BRICS Expansion Could Help Egypt’s Ailing Economy
New additions to the bloc from Africa are linked by their opposition to a Western-dominated financial system.
Welcome to Foreign Policy’s Africa Brief.
Welcome to Foreign Policy’s Africa Brief.
The highlights this week: Egypt and Ethiopia are set to join BRICS next year as the bloc expands, the Wagner Group’s future in Africa looks different after the death of Yevgeny Prigozhin, and Zimbabwean President Emmerson Mnangagwa is elected to a second term.
Can BRICS Save Egypt?
Last week’s announcement that the BRICS grouping will expand—adding Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates next January—brings China closer to its goal of making the bloc a rival to the G-7. (BRICS currently includes Brazil, Russia, India, China, and South Africa.) BRICS leaders have pushed back against the reign of the U.S. dollar; the common interest in the expanded group seems to be opposition to the Western-dominated financial system.
That is certainly the case for Egypt and Ethiopia. The strength of the U.S. dollar and high U.S. interest rates have increased the cost of their imports; they also seek alternative lending streams without Western conditions attached. Ethiopia has a tumultuous relationship with the United States and is China’s second-largest debtor in Africa, while Egypt has already indicated that it will pay for imports from China, India, and Russia in their respective currencies.
BRICS membership could especially benefit Egypt, which is in the midst of an economic crisis. After last week’s announcement, Egyptian President Abdel Fattah al-Sisi said that his country looked forward to helping to “raise the voice of the Global South,” and Egypt’s finance minister said he hoped the invite would lead to investment and export opportunities that involve local currencies.
Egypt’s sovereign debt has ballooned to more than 95 percent of the country’s GDP, and the Egyptian pound has fallen by 50 percent against the U.S. dollar since March 2022. The country is a significant International Monetary Fund debtor, and it joined the BRICS New Development Bank (NDB) in February to help ease a dollar crunch. The NDB has set up a $100 billion currency reserve pool for its members, and it aims to facilitate 30 percent of lending in local currencies by 2026.
Last year, investors pulled around $20 billion out of Egypt in the first few months of the economic downturn that followed Russia’s invasion of Ukraine. Compounding the situation, Sisi’s administration has borrowed heavily for what critics denounce as vanity projects. Egypt has also suffered as a regional power broker: With a civil war in neighboring Sudan, Egypt “must be embarrassed that Saudi Arabia has ended up playing the critical role in a conflict where Egypt—according to its own myths—should be leading,” FP’s Steven A. Cook wrote recently.
In fact, it is Saudi Arabia that Egypt will likely turn to within BRICS to help pull the country out of its economic crisis. Cairo has repeatedly borrowed from Riyadh, but the Saudi government recently signaled that it would no longer provide financial support to its allies without conditions attached, such as reforms. Trade with other BRICS countries will likely continue apace, with Russia acting as a source of grain imports to Egypt; Moscow’s central bank added the Egyptian pound to its list of exchange currencies in January.
Although BRICS membership may not fix Egypt’s economy in the short term, economists say it could eventually help the country attract more investment and lower its debt burden. On another front, given the addition of both countries to the bloc, BRICS could even help solve a long-running dispute between Egypt and Ethiopia over the Grand Ethiopian Renaissance Dam on the Blue Nile River. The pair resumed talks on Sunday after a two-year deadlock.
Some experts see the BRICS expansion as shaping the group into an explicitly anti-Western bloc. Economist Jim O’Neill, who coined the original BRIC acronym, expressed concern that Indonesia and Nigeria were not included given the size of their economies. “When it comes to Africa, why not Nigeria, which is 20 percent of the continent’s population?” he said. “It is hard to avoid concluding that China and Russia have had quite a big influence on which countries have been selected.”
However, as FP reported last week, Nigerian President Bola Tinubu has said the country was not ready to join BRICS for the moment.
The Week Ahead
Monday, Aug. 28, to Friday, Sep. 1: African health ministers meet for the 73rd session of the World Health Organization Regional Committee for Africa in Gaborone, Botswana.
Monday, Aug. 28, to Friday, Sept. 8: Mike Hammer, the U.S. special envoy for the Horn of Africa, visits Nairobi and Addis Ababa, Ethiopia, to meet with Kenyan and Ethiopian officials as well as the African Union. He is expected to discuss Sudan and conflicts in Ethiopia’s Amhara and Oromia regions.
Monday, Sept. 4, to Wednesday, Sept. 6: Nairobi, Kenya, hosts the Africa Climate Week and Summit.
