Aweke Getahun, Senior News Editor at Ethiopian News Agency
Ethiopia is a landlocked nation in the Horn of Africa that is strategically crucial for a number of reasons, including its location, population density, regional power, potential for economic growth, and others. As a result, it has become a hub for other nations looking to exert influence over the area. Ethiopia is a vital center for trade and communication because of its advantageous location at the intersection of Africa, the Middle East, and Asia. It shares border with Kenya, South Sudan, Sudan, Somalia, Djibouti, and Eritrea. It is a vital connection in international trade because of its closeness to the Red Sea and the Gulf of Aden, which give access to important marine trade routes. International powers acknowledge Ethiopia’s role in preserving security in the area and guaranteeing continuous access to these crucial economic routes.
Along with hosting the African Union (AU), Ethiopia is a member of other regional and continental organizations, including the African Union (IGAD), the Common Market for Eastern and Southern Africa (COMESA), and the African Continental Free Trade Area (AfCFTA).With a population of over 120 million, Ethiopia is the second-most populous country in Africa. With more than 70% of the population under 30, it has one of the youngest populations in the world. There is a lot of room for economic development and expansion with this sizable and youthful workforce. Ethiopia is an ideal leader in the area because of its cultural and historical links to the Horn of Africa. It has been vital in supplying security forces to secure the area, encouraging regional collaboration, and settling disputes. Global powers see Ethiopia as a useful partner in combating common issues like piracy, illicit trafficking, and terrorism while also preserving regional stability.
The latest downturn in the economy
Ethiopia’s economy has grown at one of the quickest rates on the continent and with the largest population, averaging about 10% annually. Although it still depends heavily on agriculture, the government has made a concerted effort to industrialize and diversify the economy. Numerous causes, such as increasing investment in the industrial, services, infrastructure, and agriculture sectors, have contributed to this expansion. Ethiopia is now facing several issues that jeopardize its social cohesion and economic stability, despite a number of noteworthy economic successes in recent years. About 80% of Ethiopia’s population depends on agriculture for a living, making the country heavily dependent on it. Ethiopia’s economy has been severely impacted by the continuous conflict in many regions of the nation. The worry expressed by the US and the EU indicates that the problem has garnered attention on a global scale. The severe lack of foreign exchange that Ethiopia has been experiencing has made it challenging for the nation to import necessities. Foreign exchange shortages have been caused by a combination of declining export revenue, declining diaspora remittances, and restricted access to international financing as a result of the epidemic. Because of this, Ethiopia is finding it more and more difficult to pay the coupons on its sovereign bonds and to service its foreign debt.
Joining the BRICS bloc
In 2023, a significant turning point in Ethiopia’s foreign policy was reached when it joined the BRICS alliance as a full member, joining five other nations: Saudi Arabia, Egypt, Iran, Argentina, and the United Arab Emirates. The rising economies that make up the BRICS group—Brazil, Russia, India, China, and South Africa—represent around 27% of the world’s geographical area, 42% of its population, and 33% of its gross domestic product (GDP). Ethiopia’s bid was strengthened by its favorable relations with the key BRICS nations, notably China and India, alongside its substantial population, impressive economic expansion, and bright prospects. It is anticipated that Ethiopia’s inclusion in the BRICS group will have a major positive impact on its international collaboration, regional integration, and economic growth. According to economists, Ethiopia will have access to the New Development Bank (NDB), a global financial organization that was founded in 2014 by the BRICS nations to assist with projects related to sustainable development and infrastructure in developing and rising nations. With a capital of US$100 billion, the NDB has authorized loans of more than US$30 billion for a range of industries, including urban development, energy, transportation, water, health, and education. Through the Contingent Reserve Arrangement (CRA), a structure for mutual support among the BRICS nations in times of balance of payments issues or short-term financial stress, Ethiopia’s membership in the BRICS will benefit the Horn of Africa.
