At the moment, it looks like the BRICS are calling on Nigeria. Nigeria is an important African nation by several metrics. Nigeria’s vast natural resource endowments, particularly in oil and natural gas, are what have helped it gain the most prominence.
The BRICS nations’ stated goal appears to be to challenge the G7’s (Great 7 countries) hegemony in international trade and perhaps geopolitics. The G7 is made up of the USA, UK, Germany, Canada, Japan, France, and Italy.
To clarify this further, there are several economic blocs in the West where states negotiate multilateral benefits for their countries. The G7 and G20 are a few of these. Nigeria, however, is not seen as deserving of membership in any of these organizations.
Amid this exclusion, the BRICS alliance of developing nations sprang on the scene in 2006. Few nations have received as much recognition as Brazil, Russia, India, China, and South Africa, also known as the BRICS. It has drawn a lot of attention and discussion on how drastically they have altered their economies and spread their influence over the globe in a relatively short amount of time.
Some see their quick economic growth as prospective models for other developing nations to follow to achieve the economic advances they have been unable to achieve since gaining independence.
Recently, there has been a huge increase in interest in the organization. According to reports, Iran and Argentina have expressed interest in joining, along with Bangladesh, Indonesia, Mexico, Turkey, Egypt, Algeria, Sudan, Syria, Saudi Arabia, Pakistan, and Venezuela. Many people anticipate Nigeria showing the same interest.
Extreme Dollarization
BRICS is seldom a hot topic for policymakers when discussing strategies to help Nigerians out of their economic rut. What is frequently brought out, though, is how humiliating the Naira appears in comparison to the Dollar.
The rate of the naira to the dollar seems to be the starting point and ending point of discussions of the state of the economy. Nigeria’s economic issues all seem to have a monetary component. The crisis in fuel prices is unquestionably rooted in the dollar issue. The dollar has somehow become an integral part of Nigeria’s economy to an unfathomable degree. You may hear references to the “dollar component” when a good or service is produced or rendered without the use of any foreign resources.
Contrary to macroeconomic considerations, domestic transactions are conducted in dollars by several people who have access to the American currency. The Dollar is considered when selling a property within Nigeria. School fees and professional fees are settled in dollars in the country. While Nigerians struggle with this, BRICS’s tall ambition of establishing local currencies for payments is still alive
Collectively, the BRICS encompasses nearly 30 percent of the world’s landmass, approximately 27 percent of global GDP, and around 20 percent of global trade. While trade and economic relations between Nigeria and the BRICS nations have improved over time, the country lags far behind in several economic variables.
Nigeria’s Trade Relations with China
Trade relations between Nigeria and China have increased in the past two decades, According to the World Bank, Nigeria-China trade in products increased from USD 1.2 billion in 2003 to USD 13.7 billion in 2019.
From 2016 to 2021, Nigeria-China trade increased by nearly 142%. In 2022, officials in China announced that the trade volume between both nations had increased to about $26 billion. In 2011, Nigeria was the 4th largest trading partner of China in Africa, and in the first months of 2012, it was the 3rd. China happens to be Nigeria’s biggest bilateral lender.
As a result of the relationship between both countries, Nigeria is one of the top five countries in Africa that is a beneficiary of Chinese investments. Also, China is financing infrastructure projects and Chinese companies are now being contracted to construct roads, and railways, The rehabilitation of the Abuja, Lagos, Port Harcourt, and Kano airports was also undertaken by Chinese-owned companies.
In June 2023, China exported $2 billion and imported $99.6 billion from Nigeria, resulting in a positive trade balance of $1.9 billion. Between June 2022 and June 2023, the exports of China have decreased by $-335M (-14.3%) from $2.34B to $2B, while imports decreased by $-77.2M (-43.7%) from $177M to $99.6M.
In June 2023, the top exports of China to Nigeria were Synthetic Filament Yarn Woven Fabric ($160M), Pesticides ($84.1 million), Non-Knit Women’s Suits ($81.5 million), Telephones ($67.2 million), and Fake Hair ($59 million). In June 2023, the top imports of China from Nigeria were Petroleum Gas ($95.8 million), Crude Petroleum ($71.5M), Niobium, Tantalum, Vanadium, and Zirconium Ore ($13.5 million), Zinc Ore ($13.1 million), and Raw aluminum ($12.6 million).
Nigeria’s Trade Relations with Brazil
In 2021, Brazil exported $959M to Nigeria. The main products that Brazil exported to Nigeria are Raw Sugar ($598M), Planes, Helicopters, and/or Spacecraft ($167M), and Alcohol > 80% ABV ($43.4M). During the last 26 years, the exports of Brazil to Nigeria have increased at an annualized rate of 5.42%, from $243 million in 1995 to $959M in 2021.
In 2021, Nigeria exported $1.08B to Brazil. The main products that Nigeria exported to Brazil were Crude Petroleum ($594M), Nitrogenous Fertilizers ($405M), and Refined Petroleum ($27.4M). During the last 26 years, the exports of Nigeria to Brazil have increased at an annualized rate of 2.97%, from $505M in 1995 to $1.08B in 2021.
