BRICS Building Bloc in Africa
来源:www.africanlawbusiness.com;发表于:2024-03-27;人气指数:43
Wednesday, March
27, 2024
BRICS Building Bloc in Africa
By Andrew Mizner
Entry to the club for rising economic
powers should be a trading boon for Ethiopia and Egypt, but without a clear
membership framework, the benefits are frustratingly vague.
The new year heralded a new era for two
African states. Egypt and Ethiopia joined BRICS on 1 January to form a
continental axis alongside South Africa in the geopolitical group for large
states with significant economic potential.
The two African nations have been joined
as new members by Iran, Saudi Arabia and the UAE, although there was a blow
with December’s news that President Javier Milei would cancel Argentina’s
planned participation.
Their accession was approved at a summit
in Johannesburg on 24 August last year, and marked the first expansion beyond
the core membership of BRICS, which was founded in 2009 by Brazil, Russia,
India and China, joined by South Africa in 2010.
Speaking in November to a government
unit set up to manage Egypt’s accession, Prime Minister Mostafa Madbouly was
reported by the State Information Service (SIS) to have said: “Egypt will work
on strengthening relations with this important bloc based on the grouping
objectives that prioritise promoting trade exchange among its members, boosting
projects that serve sustainable development agenda.”
A 1 January statement from the Ethiopian
government said: “Membership recognises the rich- multilateral contribution of
Ethiopia to promote international peace, security and prosperity; and the
continued commitment and leadership of Ethiopia to south-south cooperation. Due
to the ongoing economic reforms, the current and potential of the Ethiopian
economy has been acknowledged.”
BENEFICIAL INTEREST
In December, governor of the National
Bank of Ethiopia Mamo Esmelealem Mihretu told a meeting of BRICS
representatives that membership “offers a unique opportunity not just to
develop more effective bilateral ties, but also to forge a deeper strategic relationship
based on the principle of sovereign equality and consensus to promote trade,
development finance and investment”.
The expansion also received a cautious
welcome from the International Monetary Fund (IMF), whose communications
director, Julie Kozack, told an 11 January press briefing: “We are a supporter
of countries working together, finding ways to trade to become integrated so
that more people can benefit from the gains of global integration. So, to the
extent that different country groupings enable more integration and more global
cooperation, those are goals that we support.”
Egypt and Ethiopia should benefit from
expanded trade opportunities within the bloc. Commercial lawyer Amir Marghany,
the founder of Cairo-based law firm Marghany Advocates, welcomes membership:
“The main premise of BRICS is really great. Egypt imports lots of goods from
other BRICS members, whether the founding members or the new ones.”
Egypt should benefit from Indian and
Chinese agricultural imports, including wheat, while it has a vibrant plastics
sector which could be strengthened by improved access to Saudi raw materials.
Accession to BRICS also offers an opportunity to improve trade with one of the
continent’s biggest economies, explains Marghany: “Our trading with South
Africa is dismal. We should really look at better trading relations, there are
a million opportunities there,” he says, with timber imports top of the list,
and he hopes for better overall ties with Southern Africa, including Namibia,
Botswana and Eswatini.
“That’s an extended market, and Egypt
should be as well a rallying point for South African goods to enter into other
markets like COMESA (Common Market for Eastern and Southern Africa), for
instance, and the Pan-Arab Free Trade Area,” continues Marghany, “and also we
have our own partnership with the European Union. So South Africa can
definitely benefit from Egypt being a trading partner in accessing newer
markets”.
The country is currently going through
what the International Institute of Strategic Studies has described as “the
worst economic crisis in Egypt’s recent history”, with spiralling debt, reduced
public spending, rising cost of living and a plunging currency.
In February, Egypt’s Trade and Industry
Minister, Ahmed Samir, said the country plans to grow its annual exports to USD
100 billion, particularly through industrial expansion and trade with new
markets. So access to new streams of trade could be a big help, says Marghany:
“There is a chance that Egypt as a BRICS member would import from other members
and export to them without having to go through the US dollar and create the
heavy crunch on the Egyptian currency. It also creates some newer markets to export
to, [which have] lesser barriers. And we will have more and more incentive to
export to these markets.”
LACK OF CLARITY
In a November speech to BRICS leaders,
Egyptian President El-Sisi said membership “will empower us to foster closer
cooperation and joint coordination based on the principles of solidarity,
mutual respect and respect for international law”. However, no clarity on how
this will work has yet been forthcoming, warns Marghany: “It is not very
transparent and I have seen very few executive steps to materialise the whole
framework, which is creating great confusion.” He contrasts this with COMESA,
through which Egypt gains several trade benefits such as easier certification
and lack of barriers.
For a law firm, membership should
provide more than just the opportunity to offer services more widely through
the bloc. “What I am looking for is to be able to promote my services to my own
concerned markets with the edge that we have a BRICS practice group, we can use
the BRICS better than anyone else [and] we can guide businesses through BRICS.
[Currently] there’s nothing I can show for it.”
“We definitely need executive steps and
we need them now, now, now. It’s urgent, it’s vital. And it can be done
unilaterally,” he continues. “It [does not need to be] a fully comprehensive
framework. It could be a patchwork, but one country does this, the other
country reciprocates,” he says, citing the currency swap agreement signed by
Egypt and the UAE in September last year as precedent.
Nonetheless, he is optimistic that in
the long term, “there will be greater clarity and there should be. But not in
the immediate future. At the end of the day, that’s an intergovernmental thing.
It can only be done if the people in the countries who run BRICS sit down and
say something and do something”.
SIGNS OF HOPE
For now, Egypt and Ethiopia should see
some indirect benefits from inter-state trading, larger transactions and
economic growth. There are reported to be 55 current Egyptian projects
involving BRICS, across the oil, communication, IT, energy, transport, civil,
defence, trade and supply sectors, while SIS added that the state would cooperate
with other members on direct foreign investment, logistics, tourism, food
security and cash policies, with a further 235 proposed projects. Outside
BRICS, in November Egypt became the first African country to issue a bond on
the Chinese Interbank Bond Market, with the Ministry of Finance committing the
money to the country’s green financing, while in December, financing was agreed
for the construction of a new terminal at the Damietta port in Egypt. Ethiopia,
meanwhile, navigated the economic challenges of the pandemic by rescheduling
loan repayments and offering tax amnesties, and improving production in key
sectors.
The African Law & Business
Source: www.africanlawbusiness.com