With a total value of $100 billion, the CRA can augment the current global financial safety nett. Participation in the BRICS basket reserve currency is a proposal to establish a single currency among the BRICS nations, therefore lessening their reliance on the US dollar and other major currencies. As a unit of account, a means of exchange, and a store of value, the basket reserve currency would be made up of a weighted average of the BRICS member countries’ respective currencies. Originally established in 2006 as a loose platform for communication and collaboration among its members, the BRICS group has subsequently grown into a more official institution with a wider range of objectives. The BRIC group was established in 2006 by Brazil, Russia, India, and China. South Africa joined the organization in 2010, adding the letter S to the acronym. In addition to accounting for 30% of the planet’s landmass and over 42% of its people, the bloc also contributes 23% of global GDP and 18% of global commerce.
Opportunities
Ethiopia’s geopolitical power is anticipated to increase as a result of its BRICS membership, allowing it to take part in important talks on world issues. Ethiopia now has a forum to discuss issues and interests with other major rising markets, such as Brazil, Russia, India, China, and South Africa (BRICS). Ethiopia can more successfully advocate for regional and continental goals, such as advancing economic integration, sustainable development, and peace in Africa, by increasing its influence. Ethiopia is anticipated to benefit commercially and economically from membership in the BRCS. The union has prospects for enhanced bilateral commerce and foreign direct investment (FDI) since it includes some of the biggest economies in the world. Joint projects, research partnerships, teacher exchanges, and technology innovations provided by other members can all be advantageous to Ethiopia. This partnership may help close development gaps and support a number of industries, from manufacturing to agriculture. Ethiopia’s ambitious infrastructure program is receiving more assistance, as seen by China’s engagement in BRICS infrastructure development. The enhancement of ports, trains, power plants, road networks, and digital connections might all benefit from this funding. These advancements have the potential to promote economic expansion, ease commerce, and unite formerly disconnected areas, culminating in a society that is more wealthy and cohesive. Being a part of BRICS gives Ethiopia the chance to benefit from the experience, skills, and technology of other countries that have made strides in fields like manufacturing, artificial intelligence, and renewable energy. Ethiopia would have a stronger voice and more influence in international political and economic matters as a member of the BRICS alliance. This might give the nation a stage on which to promote its interests, open up foreign markets, and present chances to establish strategic alliances with other superpowers. Ethiopia’s participation in the BRICS group might motivate other African nations to pursue similar affiliations, potentially leading to the establishment of regional blocs that could transform the global economic landscape.
Challenges
The BRICS membership of Ethiopia presents challenges regarding power relations within the organization. Ethiopia, the BRICS country with the lowest GDP, must make sure that its interests and voice are fairly reflected. It might be difficult to make sure that the decision-making process is fair and takes into account the individual requirements of each member. Ethiopia should work to strengthen its strategic partnerships and diplomatic negotiating abilities with other BRICS members in order to keep its worries from being eclipsed. Balancing its connections with its traditional partners and friends, such as the United States, the European Union, and the African Union, who may have worries or misgivings about Ethiopia’s growing relationships with the BRICS nations, might be another problem for the East African nation.
As dynamics and expectations change, the BRICS group is evolving from an unstructured forum to a more formal organization. Its membership has grown as a result of this transformation, which has also placed more emphasis on tackling a range of internal problems and issues, including social inclusion, political stability, environmental protection, security risks, and poverty reduction. Between the BRICS nations, there are notable economic differences; Ethiopia’s economy is far less than that of China or Brazil. For Ethiopia, this means that it could be difficult to participate in and gain equitably from bloc-wide efforts and collaborative projects. The BRICS countries can help handle Ethiopia’s economic problems by increasing investment and development support, but Ethiopia’s over-reliance on these nations might jeopardize national sovereignty and lead to a power imbalance.
In conclusion, Ethiopia is a significant player in the Horn of Africa because of its population, geographic location, potential for economic growth, influence in the area, energy resources, and participation in geopolitical rivalries. It attracts the attention of global powers seeking to maintain peace in the area, resolve shared concerns, and obtain access to markets, resources, and strategic assets. The country will become even more strategically significant over the coming years, and its ability to balance the interests and influence of several foreign powers will have a significant impact on both its own development and the stability of the Horn of Africa. However, there are certain difficulties involved as well, which Ethiopia’s society and government must carefully consider and handle. A problem for Ethiopia may be striking a balance in its relationships with traditional friends and partners like the US, EU, and African Union, who could be wary of Ethiopia’s growing links to the BRICS nations.
