Nigeria seeks to diversify trade, reduce dollar dependence with BRICS

Nigeria could reduce dependency on the US dollar by engaging in trade with BRICS, an economic bloc consisting of Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran and the United Arab Emirates using local currencies, thereby stabilising its foreign exchange reserves, according to Yusuf Tuggar, the minister of foreign affairs.

Nigeria officially joined BRICS as a partner country last as announced by the Brazilian foreign ministry.

Africa’s largest oil producer became the ninth partner country of BRICS, alongside Belarus, Bolivia, Cuba, Kazakhstan, Malaysia, Thailand, Uganda, and Uzbekistan.

In a post on his X account on Tuesday, the Nigerian foreign affairs minister highlighted critical benefits Nigeria could derive from such a partnership, spanning economic growth, infrastructure development, energy collaboration, agricultural advancement, and financial stability.

Economic and trade opportunities
A BRICS partnership could diversify Nigeria’s trade relations by strengthening economic ties with major importers of Nigerian crude oil, including China and India, according to Yusuf.

This diversification could help reduce Nigeria’s reliance on Western markets and open access to new emerging markets such as Brazil and South Africa.

Infrastructure development
The New Development Bank (NDB), an institution established by BRICS, offers development financing for large-scale projects. Nigeria could leverage this opportunity to secure low-interest loans for initiatives in energy, transportation, and technology, the foreign minister noted.

Also, collaboration with BRICS nations could enhance access to advanced technologies, particularly in renewable energy, agriculture, and industrial development.

Energy sector collaboration
With its rich oil and gas resources, Nigeria stands to benefit from partnerships with Russia and China. These energy giants could invest in Nigeria’s energy sector, enhancing production capacity and exports.

Furthermore, Brazil, China, and South Africa’s expertise in renewable energy could bolster Nigeria’s efforts to diversify its energy mix and reduce power shortages.

Agricultural growth
Food security remains a pressing issue for Nigeria, and collaboration with agricultural leaders like Brazil could revolutionise the sector, the minister noted. Advanced farming technologies and sustainable practices shared through BRICS could increase food production and reduce Nigeria’s dependency on food imports, the foreign ministry has highlighted.

Financial support and economic stability

Nigeria’s economic stability could be bolstered by currency swap agreements with BRICS countries, enabling trade in local currencies rather than the US dollar. This strategy could stabilise Nigeria’s foreign exchange reserves and assist in debt management, according to Yusuf.

However, President Donald Trump has threatened to impose 100% tariffs on BRICS countries if they try to replace the US dollar.

“If the BRICS nations want to do that, that’s okay, but we’re going to put at least a 100 per cent tariff on the business they do with the United States. They have a 100 percent tariff if they so much as even think about reducing the use of the dollar in global trade,” Trump, who was sworn in as the 47th US president on Monday, said.