An article by: Ahmed Moustafa

On January 1, 2024, the five founding countries of the BRICS group will be joined by six more states, including Egypt. Renowned Egyptian political scientist, economist, journalist and writer Ahmed Moustafa analyzed for Pluralia the benefits that joining BRICS will give Egypt.

Introduction

Egypt’s decision to join the BRICS (Brazil, Russia, India, China, and South Africa) economic alliance has sparked debate among analysts and scholars. Egypt aims to project itself as an emerging global economic power, enhancing its geopolitical influence and gaining a greater voice in international affairs. It also expects BRICS membership to provide diversified trade opportunities, allowing it to expand its export market and reduce its dependency on traditional trading partners. Egypt also hopes to leverage the BRICS Development Bank and New Development Bank to finance large-scale infrastructure projects, facilitating economic growth and improving quality of life. The inclusion of Russia in the BRICS could also enhance Egypt’s energy security and independence. Moreover, BRICS membership could offer Egypt a platform to address global issues, such as international trade regulations, climate change, and human rights. However, Egypt must find common ground with the BRICS countries, as their focus on economic issues may overshadow their emphasis on security and stability in the Middle East. Accordingly, Egypt benefits from BRICS membership through the important points hereinafter.

Egypt’s financial infrastructure distinguishes it from others in BRICS membership in Africa

Egypt, a North African nation, has a strong financial infrastructure that gives it a competitive edge in the global economic landscape. This is exemplified by its well-developed banking system, advanced stock market, and efficient payment systems. Egypt’s membership in the BRICS alliance provides access to resources and opportunities that strengthen its financial infrastructure. The country’s well-established banking system attracts clients and investments, while its advanced stock market, represented by the Egyptian Exchange (EGX), attracts both local and international investors. Efficient payment systems facilitate domestic and international transactions, reducing transaction costs and expanding financial inclusion. BRICS membership also offers Egypt the potential for increased investment, allowing it to leverage its economic potential and learn from the experiences of its fellow members. Additionally, BRICS membership promotes financial stability and resilience, allowing Egypt to maintain a robust financial infrastructure. Egypt’s strategic geographic location allows it to leverage its participation in the BRICS alliance to expand its trade network, promoting economic growth and diversification.

Strengthening the partnership between Egypt and BRICS regarding startups and venture capitals

Egypt’s startup ecosystem is thriving, positioning it as a hub for entrepreneurship and innovation in the Middle East. The country’s strategic location, large domestic market, and skilled graduates from reputable universities contribute to its growth. The government has implemented initiatives to support startups, including funding schemes, tax incentives, and legislative support. Egypt’s strong diaspora networks provide startups with valuable connections and resources, while its membership in the BRICS group opens doors to extensive trade opportunities, investments, and collaborations with other member countries. This membership also offers a platform for knowledge-sharing and best practices among member states, enabling startups to adapt and adopt innovative approaches. Egypt’s geopolitical positioning and credibility are also enhanced by its membership in the BRICS group. This collaboration can lead to joint investments and partnerships between Egyptian startups and those from other member states, leveraging the respective strengths and resources of each country.

Egypt with Better Credit Terms within BRICS Membership

Egypt, an emerging market economy with immense potential, could greatly benefit from accessing better credit terms within BRICS membership. This would provide Egypt with better funding opportunities for large-scale infrastructure projects, enabling sustainable economic growth. Additionally, better credit terms within BRICS membership would enhance Egypt’s ability to attract foreign direct investment (FDI), promoting strategic partnerships and innovation. As one of three African members of BRICS Plus, Egypt would have a unique platform to voice its concerns and advocate for the interests of the African continent. Moreover, improved credit terms could open up new avenues for social development, allowing the government to allocate resources towards poverty reduction, healthcare, education, and social welfare. However, Egypt must address internal challenges such as corruption, bureaucracy, and political instability to fully capitalize on the benefits of improved credit terms. Diversification of the economy, away from tourism and agriculture, and diversification of external relations beyond traditional partners can strengthen Egypt’s resilience in times of global economic uncertainty.

To obtain better negotiation terms with respect to the Renaissance Dam

Egypt’s BRICS membership offers a chance to influence international issues, particularly in the Middle East and North Africa. It can collaborate with countries like China and Russia, promoting its interests in conflict resolution, terrorism combat, and regional stability. However, Egypt’s ongoing negotiations with Ethiopia over the GERD dam have been fraught with tensions, as the dam’s construction could disrupt Egypt’s water supply. The dispute highlights the need for equitable water-sharing agreements and cooperative frameworks to ensure the sustainable use of a shared resource. Despite mediation efforts by the United States and the African Union, a definitive resolution remains elusive, highlighting the need for equitable water-sharing agreements.

Egypt’s BRICS Membership and Local Currencies Replacing US$

Egypt applied to join the BRICS in 2020, citing its strategic location, political stability, economic reforms, and potential for regional integration. However, adopting BRICS principles and aligning the Egyptian economy with these nations would require significant internal reforms and careful management of Egypt’s strategic relationship with the United States. Similarly, countries are considering reducing their dependency on the US dollar as the world’s primary reserve currency due to concerns over volatility, inflation, and political instability. Transitioning to local currencies as global reserve currencies would have advantages such as reducing global financial crises, enhancing economic sovereignty, and allowing countries to prioritize domestic agendas. However, a smooth transition requires collaboration, trust, and restructuring of the existing global financial infrastructure.

Conclusion

In conclusion, Egypt’s decision to join the BRICS group signifies its aspirations for global influence, trade diversification, infrastructure expansion, energy security, and political cooperation. This alliance offers Egypt a competitive advantage in global financial infrastructure, access to resources, increased investment, financial stability, and expanded trade relations. Egypt’s startup ecosystem, a hub of innovation and entrepreneurship, is also thriving due to its strategic location, large domestic market, talented workforce, supportive government policies, and diaspora networks. Egypt’s BRICS membership also presents opportunities for economic, political, and social advancement, including better financing options for infrastructure projects and increased foreign direct investment. However, it also presents challenges in balancing relationships with traditional partners and emerging powers, such as the Renaissance Dam issue with Ethiopia. Understanding these dynamics is crucial for developing sustainable diplomatic strategies for Egypt’s economic development and regional stability.

Director of the Center for Asia Studies

Ahmed Moustafa