Monday, June 17, 2024

Economists implore for upgrade in financial systems ahead of BRICS


By Eyasu Zekarias

Ethiopia gears to officially join BRICS in January 2024, with hopes and concerns equally running high.

As Dr. Degye Goshu, Director of Research and Policy Analysis of the Ethiopia Economic Association (EEA) highlights, it is necessary to create a governance and financial system for Ethiopia with BRICS members, owing to the low level of trust in the current National Bank.

“Ethiopia’s voting power in the World Bank is less than 1 percent, and it is difficult to get the expected benefit if there is no comparable or equal financial system in BRICS,” Dr. Degye pointed out.

Recently, economic experts within the EEA, posed the question, “Does Ethiopia benefit from joining the BRICS?” As, reviewed, the simple answer was yes but as from the broad spectrum of analysis of 233 economic experts’ survey, Ethiopia is noted to have wanted to join BRICS because of political and economic sanctions.

As the report showcased, 49 percent of economic experts believe that Ethiopia joined BRICS because of political and economic sanctions. Among the 233 economic experts who conducted the study, 47 percent believed that emerging economy, 45% geopolitical, 41% deteriorating foreign relation with the west and 39% shortage of forex as the reasons why the country wanted to join BRICS.

According to the EEA, there is no clear criteria why BRICS accepted the newly joined countries.

Reducing the supremacy of the dollar, and allowing BRICS members to be able to trade in their own local currency is said to create a paradigm shift in the economy. To this end, from the survey, 61 percent of experts gave their opinion that BRICS can eliminate the dollar.

BRICS whose current members are Brazil, Russia, India, China, South Africa, will in the New Year 2024, include Ethiopia, Egypt, Argentina, Iran, United Arab Emirates and Saudi Arabia.   

According to PM Abiy Ahmed this is a pivotal move for the country.

Nonetheless, economic experts have expressed concerns that it will be difficult for Ethiopia to get out of its current political, economic and social problems in alignment to the objectives of BRICS.

Some of the issues raised in form of percentages from the pool of survey was: 52% citing conflict of political interest, 51% citing limited financial capacity of the BRICS, while 27% spotted governance problem in BRICS.

It is widely argued that Ethiopia’s official joining of the BRICS group will increase its economic potential in the Horn of Africa and enable it to implement the 2063 African Development Agenda and the goals of the African Continental Free Trade Agreement (AfCFTA).

Read more