assistance, among other areas of mutual interest. South Africa was not part of the grouping at the time.
The 2018 summit concluded with the issuance of the 10th BRICS Summit Johannesburg Declaration, which contains 102 paragraphs with a number of pledges. The pledges range from strengthening multilaterism, to reforming global governance, co-operation on international peace and security, and partnership towards the fourth industrial revolution.
The summit had held during a period of an escalating trade war between China and the United States under President Donald Trump and other recent US policies that seem to be altering global rules and norms. In paragraph 8 of the Johannesburg Declaration, the BRICS declared: “We recommit our support for multilateralism and the central role of the United Nations in international affairs and uphold fair, just and equitable international order based on the purposes and principles enshrined in the Charter of the United Nations, respect for international law, promoting democracy and the rule of law in international relations, and to address common traditional and non-traditional security challenges.”
The BRIC concept – as coined by former Goldman Sachs' chief economist, Jim O'Neill – predates the formation of the group as an economic bloc with formal agreements. In 2001, O'Neill had thought of Brazil, Russia, India and China as emerging markets that would wield significant power in the future and he projected their combined economies would eclipse the existing advanced economies by 2050. In 2011, South Africa – which was the largest African economy at the time – officially became a member of the group.
On the occasion of the 10th annual summit of the group, it is important to ask some pertinent questions: First, is it possible to pinpoint the achievements of this group? Has BRICS, which covers 41 per cent of the world's population and 30 per cent of global territory as of 2016, been able to protect the interest of the developing world? I ask these questions because, at the Johannesburg Summit, the group expressed satisfaction regarding the achievements of BRICS over the last ten years. It stated the achievements as strong demonstration of BRICS cooperation and deliberated on ways to consolidate them moving forward.
The group, having accounted for 50 per cent of global growth since 2009 and constituted about 24 per cent of global GDP (over 18 trillion) in 2017, recognised the important role of international trade and foreign direct investment in global economic recovery. In which case, the five economies view South-South co-operation as a key element behind international development efforts.
One of the most notable achievements of BRICS is the creation of the New Development Bank (NDB), a multilateral development bank that mobilises resources for infrastructure and sustainable development projects among the BRICS and in other emerging economies and developing countries. The bank was set up to complement the existing efforts of multilateral and regional financial institutions for global growth and development. Last month, S&P Global Ratings and Fitch Ratings both assigned to NDB 'AA+' long-term issuer credit ratings with a stable outlook.
As part of the achievements of the Johannesburg Summit and a demonstration of effective cooperation among the BRICS economies, South Africa signed a deal that will see China invest $14 billion in the country over the next few years.
This brings me to my next point of discussion. Why is Nigeria not part of BRICS? After all, the South African economy is comparably the smallest economy in the bloc, and currently the second largest economy in Africa, behind Nigeria.
With the admission of South Africa into the BRICS membership, the country's Standard Bank had rightly said: "South Africa provides the institutional stability, depth of financial markets, and regulatory efficiency that many corporates will look to capitalise on as a base for wider pan-African operations." But South Africa did not just get invited by the BRIC economies to join them. It took diplomacy and statecraft, under the leadership of former President Jacob Zuma, for the country to gain membership into the group.
Given Nigeria's economic status as the largest economy in Africa, I will argue that it meets certain basic criteria for a prospective BRI'N'CS membership. Although Nigeria's GDP shrank to $376 billion in 2017, from its peak of $569 billion in 2014 – and also dropped from being the 26th largest in the world in 2014 to the 31st position last year – the economy still remains the largest in Africa. The country is also the most populous black nation with a population of over 190 million people.
However, the country falls short on a number of other metrics. For instance, the 2016 Human Development Index (HDI) report ranks Nigeria in the 152nd position out of 188 countries. On this metric, the country was closely followed by Cameroon in the 153rd position and Zimbabwe in the 154th position.
Currently considered a frontier market, Nigeria is also yet to join the club of emerging markets. Moreover, Nigeria is also behind South Africa on the industrialised/semi-industrialised spectrum. The GDP per capita of the largest economy in Africa is a third of the second largest economy on the continent.
Jim O'Neill once opined on the prospect of Nigeria joining the BRICS club, stating that the country was far from becoming a member. The former Goldman Sachs executive said, “It is difficult for Nigeria to become as big as a BRIC, (at least in my lifetime) because it's kind of starting from a low base.”
Notwithstanding, O'Neill included Nigeria among the “N-11” or Next Eleven nations that will also emerge as economic powers, along with the BRICS. The Nigerian officialdom celebrated the inclusion of Nigeria among the N-11, which are Bangladesh, Egypt, Indonesia, Iran, Korea, Mexico, Nigeria, Pakistan, the Philippines, Turkey and Vietnam.
Nigeria and many of the economies in BRICS and N-11 had weathered the last Global Financial Crisis (GFC). However, with the rebalancing of the Chinese economy and the fall in commodity prices in recent years, the growth momentum previously seen in these economies has ceased for the time being.
Under the new normal of uncertainties in the global economy, Nigeria and other emerging and frontier markets need a structural transformation of their economies to achieve sustainable economic growth. Or as stated in the 10th BRICS Summit Johannesburg Declaration, there has to be a focus on development, inclusivity and mutual prosperity in the context of technology-driven industrialisation and growth.
In paragraph 60 of the BRICS Declaration, it says, “We are convinced that trade and technology are vital sources of inclusive growth, including through economic integration and consolidation of global value chains in sustainable and equitable ways. Technological progress will have wide ranging implications for production of goods and services as well as incomes of people.” The Nigerian government should take note.