Recent working paper by the Ethiopian Economics Association (EEA) highlights concerns over potential Western backlash following Ethiopia’s membership in the BRICS bloc. A survey of 233 Ethiopian economists revealed a significant majority anticipate adverse reactions from Western powers due to Ethiopia’s new alliance. These reactions include the refusal or reduction of new loans and grants (55.6%), financial disbursement problems (42.7%), and pressures for currency devaluation (39.7%), alongside political pressures and impacts on foreign direct investment (FDI) (37.5%).

With 73.4% of respondents foreseeing negative measures from Western entities, the anticipated challenges extend to political pressures and a strained relationship with institutions like the World Bank Group (WBG) and the International Monetary Fund (IMF). The survey also identified internal challenges within BRICS, such as political interest conflicts among members and the bloc’s limited financial capacity to support emerging economies like Ethiopia.

Despite these challenges, the study suggests that the economic benefits of joining BRICS could outweigh the drawbacks. However, nearly half of the experts fear economic costs, in addition to the consensus on the expected Western punitive measures. The National Bank of Ethiopia (NBE), as perceived by these economists, lacks the trust and capacity to actively participate within BRICS, highlighting the need for substantial financial and banking reforms.

The research concludes with recommendations for Ethiopia to carefully assess the multifaceted effects of joining BRICS, suggesting a balanced approach of engaging with both BRICS and Western international financial institutions (IFIs). This strategy includes trading with local currencies within BRICS, despite potential forex constraints and the need for Ethiopia to overhaul its financial system to match the standards of BRICS member states.