Nigeria has officially joined the BRICS bloc as a partner country, underlining a broader trend towards deeper integration with major emerging market economies coming together under the bloc.

The announcement was made during the ongoing BRICS summit in Kazan, Russia, which runs from October 22 to 24, 2024, bringing together leaders and representatives from various countries to discuss global economic development and security.

With this development, Nigeria and 12 other nations have been recognized as partner countries, not full members. The additional partner nations include Algeria, Belarus, Bolivia, Cuba, Indonesia, Kazakhstan, Malaysia, Thailand, Turkey, Uganda, Uzbekistan, and Vietnam.

Nigeria’s inclusion as a partner follows a recent surge in foreign capital inflows from BRICS nations, which saw the country receiving a dramatic 189% increase in the first half of 2024, reaching $1.27 billion, compared to $438.72 million during the same period in 2023.

Nigeria’s journey towards becoming part of BRICS has been gradual but consistent. The country has long expressed interest in joining the bloc, with the government citing Nigeria’s economic potential and large population as qualifications for membership. Last year, during the 2023 BRICS summit in South Africa, Vice President Kashim Shettima attended the meeting but did not pursue full membership, even as new African countries like Ethiopia and Egypt were admitted.

In November 2023, Foreign Affairs Minister Yusuf Tuggar affirmed that Nigeria intended to seek membership within two years, positioning itself to leverage the economic benefits of closer ties with the BRICS bloc. He reiterated Nigeria’s interest in September 2024, noting that while the country had not formally applied, the goal remained on the radar of President Bola Tinubu’s administration.

BRICS, originally formed by Brazil, Russia, India, and China (BRIC) in 2009, expanded to include South Africa in 2010, resulting in the current BRICS acronym. The group’s primary focus is on fostering trade, investment, development, and security among the leading emerging economies. The addition of new members and partner nations underscores the bloc’s expanding influence, aimed at reshaping global economic governance to favor fairer development outcomes.

The 2024 summit, themed “Strengthening Multilateralism for Fair Global Development and Security,” underscores BRICS’ commitment to promoting a multipolar world. This year marks the sixteenth annual summit, with Nigeria’s new partner status signaling a more prominent role in global economic discussions.

While partner countries do not have full voting rights or decision-making power within the bloc, the designation allows for increased collaboration and closer economic ties with full member states.

What Partner Status Means for Nigeria

Some analysts believe the partnership opens the door for increased trade, foreign direct investment, and development initiatives that can bolster Nigeria’s economic prospects. Nigeria’s new status is also expected to support its efforts to diversify its economy away from a heavy reliance on oil. With BRICS nations already accounting for a significant portion of global trade, many believe there is room for Nigeria to explore new export markets and attract investments in sectors like agriculture, manufacturing, and technology.

The recent expansion of BRICS has seen the addition of four new full members—Iran, Egypt, Ethiopia, and the United Arab Emirates—who were granted membership in January 2024. These countries attended their first BRICS summit as full members at this year’s gathering in Russia. The expansion to include African nations like Ethiopia and Egypt signals BRICS’ growing focus on the continent, which has been increasingly recognized for its economic potential and strategic importance.

However, Nigeria’s involvement as a partner country within BRICS is understood as a signal of a shift in geopolitical alignments, as countries in Africa and the Global South look for alternatives to traditional Western-led economic frameworks. The country’s large economy and population make it a prime candidate for future expansion, should it meet the bloc’s requirements and demonstrate readiness for deeper integration.

Several Hurdles to BRICS’ Future

Despite its growing appeal, BRICS still faces significant hurdles. Key among them is the challenge of creating a unified economic and financial framework that can accommodate the diverse needs of its member states.

The bloc’s existing members – Brazil, Russia, India, China, and South Africa – often have divergent economic policies and political interests, which could complicate efforts to establish a coherent strategy for the expanded membership.

The Currency Dilemma

One of the most pressing issues facing BRICS is determining a common trading currency among its members. This has been a topic of discussion for several years, as the bloc seeks to reduce its reliance on the US dollar, which currently dominates global trade and finance. The bloc’s interest in developing an alternative currency is rooted in its desire to create a fairer and more balanced global financial system, reducing the influence of the dollar in international transactions and shielding member economies from the volatility of US monetary policy.

In July 2024, BRICS announced ambitious plans to establish an alternative financial messaging system, similar to SWIFT (Society for Worldwide Interbank Financial Telecommunication), which has long been dominated by Western nations. The bloc also revealed its intention to create a new gold-backed currency as part of its efforts to provide a stable medium of exchange for intra-BRICS trade. The proposed currency would be anchored in gold reserves, potentially enhancing its value and credibility compared to fiat currencies.

While these plans reflect BRICS’ determination to assert its economic independence, significant challenges remain. Analysts have cautioned that establishing an alternative financial messaging system and a new currency may not drastically alter the global financial industry in the short term. The US dollar’s entrenched dominance as the world’s reserve currency, alongside well-established currencies such as the euro and the British pound, poses a significant obstacle to any currency that seeks to challenge its supremacy.

The global financial system is deeply intertwined with the US dollar, which accounts for nearly 60% of global foreign exchange reserves. Additionally, most international trade is conducted in dollars, further cementing its role in the global economy. This means, that even if BRICS successfully introduces a gold-backed currency, the practical challenges of getting countries to adopt it for trade and reserve purposes could limit its immediate impact. There is also the issue of liquidity, as a new currency would need to establish deep and liquid markets to support trade and investment.

BRICS’ plan to create a financial messaging system akin to SWIFT is part of its ambition to build infrastructure that could facilitate financial transactions among member states without relying on Western-dominated systems. This initiative is partly driven by Russia’s experience of being cut off from SWIFT due to sanctions, highlighting the vulnerabilities that come with dependence on Western financial networks.

However, analysts have pointed out that setting up a viable financial messaging system capable of rivaling SWIFT is a complex undertaking. SWIFT’s extensive network, which connects over 11,000 financial institutions across more than 200 countries, took decades to develop. A BRICS alternative would need to achieve widespread adoption and interoperability with existing banking systems, which could take considerable time.

Moreover, economists have noted that the success of any alternative financial infrastructure would largely depend on whether the proposed BRICS currency gains acceptance among member states and beyond. Several countries within the bloc may have reservations about abandoning the US dollar for a new currency, particularly those with significant dollar reserves or economies closely linked to dollar-based trade. Additionally, concerns about the political and economic stability of member countries, especially those with fluctuating currencies, could pose challenges to the cohesion and success of a BRICS currency.