Ethiopia’s surprising admission into the BRICS elite circle: Exploring the role of geopolitics, economics

By Abdii Biyenssa @ABiyenssa 

Addis Abeba – The recent BRICS summit, held in South Africa, sent shockwaves through global geopolitics as it unexpectedly welcomed six new nations into its ranks. On January, 2024, Argentina, Iran, Saudi Arabia, the United Arab Emirates, Egypt, and Ethiopia will officially join the bloc. This surprising move not only ignited fierce debate among experts but also captured the attention of world leaders. Among the newly admitted members, one nation stood out, sparking intense discussions and leaving many questioning the criteria behind its selection: Ethiopia.

The invitation extended to Ethiopia to join the bloc was a surprising twist, given that Ethiopia has expressed interest in joining the BRICS only in recent years. In 2022, Ethiopia made its debut at the 14th BRICS summit, which was hosted by China. Subsequently, in early 2023, the Ethiopian Foreign Ministry duly submitted an official application to join the bloc.

In his statement following Ethiopia’s endorsement to join the emerging-market bloc at the 15th BRICS Summit in Johannesburg, Prime Minister Abiy Ahmed underscored the importance of the country’s membership in BRICS. According to him, this accomplishment represents an exceptional diplomatic milestone for Ethiopia, standing out as one of the most remarkable feats in the nation’s recent history.

Originally developed by Goldman Sachs economist Jim O’Neill in 2001, the term BRIC encompasses the ascent of Brazil, Russia, India, and China. In 2009, these influential nations held their inaugural summit in Russia. Subsequently, South Africa joined the group in 2010, officially transforming it into BRICS.

There is much debate over whether the recent expansionary move by the bloc is simply a numerical change or rather a strategic indication of a shift in the global economic landscape. Established 14 years ago, BRICS has seen its significance in global geopolitics and trade grow steadily, as evidenced by its combined gross domestic product (GDP) of $27.6 trillion in 2023, representing 26.3% of the global total. With its latest maneuver, the bloc has not only increased in numbers but also elevated its combined GDP to $30.8 trillion, now accounting for a third of the global economy.

The inclusion of these six nations signifies a shift in global dynamics as BRICS strives to broaden its strategic influence.”

Jeffrey Sachs, a renowned economics professor

Experts highlight that this significant decision serves as a pivotal chance for Ethiopia to make its mark on the global stage. During a recent interview, renowned economics professor Jeffrey Sachs asserted that the inclusion of these six nations signifies a shift in global dynamics as BRICS strives to broaden its strategic influence. “When it comes to finding partners in Africa, it is a clever move for BRICS to focus on Ethiopia and Egypt, both ancient civilizations with sizable economies and growing populations,” he said.

Decoding Ethiopia’s selection

Despite BRICS’ decision to welcome six nations into its ranks, Ethiopia’s selection has left many pondering. According to the Prime Minister, Ethiopia’s eligibility to join the bloc stems from a multitude of factors, with the topmost being its burgeoning population, rich historical heritage, and remarkable economic growth rate. Prime Minister Abiy further highlighted the nation’s tremendous development prospects and its promising potential to emerge as a powerhouse in Africa’s future.

Although Ethiopia has experienced rapid economic growth for more than a decade, its economy pales in comparison to South Africa, the smallest BRICS member in terms of GDP size. According to the official data, Ethiopia’s GDP size is only a quarter of South Africa’s, standing at close to $406 billion in 2022.

In a recent address to the parliament, Prime Minister Abiy highlighted that Ethiopia has successfully emerged as the largest economy in the East African region. In April 2023, the International Monetary Fund (IMF) brought forth a new prediction, indicating Ethiopia’s likelihood of surpassing Kenya to become the largest economy in Eastern Africa by the end of 2023, with a $156 billion GDP size.

Although Ethiopia has the biggest economy in East Africa, its economy is inferior compared to other African heavyweights such as Nigeria or Algeria. With a population of 223 million, Nigeria boasts the largest population in Africa. Therefore, it was quite surprising for many that Nigeria, with its $477 billion GDP, was absent from the selection process.

