No Currency Swap, No Checkout: AliExpress’s Ethiopia Rollout Drags On

When Chinese e-commerce titan AliExpress took its first steps into the Ethiopian market, it sparked a wave of excitement among urban shoppers. Young, cash-strapped urbanites were particularly excited about the prospects of affordable electronics delivered to their doors. But a year after the fanfare and a string of high-profile partnerships, Ethiopian consumers are still navigating informal workarounds to access the platform’s services. 

Abraham Dube, a mid-20s software developer, received AirPods and a pair of UV glasses purchased from AliExpress last week. Nearly a month passed between Abraham’s $13 payment. made using his Bybit card, a Mastercard prepaid card issued by the cryptocurrency exchange and the arrival of the items in Ethiopia. It wasn’t until he visited the Ethio-Post office that Abraham finally got his hands on the items.

“I still paid three times less than what it would cost locally,” he told Shega.

Low costs form an integral element of AliExpress's appeal. Since customers gain direct access to manufacturers on the website, intermediary costs are absent. But that same direct access can also become a window for scammers to take advantage of trusting foreign buyers.

Buyers like Abraham benefit, in part, from the growing number of content creators offering guidance. On platforms like TikTok, users frequently post advice on how to navigate AliExpress, including how to select vendors and commentary on what the platform’s entry means for Ethiopian consumers.

“Order small, low-cost items. When buying multiple products, use separate carts.” This was the most repeated advice, aimed at helping buyers avoid burdensome taxes.

Haile Berhanu, a programmer in Addis Ababa, ordered what he thought was a UPS, a backup power source device, and a hard disk. When he eagerly unboxed the package a month later, he found something entirely different inside.

“A flash drive and a screwdriver were what I found,” Haile told Shega. “I did not even think you could get scammed on a global platform.”

Although AliExpress offers buyer protection and a refund policy, the burden of return shipping often falls on the buyer. For individual Ethiopian consumers, especially in the absence of a local return infrastructure, this can be a deal-breaker

Like Abraham, Haile had also used a Bybit prepaid card to make the payments. The card, which recently stopped accepting Birr for P2P payments, has become the go-to source for many shoppers. 

Yet this workaround falls far short of the seamless, Birr-based e-commerce ecosystem announced by Ethiopian officials and company executives last year.

What Happened to the Local Partnerships? Currency Swap Deal? 

At a high-profile ceremony held at the Skylight Hotel last year, officials from the Ministry of Innovation & Technology, AliExpress executives, and prospective partners announced a milestone in the country’s e-commerce development. The e-commerce arm of Alibaba was set to begin a full set of services, partnered with domestic counterparts.

MKTY IT Services PLC, a decades-old Ethiopian technology firm, signed a partnership deal to facilitate the entry of AliExpress into Ethiopia and set up a showroom. Markos Tilahun, MKTY’s CEO, says they were asked to build an e-commerce website tailored to the Ethiopian context, fitted with payment integration to local payment institutions. And they appear to have built just that with Gebeya Express, which offers a limited selection of items from AliExpress while accepting payments through the mobile money service telebirr. However, shoppers have complained of higher prices and limited product offerings, hallmarks of the AliExpress brand. Markos says efforts to stay in line with customs duties and tax obligations have been part of the challenge in creating a seamless commerce portal.

“Still, users have yet to experience the full potential of the service,” the undeterred CEO told Shega.

Markos also pointed to challenges in consumer behavior, noting that Ethiopia’s online shoppers face a fragmented e-commerce landscape and generally low rates of digital adoption.

Echelon Group, the other Ethiopian company partnered with AliExpress to build a platform and set up a physical shop, has taken a dramatic turn. The shop opened on the ground floor of the Getu Commercial Building on Bole Road is now closed and operated by different management, while prospective shoppers have only been met with disappointment.

“Many customers hoping to buy from AliExpress in the shop were leaving let down,” a former employee told Shega.

Michael Mamo, the Ethio-Canadian founder of Echelon Group, who previously said customers could buy products using Birr, could not be reached for comment before publication.

Geoffrey Jiang, Director of African Operations for Alibaba, had also previously reaffirmed plans to enable payments with Ethiopian currency by November 2024 to Shega. The statement aligned with AliExpress’s entry into other African countries like Nigeria, Egypt, Kenya, and South Africa. However, all of these countries have some sort of currency swap agreements with China’s central bank, making the process significantly easier. Nigeria renewed a currency swap arrangement of about 2 billion dollars last December. A currency swap agreement allows two central banks to exchange currencies directly, bypassing the need for intermediary hard currencies like the U.S. dollar. For Chinese companies like AliExpress, this would mean that Chinese yuan (CNY) can be exchanged directly for local currency while customers can pay in Birr, and sellers in China still receive payment in yuan.

Despite a currency swap agreement with China being reported by Ethiopian media outlets back in September, no such deal exists on the ground. Finance Minister Ahmed Shide had told a state-owned outlet that a verbal agreement had been reached for a currency swap with details to be finalized down the line during a state visit to China. But as it stands, Ethiopia only has a currency swap deal with the United Arab Emirates, with governors from both central banks agreeing on a 46 billion Birr- 3 billion AED swap.

Solomon Damtew, Director of Payment & Settlements at the National Bank of Ethiopia, said the stories about a currency swap deal with China were predicated on presumptions. He explained that several conditions need to be fulfilled before such a deal is signed between central banks.

“We have not even liberalized capital accounts,” Solomon told Shega.

The director acknowledged that some sectors of the economy, especially those that entail international payment settlement, might need currency swap arrangements to thrive.

For Baheru Zeynu, Deputy Manager of the Digital Transformation Ethiopia Association (DTEA), a 300-member strong association that played a key role in bringing AliExpress to Ethiopia, a currency swap deal represents much more than just an e-commerce platform. He believes providing access to affordable inputs will be transformational for cash-strapped small businesses and entrepreneurs.

“We are losing out on a critical economic opportunity,” Baheru told Shega.

DTEA has also developed a platform integrated with six commercial banks and two mobile money operators capable of implementing cross-border payment capabilities. Baheru fears that interest might be waning from AliExpress due to the postponement of a capability initially scheduled for February.

“Other African countries, including our neighbors, have already moved ahead,” he says. "Imagine our advantages in logistics with Ethiopian Airlines."

Baheru pins future progress on ongoing advocacy efforts through the National E-Commerce Steering Committee, composed of 13 institutions, including the central bank. He hopes that their continued efforts will yield some results soon, albeit much later than they had initially hoped. 

“One day we will succeed,” Baheru said.

Until then, Ethiopian shoppers will continue to rely on a mix of informal vendors, crypto exchanges, and relatives coming from abroad to buy products from AliExpress.