President Abdel Fattah El-Sisi with Presidents of Russia and China. BRICS.
This move to expand BRICS has taken center stage during the three-day summit in Johannesburg from 22 to 24 August.
The five BRICS nations are open to expanding the club to new members, South African President Cyril Ramaphosa said on Wednesday.
Amid significant economic challenges, Egypt stands to gain several advantages from joining the bloc. Here are four key benefits:
1. Wean the economy off the dollar
The BRICS countries aspire to create an alternative currency for global trade, potentially backed by gold, to lessen reliance on the US dollar for pricing essential commodities in global markets, according to the bloc's website.
The dethronement of the dollar could benefit countries like Egypt, which has faced a critical shortage of US dollars for about a year and a half. By adopting an alternative currency, Egypt could potentially address its estimated $17 billion financing gap forecasted until 2026.
2. Attract new investments
Membership in the BRICS could open doors to substantial investments in the Egyptian economy.
Data from the Central Agency for Public Mobilization and Statistics (CAPMAS) reveals that investments from BRICS nations in Egypt surged from $610.9 million in the fiscal year 2020/2021 to $891.2 million in 2021/2022, marking a 45.9 percent increase.
Egypt joined the BRICS New Development Bank (NDB) in March. Established in 2015 by BRICS countries, this institution is a multilateral development bank aimed at mobilizing resources for infrastructure and sustainable development projects within BRICS and in other emerging markets and developing countries (EMDCs).
The BRICS countries plan to develop the NDB as a replacement for the World Bank and the International Monetary Fund (IMF), supporting member states through the Contingent Reserve Arrangement, which is a framework to provide additional liquidity and other benefits to BRICS countries during economic crises.
In December, Egypt entered into a $3 billion loan programme with the IMF to alleviate its economic pains. However, the IMF loan deal is currently facing challenges since the first review, originally scheduled for completion by 15 March, has not yet been conducted.
3. Boosting mutual trade
Egypt has a considerable volume of trade with BRICS members, especially, Russia, China, and India. With its developing economy, Egypt could expand its exports to these countries, capitalizing on trade agreements like the Common Market of the South (Mercosur), to become a hub connecting Africa, Asia, and South America.
Trade exchange between Egypt and the BRICS countries increased to $31.2 billion in 2022, compared to $28.3 billion in 2021; a growth of 10.5 percent.
4. Securing strategic commodities
Egypt, Russia and India have previously discussed trading wheat and rice, along with other strategic commodities, in Egyptian pounds, rubles, and rupees. By joining the BRICS, such talks could come to fruition.
Egypt is expected to import 12 million tons of wheat during the current FY 2023/24, which started on 1 July, according to a report by the Food and Agriculture Organization released last month. Based on the Ministry of Supply's data, the country imports 60 percent of its basic food needs.