Muhammad Haruna Manta, the Nigerian High Commissioner to South Africa, recently explained why Nigeria, the largest economy in Africa, was not invited to join the bloc. According to Manta, Nigeria never applied to become a member.

Gutu Tesso (PhD), a seasoned economist and researcher, asserts that politics, rather than economics, played a significant role in the selection process. To support his argument, Tesso highlights the establishment of BRICS, which is rooted more in geopolitics than in economic benefits.

Gutu, who has nearly 20 years of experience working for international organizations such as the European Union’s office in Addis Abeba and the African Development Bank office in Abidjan, Côte d’Ivoire, also harbors doubts about the prospects of the bloc. This skepticism arises from the geopolitical tensions that existed between several member countries, including China and India, Saudi Arabia and Iran, Ethiopia and Egypt, as well as Brazil and Argentina.

However, experts like Andrew Korybko, an American political analyst based in Moscow, argue that this decision is a calculated move aimed at achieving meticulous equilibrium and promoting harmony and impartiality. Korybko highlights that BRICS draws inspiration from the Shanghai Economic Cooperation model. It strategically includes potential regional competitors like Saudi Arabia, Iran, Ethiopia, and Egypt, ensuring a delicate balance and preventing any country from overshadowing others.

With Nigeria out of the picture, the general anticipation was towards Algeria, which had submitted a formal application in November of last year. With its rich resources and global geopolitical stance, Algeria also had the support of heavyweights like Russia to be included in the bloc.

Algeria is not just a nation residing in northern Africa. With its vast expanse in the Sahara and coastline touching the Mediterranean Sea, the nation is strategically placed between Africa and Europe, making it an ideal candidate to join BRICS. However, Korybko stated that inviting Algeria to join the bloc without its regional rival, Morocco, would destabilize the balance.

The other contender for BRICS membership was Morocco, a nation that has strong ties with BRICS countries such as China and Russia. However, its relationship with South Africa has been tense, largely due to South Africa’s long-time political support for the cause of the Sahrawi Arab Democratic Republic. The Sahrawi Arab Democratic Republic, a former Spanish colony, was annexed by Morocco in 1975. Since then, it has been the subject of a long-running territorial dispute between Morocco and its indigenous Sahrawi people, led by the Polisario political movement.

Just before the BRICS summit was set to convene in South Africa, Morocco’s state news agency, Maghreb Agence Presse (MAP), announced that the country would not be attending the upcoming summit in Johannesburg. The news agency further stated that South Africa has consistently displayed a hostile attitude towards the kingdom and has taken negative and rigid stances on the issue of the Moroccan Sahara.

This improved the odds for Ethiopia and Egypt, two nations currently locked in a dispute over the construction of the Grand Ethiopian Renaissance Dam (GERD) and the future management of the Nile River.

What’s in it for Ethiopia?

Abdurahaman Edao, a foreign policy analyst, provides insights into the motivations behind countries’ desire to join the BRICS bloc. He emphasizes that with a population of over three billion people, countries can tap into a significant market by joining BRICS. Additionally, he points out that the middle class in BRICS nations is experiencing notable growth, which presents new commercial prospects.

In 2021, the BRICS countries were estimated to have a combined population of 3.24 billion people, which is over 40% of the world population. With the addition of these six countries, the bloc now represents 42% of the world’s population.

However, Gutu, the economist, asserts that the majority of BRICS member states have identical market objectives, posing a formidable obstacle for Ethiopia to establish a foothold in these saturated markets.

He also disagrees with Prime Minister Abiy’s statement that Ethiopia’s entry into the BRICS bloc signifies a noteworthy advancement in achieving concrete South-South cooperation, mainly because of the differing interests among member states. According to Gutu, these divergent interests pose difficulties in reaching consensus on common objectives.

