O’ Neill: BRICS’ Countries Expanding Not Logical, Disappointing

Jim O'Neill

Jim O'Neill

Former Chief Economist at Goldman Sachs, Jim O’Neill, coined the acronym BRICs (Brazil, Russia, India, China) in 2001, and in 2010, South Africa was admitted into the group which made it BRICS. In this interview, the economist who later coined the acronym MINT (Mexico, Indonesia, Nigeria, and Turkey) criticised the expansion drive of the BRICS nations. He also spoke about governance in Nigeria and Africa. Obinna Chima brings the excerpts

What is your assessment of the BRICS nations so far, do you think they have been able to make any impact in the international system since you coined the acronym and what do you think about their expansion drive?

Economically, only two of the BRICS countries have been particularly successful and that obviously is China and India. The other two – Russia and Brazil – because I didn’t include South Africa at the beginning – had a very good first decade, but since after 2010, both have been extremely disappointing and of course South Africa as well. In fact, each of the three countries’ share of global GDP is back to where it was when I created the acronym in 2001. So, the aggregate of the BRICS is completely dependent on India and especially China. China today, despite having significant problems, is twice the size of the other BRICS countries put together. So, BRICS is an economic club that is dependent on the importance of China and India. As for the expansion of the political club, I don’t really understand what they are trying to achieve, because they have never achieved anything political together so far. At the same time and how it relates to Nigeria of course, I don’t understand the criteria they used in choosing the countries to join them.  I don’t know why they want to expand when they have never achieved anything yet as a club, because it would be harder for them and I don’t understand why they chose the six countries they announced.

You also came up with the MINT but we seem not to be hearing much about them forging any form of alliance?

Yes, the MINT acronym can 12 years after the BRICS. I created BRIC acronym in 2001, but the MINT idea came late 2013. So, that was what I was trying to say earlier. If they are going to expand the BRICS group, economically, you would first include Indonesia, probably Mexico and not Argentina, because Mexico is much bigger, probably Turkey and very relevant and almost definitely, Nigeria ahead of Ethiopia or Egypt. Nigeria is the biggest economy in Africa and holds almost 15 per cent of Africa’s population. Whilst Egypt and Ethiopia have a lot of people, it is less than half of the people of Nigeria. So, I don’t why they chose the countries they did. For me, the expansion is not logical, it doesn’t make any sense and it is very disappointing. I wrote an academic article early this year in which I suggested that if they are going to expand, they needed certain criteria. The main criteria was what would be the goal of expanding it to any other country and what do they want to achieve? Secondly, what would a new country bring that is not already there from the current members? And thirdly, is it based on demographics or economic size and finally, as it looks like, is it actually based on sympathy for being anti-western to some extent? Out of the six countries they announced to join them, only one of them is under democratic rule. So, it looks like they chose countries that symbolises that they are anti-western, which to me doesn’t make any sense and I think is very disappointing.

So, if you are to compare Nigeria when you coined MINT and the opportunities you saw in the country then and the state of the country presently, what will be your assessment of the performance of the country?

On the performance of the Nigerian economy: to be honest with you, it has been very disappointing. Nigeria has not reformed enough and is still too dependent on oil, even though there were some encouraging steps recently to reduce subsidy on petrol prices. Somehow, Nigeria has to develop its economy to become less dependent on oil prices and oil revenue. Since I visited in 2013, I don’t think the country has been very successful. For me, beyond Nigeria, it is very sad that Africa is still the world’s poorest continent and it seems to be very difficult for governance to improve. Obviously, this is even at a time when a lot of Francophone West African countries are having a lot of turbulence and many coups. I used to think and I hope I will eventually be right, that the emergence of a younger generation that gets better educated would allow for a more transparent and a less corrupt form of governance to occur in many African countries. But if you look at so many examples in the past decade, it is very disappointing.

And what is the role of leadership in all of these?

The leadership in Nigeria in my opinion has been very disappointing. But I still think it should be the next country to join the G20, because it is the most important country in Africa in terms of its economy and population.

So, how do you think Nigeria can position itself to be more relevant in the international system?

I personally think Nigeria shouldn’t worry too much about not being included in BRICS, because it is a club that hasn’t achieved anything yet. Secondly, I personally believe that Nigeria is probably the most outstanding country to be included in the G20, if they are going to expand it. If they are going to expand the G20, Nigeria should be one country that should be next to become a member.  That is because it is the biggest country in Africa. If you want to make the global system truly representative, in my opinion the G20 is close to being the most legitimate thing we have, because it already has 80 per cent of GDP half of the world’s population. So, adding Nigeria would make a lot of sense. I don’t think the BRICS group is likely going to have any global power. If you really want to truly solve global issues, you need to have the important countries and the most important emerging countries with you. It is pretty straightforward in my opinion.

What is your take about the idea of a common currency for the BRICS nations?

It is a ridiculous idea. You will need to have an independent central bank to achieve that. There is no way that India and China would ever agree to an independent central bank or even a joint central bank. To me, it is just fantasy and almost embarrassing.

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