In June 2023, Brazil exported $99.2M and imported $40.4M from Nigeria, resulting in a positive trade balance of $58.7M. Between June 2022 and June 2023, the exports of Brazil have increased by $20.5M (26%) from $78.7M to $99.2M, while imports decreased by $-226M (-84.8%) from $267M to $40.4M.
Nigeria’s Trade Relations with India
India established its Diplomatic House in Lagos in November 1958, two years before Nigeria became independent on 01 October 1960.
Presently, India is one of Nigeria’s largest trading partners and Nigeria is India’s largest trading partner in Africa. The Bilateral trade volume between Nigeria and India has touched USD 15 billion for the financial period 2021-2022 which represents an increase of 69.80%.
This is despite an understandable fall in Crude Oil imports by India last year due to the COVID-19 pandemic. Bilateral trade has also risen strongly from USD 8.8 billion in 2020-21 to USD 14.95 billion in the year 2021-22. While is one of the largest buyers of Nigerian crude oil, over 135 companies are owned and/or operated by Indians or Persons-of-Indian Origin in Nigeria.
The total bilateral trade between India and Nigeria during the year 2021-22 registered USD 14.95 billion, as against USD 8.81 billion during the year 2020-21. Indian exports to Nigeria during the period 2021-22 were USD 4.66 billion, as against USD 3.13 billion in 2020-21 representing an increase of 48.75% of India’s exports. India’s imports during the period 2021-22 recorded USD 10.29 billion, against the USD 5.67 billion in 2020-21, representing an increase of 81.43 % of India’s imports.
The Nigerian Government took steps to diversify the Nigerian economy with a focus on the agriculture and mining sector. Nigeria has recently signed the African Continental Free Trade Area (AFCFTA) Agreement which was postponed due to the COVID-19 Pandemic. Despite the constraints on trade relations in the country due to the coronavirus, the overall India-Nigeria trade and commercial relations remain buoyant and steady.
Nigeria’s Trade Relations with South Africa
Nigeria exported $2.23B to South Africa. The main products that Nigeria exported to South Africa were Crude Petroleum ($2.17B), Petroleum Gas ($46M), and Rubber ($8.8M). During the last 26 years, the exports of Nigeria to South Africa have increased at an annualized rate of 24.7%, from $7.25M in 1995 to $2.23B in 2021.
In 2021, South Africa exported $569M to Nigeria. The main products that South Africa exported to Nigeria are Propylene Polymers ($96.1M), Apples and Pears ($39.2M), and Delivery Trucks ($24.9M). During the last 26 years, the exports of South Africa to Nigeria have increased at an annualized rate of 9.69%, from $51.3M in 1995 to $569M in 2021.
South Africa ranked 59 in the Economic Complexity Index (ECI 0.098), and 34 in total exports ($143B). That same year, Nigeria ranked 126 in the Economic Complexity Index (ECI -1.56), and 52 in total exports ($57.7B).
Nigeria’s Trade Relations with Russia
Nigeria Imports from Russia was US$2.09 Billion during 2021, according to the United Nations COMTRADE database on international trade. Nigeria exported $38.8 million to Russia in 2021. Cocoa beans ($29.5M), perfume plants ($3.55M), and cut flowers ($1.5M) are Nigeria’s top exports to Russia. Nigerian exports to Russia have grown at an average rate of 6.36% over the past 25 years, from $8.3 million in 1996 to $38.8 million in 2021.
Russia exported $1.25 billion to Nigeria in 2021. Refined petroleum ($503 million), wheat ($493 million), and potassic fertilizers ($71.4 million) were the biggest exports from Russia to Nigeria. From $27.3M in 1996 to $1.25B in 2021, Russia’s exports to Nigeria have grown at an annualized pace of 16.5% during the past 25 years.
Dislodging the Dollar
More recently, the BRICS have been discussing the possibility of dealing with each other in local currencies with the medium- and long-term objective of dethroning the US dollar as the primary reserve currency worldwide. The dollar’s hegemonic status in global trade, however, serves more as a cornerstone of American imperialism than it does for the economic development of Africa.
Many Nigerians expressed their “worry” and “sadness” at the end of the previous week about their country’s exclusion from the BRICS. Nigeria did not seek to join BRICS, according to Vice President Kashim Shettima, because President Tinubu is a democrat who must first forge national consensus by holding extensive consultations with the Federal Executive Council, his economic advisory team, and the National Assembly.
The relationship between Nigeria and the BRICS is intricate. Even if Nigerians occasionally exercise caution, governments on all sides view the partnership as mutually advantageous. However, western nations that appear to have been ousted by the developing powers are increasingly in position to make a comeback.
Under Secretary Marisa Lago emphasized the Biden-Harris administration’s commitment to strengthening engagement throughout the African continent during a recent visit to several African nations, including Nigeria. It is obvious that the US will take action to compete with the BRICS in commerce with Africa and Nigeria. Nigeria, the BRICS, and the West are likely to establish stronger trade ties in the upcoming years. Nigeria must decide which front will best advance its economy.
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