Gutu additionally pointed out the presence of significant geopolitical tensions between countries, such as China and India, Saudi Arabia and Iran, Ethiopia and Egypt, as well as Brazil and Argentina, which further complicate the achievement of common goals. “The nature of these member states has an adverse impact on unanimous voting, potentially resulting in policy deadlock and organizational instability,” he argued. “As a result, successful cooperation may prove to be challenging.”

Despite its complicated arrangement, Abdurahaman believes that by becoming a member, Ethiopia could potentially access financial resources from the BRICS New Development Bank (NDB) to fund its infrastructure and development projects. This move, according to the policy analyst, would reduce Ethiopia’s reliance on traditional Western-dominated institutions such as the World Bank and the IMF.

The NDB is a multilateral development bank that was established in 2015 by BRICS countries. Its primary objective is to mobilize resources for infrastructure and sustainable development projects in emerging markets and developing countries. Up until May 2023, the bank has disbursed $33 billion across over 96 projects in its five founding member countries.

But Abdurahaman emphasizes that joining BRICS does not mean a complete departure from the IMF and the World Bank. Instead, it aims to diversify Ethiopia’s sources of financing and explore the possibility of trading with member states using local currencies instead of relying solely on the dollar.

The Western world continues to be the primary provider of external funding for Ethiopia. According to the Public Sector Debt Statistical Bulletin released by the Ministry of Finance in June 2023, out of Ethiopia’s total external debt of $28 billion, 75% is attributed to the Bretton Woods institutions—the IMF and World Bank—as well as Paris Club countries including the United States, the United Kingdom, Western European nations, and Scandinavian countries.

Despite being the major source of funds, the flow of finance from western countries to Ethiopia has shirked in recent years, mainly because development partners have suspended a significant portion of the funds they pledged. As a result, the external assistance obtained in the past two years remains less than a quarter of the plan, according to the latest budget document. 

Three years ago, Ethiopia’s debt distress rating was downgraded by the IMF from “moderate risk” to “high risk” due to its significant debt burden. This also led to reduced interest from major funding sources for the country, such as the Bretton Woods institutions.

In early 2021, the government attempted debt restructuring under the Group of 20’s common framework, a plan specifically designed to restructure government debts in low-income countries. Unfortunately, progress was impeded by a civil war that broke out in November 2020 and has continued for two years. Ongoing discussions with development partners have not yet yielded a definitive resolution.

However, during a sideline meeting of the BRICS Summit in Pretoria, President Xi Jinping made an announcement that China would provide Ethiopia with one year of debt service relief.

Striking a delicate balance

In spite of its obvious advantages, Abdurahaman cautions against the significant risk of developing stronger ties with China, a nation that has already established a firm presence in various parts of Africa, including Ethiopia. Without careful engagement, he says there is a danger of Ethiopia becoming excessively reliant on Chinese commodities, susceptible to currency fluctuations, and exposed to market volatility. Additionally, Abdurahaman raises concerns about the potential neglect of human rights and democracy throughout this process.

Ethiopia should engage skillfully and impartially with global powers without becoming too entangled with anyone at the expense of others.”

Abdurahaman Edao, a foreign policy analyst

To safeguard Ethiopia’s strategic interests, experts emphasize the importance of preserving Ethiopia’s non-alignment policy. Abdurahaman suggests that the nation should engage skillfully and impartially with global powers without becoming too entangled with anyone at the expense of others.

Ethiopia has a longstanding tradition of practicing non-alignment in global politics, prioritizing positive relations with major powers. As a founding member of the Non-Aligned Movement in 1961, Ethiopia has pursued a foreign policy rooted in principles of neutrality and independence.

Gutu also emphasizes that Ethiopia’s non-alignment policy has uniquely positioned it to play a constructive role in mediating international disputes, such as those in South Sudan, and promoting peace and security in Africa. Therefore, deviating from this alignment would risk compromising the significant gains Ethiopia has achieved.

In addition, both Gutu and Abdurahaman stress the importance of conducting a comprehensive analysis before Ethiopia moves forward and urge the country to carefully consider both the benefits and potential drawbacks. They suggest that, by doing so, Ethiopia can develop an optimal strategy to effectively leverage the opportunities at hand. AS