Ethiopia and China Finalize Currency Swap Agreement

Ethiopia and China have finalized a currency swap agreement. This deal allows trade in Ethiopian Birr and Chinese Yuan. The central banks of both countries will oversee the arrangement. The agreement aims to enhance trade flexibility, attract foreign direct investment (FDI), ease foreign exchange shortages, and strengthen Ethiopia’s economic partnerships.

China is one of Ethiopia’s largest trading partners. Ethiopia exports oil seeds, flowers, coffee, and meat to China while importing a variety of goods from the country. Chinese exports to Ethiopia have surged, growing from $254 million in 2001 to $4.07 billion in 2016. This growth highlights the deepening ties between the two nations over the past two decades.

This agreement of currency swap between Ethiopia and China will help stabilize Ethiopia’s economy by reducing reliance on third-party currencies for trade with China. Additionally, AliExpress, an online retail service owned by Alibaba Group, has recently entered the Ethiopian market.

Finance Minister Ahmed Shide mentioned that the specifics of the currency swap will be finalized in future discussions, but the agreement is already in place.

This agreement comes during Prime Minister Abiy Ahmed’s official visit to China for the 2024 China-Africa Summit. During the visit, he met with Chinese President Xi Jinping to discuss the currency swap deal. President Xi pledged to increase China’s support for Africa, committing nearly $51 billion over three years to fund infrastructure projects and create at least 1 million jobs.

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