What We’re Watching
Wagner Group’s future. The death of Yevgeny Prigozhin, the founder of the Russian mercenary Wagner Group, does not seem likely to dislodge the group from countries where it is well-established in Africa. Experts say the Central African Republic and Mali will keep their contracts with the group, given assurances from Russia that assistance will continue. However, Prigozhin’s death revealed tensions within Moscow’s security services that could slow the influx of Russian military contractors in Africa as governments consider alternative partners, such as Turkey.
The Wagner Group has some 5,000 members in the four African countries where it operates, and without Prigozhin, this presence is likely to be more chaotic and unregulated. The Russian military could absorb the group, but there are many other Russian paramilitary groups (including some operating in Africa) that may seek to recruit Wagner members.
Zimbabwe’s election results. On Saturday, Zimbabwean President Emmerson Mnangagwa was unsurprisingly declared the winner of last week’s election, granting him a second and final term. He took a reported 52.6 percent of the vote, compared to 44 percent for the main opposition challenger, Nelson Chamisa. Election observers from the Southern African Development Community regional bloc noted irregularities, and Zimbabwean authorities arrested dozens of local election monitors during the vote on subversion charges.
Mnangagwa took office in Zimbabwe in 2017 after longtime dictator Robert Mugabe was removed in a military coup, and he won a disputed election in 2018; as a result, his victory was predictable. “When these are the ‘democratic’ exercises underway, it’s unsurprising that many people are eager to explore alternatives,” wrote Michelle Gavin, a senior fellow for Africa studies at the Council on Foreign Relations, before the election.
Protests in Libya. Libyan Foreign Minister Najla al-Mangoush was sacked on Monday after her Israeli counterpart said he held talks with her last week in Rome, despite the two countries not having formal relations. Nationwide protests erupted in Libya on Sunday as demonstrators blocked roads and waved the Palestinian flag. Israel has normalized relations with some Arab countries as part of the Abraham Accords, but many young Muslims reject Israeli Prime Minister Benjamin Netanyahu’s far-right government, which plans to expand illegal settlements in the occupied West Bank.
This Week in Culture
Ethiopian women marked the nationwide Ashenda festival after a three-year hiatus due to the COVID-19 pandemic and the country’s two-year Tigray War. The annual Ashenda celebration dates back to the fourth century and was originally a Christian festival honoring the Virgin Mary’s ascension to heaven. It has since evolved into Girls’ Day, a broader cultural festival that transcends religion.
As part of the festival, young girls and women dance and sing songs together. The women wear skirts made of a tall, green grass known as ashenda in the Tigrinya language. In Amharic, the festival is known as Shaday or Ahendiye. The celebrations took place in communities still healing from conflict, with forces on all sides accused of atrocities against women and girls during the war.
FP’s Most Read This Week
- Russia’s Illegal Bridges Have Ukrainian Crosshairs on Them by Oz Katerji
- The Panda Party’s Almost Over by Rishi Iyengar
- Turkey’s Halt on Iraqi Oil Exports Is Shaking Up Global Markets by Emir Gurbuz
Chart of the Week
Next week, Kenya’s capital hosts the Africa Climate Summit, where leaders are expected to discuss financing for climate action and the green energy transition. Developing countries need renewable investments of about $1.7 trillion per year to be able to expand electricity and make the transition to low-carbon energy, but they attracted only $544 billion in foreign direct investment for clean energy in 2022.
Investments in Africa are concentrated in a handful of countries: Egypt, Morocco, South Africa, and Kenya account for nearly three-quarters of all renewable energy investment on the continent since 2010.
What We’re Reading
The EU factor in Bazoum’s downfall. In the Guardian, Zeinab Mohammed Salih reports that some observers have credited former Nigerien President Mohamed Bazoum’s support for European Union migration policy as one of many reasons for his ouster on July 26. Under a deal implemented in 2016, when Bazoum was interior minister, Niger received aid money in return for blocking migration routes through North Africa; the legislation became known as the “Bazoum law.”
According to the Guardian, members of the Nigerien military strongly opposed the law because they had previously benefited from bribes paid by both smugglers and migrants.
Malawi’s state-backed prejudice. The Platform for Investigative Journalism Malawi reports on targeted attacks against migrant businesses by the governing Malawi Congress Party’s youth wing. The outlet found that members of both the youth wing and the Malawi police destroyed and looted businesses run by Burundi and Rwandan refugees in the townships of Mchinji, Lilongwe, and Salima.
Nosmot Gbadamosi is a multimedia journalist and the writer of Foreign Policy’s weekly Africa Brief. She has reported on human rights, the environment, and sustainable development from across the African continent. Twitter: @nosmotg
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