Joining the BRICS alliance opens doors to enhanced financing, diversified trade, and reduced reliance on the dollar.
Joining the BRICS alliance opens doors to enhanced financing, diversified trade, and reduced reliance on the dollar - File Photo
South African President Cyril Ramaphosa has formally invited Egypt, Argentina, Saudi Arabia, and the United Arab Emirates to attain full membership in the BRICS alliance. These new members are set to be officially incorporated into BRICS as of January 1, 2024.
During the disclosure of the results from the 15th BRICS summit, President Ramaphosa affirmed, "The incoming nations will seamlessly integrate into BRICS, commencing on January 1, 2024." The summit convened at the Sandton Convention Center in Johannesburg.
Alaa Ezz, the Secretary-General of the Egyptian Chamber of Commerce, emphasized that Egypt's inclusion in the BRICS group represents a strong move to drive and enhance Egyptian exports. This decision also holds the potential to attract diversified investments from the member countries of this major trade alliance. He pointed out that Egypt's membership in the New Development Bank, a part of the BRICS group, strengthens Egypt's presence on the international stage.
Egypt's membership in the BRICS alliance is seen as a strategic opportunity to foster its economic growth. This step is expected to reduce the reliance on the dollar and facilitate stronger trade relationships with member countries. Alaa Ezz stated that being part of BRICS provides a unique chance for local industry development, as member countries are expected to increase their imports from Egypt.
Joining BRICS is a significant move for Egypt that enhances international confidence in its economic stability. The move is expected to positively influence global financial institutions and credit rating agencies, ultimately resulting in increased investment attraction and reduced import costs.
The investment statistics of the BRICS group in Egypt show a remarkable increase, with a growth rate of 45.9% from $610.9 million in 2020-2021 to $891.2 million in 2021-2022. These investments are expected to continue to surge, turning Egypt into a gateway connecting Africa, Asia, and South America for re-export to Europe and the Americas through free trade agreements.
According to recent data from the General Authority for Statistics and Census, Egyptian exports to BRICS countries increased by 5.3% during the previous year, reaching $4.9 billion compared to $4.6 billion in the previous year. Egypt's imports from BRICS countries also increased by 11.5% to $26.4 billion, and the total trade volume between Egypt and BRICS countries reached $31.2 billion, indicating a 10.5% increase.
India emerged as the top destination for Egyptian exports within BRICS countries in 2022 with a value of $1.9 billion, followed by China with $1.8 billion, Russia with $595.1 million, Brazil with $402.1 million, and South Africa with $118.1 million. On the other hand, China was the leading exporter to Egypt within BRICS, with a value of $14.4 billion, followed by Russia with $4.1 billion, India with $4.1 billion, Brazil with $3.6 billion, and South Africa with $133 million.
Dr. Madhat Nafie, Chairman of Al-Arabiya for Alloys, highlighted that Egypt's membership in BRICS brings substantial weight and importance to the country. Egypt's inclusion among the initial six countries chosen from a total of 23 applicants demonstrates the significance of this move. He emphasized that this membership offers improved financing conditions and reduces Egypt's reliance on international financial institutions like the World Bank and the International Monetary Fund.
With its strategic integration into BRICS, Egypt is poised to reshape its economic landscape and forge stronger trade partnerships on the global stage. This move is set to have far-reaching positive impacts on Egypt's economic growth, trade balance, and investment attraction.
Dr. Kamal Eldesouki, a member of the Board of Directors of the Egyptian Industries Union, highlighted that Egypt's accession to the BRICS group represents a pivotal step for the national economy, especially considering the group's efforts to reduce the use of the US dollar in intra-member trade. This move is expected to alleviate pressure on Egypt's foreign currency reserves.
According to Dr. Kamal Eldesouki, BRICS seeks to rebalance global economic power and trade dynamics, challenging the dominance of specific alliances and currencies in the world economy. He emphasized that this alliance has the potential to create a new economic multipolar reality that shifts away from the dominance of certain economic powers.
Dr. Mohamed Attia Al-Fayoumi, Chairman of the Chamber of Commerce and Treasurer of the General Union of Chambers of Commerce, welcomed Egypt's BRICS membership, expressing that Egypt highly values the confidence shown by the BRICS member countries. Egypt is looking forward to cooperation and coordination with fellow member states to achieve the alliance's economic cooperation goals.
Dr. Kamal Eldesouki further stated that the BRICS alliance includes Russia, China, India, Brazil, and South Africa, collectively representing around 30% of the global economy. This percentage could increase to 50% with the addition of new member countries.
The inclusion of Egypt in the New Development Bank, associated with BRICS, opens doors to improved financing conditions for its developmental projects. These conditions are expected to be more favorable and expedited compared to the constraints imposed by international financial institutions like the World Bank and the IMF.
Membership in BRICS potentially allows Egypt to conduct trade settlements for its major imports in national currencies, which could mitigate pressure on foreign currency reserves. This is particularly relevant considering Egypt's current economic challenges related to foreign exchange measures.
Finance Minister Mohamed Maait has revealed the rationale behind Egypt's bid to become a member of the BRICS economic consortium, which comprises Brazil, Russia, India, China, and South Africa.
Maait emphasized that Egypt's objective is to broaden its global footprint by engaging with various international coalitions and institutions, fostering economic and political advantages.
Mohamed El-Orabi, President of the Egyptian Council for Foreign Affairs, indicated that the government plans to present the membership request during the ongoing summit in South Africa, contingent on Russia's support and encouragement. Prime Minister Mostafa Madbouly is presently representing Egypt at the summit.
According to the Central Agency for Public Mobilization and Statistics (CAPMAS), Egyptian exports to BRICS nations witnessed a rise, nearing $4.9 billion in 2022, up from $4.6 billion in 2021. Likewise, imports from BRICS countries to Egypt marked an upswing, totaling $26.4 billion in 2022, compared to $23.6 billion in 2021.
In conclusion, Egypt's impending membership in the BRICS economic alliance is highly anticipated as a strategic move with far-reaching economic implications. It promises to not only boost trade and investments but also reshape global economic dynamics and provide Egypt with increased financial opportunities and currency flexibility.
