Why joining BRICS is in the national interest of Nigeria

Global economic stability cannot be maintained in the interests of all when one country or group of countries continues to dominate major global financial institutions with global mandates.

The International Monetary Fund (IMF) and the World Bank were both conceived at the United Nations Bretton Woods conference in 1944 with the following objectives: For the IMF, it was “to achieve sustainable growth and prosperity for all of its 190 member countries,” while for the World Bank, it was “to provide financing, advice, and research to developing nations to help advance their economies.”

The United States, where the IMF and World bank are both headquartered in Washington D.C., has by far the largest voting power of any member country in either institution, with a voting weight of 16.5 percent at the IMF and 15.49 percent at the World bank (IBRD). Japan is the next closest at 6.14 percent and 7.08 percent, respectively. Collectively, Germany, France and UK have a total voting weight of 13.37 percent and 11.93 percent respectively, meaning that a natural political bias must therefore exist towards the interests of the United States and its European allies in decision making at the IMF and World Bank. There is evidence to support this: Reports from both institutions show that between 1980 and the early 1990s, under the neoliberal economic philosophy of the Structural Adjustment Programme (SAP) imposed on Sub-Saharan African countries in exchange for loans, debt servicing payments to Western financial institutions rose from $30 billion in 1980 to more than $200 billion in the early 1990s. By the mid-1990s, African countries were spending over 20-30 percent of their GDP just on debt servicing, placing severe restrictions on government expenditure in other areas.

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BRICS acts as a natural counterbalance to the West’s dominance and influence over the global economy through institutions like the IMF and the World Bank. Made up initially of the five major emerging economies of Brazil, Russia, India, China, and South Africa (Saudi Arabia, the United Arab Emirates, Egypt, South Africa, and Ethiopia joined in January 2024), the group accounts for 45 percent of the global population and 28 percent of global GDP.

At a time when there is growing nationalism in the rich, powerful, and influential nations of North America and Western Europe, bringing with it the risk of the emergence of narrow, nationalistic economic policies and interests replacing globally friendly economic policies and interests, it is important that BRICS acts as a rallying point for the interests of emerging countries in a global context. Recent globally significant events indicate how nationalism has evolved over time in America and Europe: Donald Trump’s election in the United States on 9th November 2016, the Brexit referendum in the UK on 23rd June 2016, where 52 percent of Britons voted to leave the European Union, rejecting in the process both of the UK’s largest establishment parties, who had recommended “stay,” the announcement of COVID-19 as a global pandemic on 11th March 2020 when nations shut down their borders, fought for medical supplies, and blamed each other for the source of the disease, and the rise of far-right parties in Italian, Austrian, and German elections in 2017 and 2018.

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Globalisation, which has hugely benefited BRICS countries like China and India (at the expense of Western countries that have seen their GDP contract), is one of the drivers of rising nationalism in North America and Western Europe. However, we also know that it has significantly increased overall global GDP and initiated a more even distribution of wealth from the global North to the global South. A 2017 United Nations report stated that between 2000 and 2016, global GDP rose from around $50 trillion to $75 trillion.

China’s share of global GDP grew massively from 4.1 percent in 1990 to 18.9 percent in 2023, whilst that of India more than doubled from 3.6 percent to 7.32 percent. In contrast, in the same period, the major advanced economies (G7) share of global GDP fell from 50.9 percent to 29.9 percent, and from 27.6 percent to 14.5 percent in the European Union (EU), indicating the scale of the economic impact of globalisation (e.g., job losses) on Western democracies, and asking questions about the long-term sustainability of the current United States-led world order, which promotes the free flow of goods, services, ideas, and people.

So, what does this mean for Nigeria? For the economy to grow, the country must attract foreign direct investment. To this end, one of the earliest policy implementations of the President Tinubu administration was the unification of the Naira’s foreign exchange rate to facilitate the discovery of a market-determined price for the currency. The government will also need to ensure that Nigeria’s second biggest source of foreign exchange earnings (after crude oil exports), diaspora remittances, is better utilised for the country’s development. According to the World Bank, Nigeria received more than $20 billion in diaspora remittances in 2023. Could this have been achieved without globalisation? Most probably not, as globalisation is key to the facilitating of employment opportunities across borders. In 2017, migrant workers sent an estimated $466 billion globally to their home countries, underlining the global significance of this revenue source for emerging countries. BRICS must therefore continue to bang the globalisation drum so that countries like America, on the cusp of the start of a 2nd Trump presidency and a return to an “America first” trade policy, are not allowed to have it all their own way on the global stage.

The truth is that the world needs to be both global and nationalist in outlook. Therefore, balance is key, with BRICS playing a key role in the negotiation of their political and economic interests with the West to achieve the optimal balance that will propel global prosperity for all. We should also move away from the idea that nationalism is bad and globalisation is a good debate, depending on which side of the fence you sit on, because both can exist side by side to the betterment of global or national prosperity. For example, it is the nationalist policies of Narendra Modi, Prime Minister of India since 2014, that led him to his commanding victory in the elections that brought him to power and the landslide victory he secured in the 2019 elections. Yet, India’s outsourcing sector, a major beneficiary of globalisation, is one of the country’s biggest contributors to GDP. According to the Economic Survey 2021-22, the services sector (which includes outsourcing) contributed over 50 percent to India’s GDP.

What is clear is that the interests of Nigeria, as far as global interactions are concerned, are more closely aligned with BRICS countries like China, Brazil, and India. It is also clear that in order to reach a state of equilibrium in relation to the interests of rich Western democracies vis-à-vis the interests of emerging nations, BRICS must exist as a group to leverage the advantages of acting collectively globally and in institutions like the IMF and World Bank. The political and economic interests of Nigeria would be better served by being a part of such a group.