Ethiopia Secures Currency Swap Agreement With China

Ethiopia and China have reached a currency swap agreement, allowing trade in Ethiopian Birr and Chinese Yuan, according to Finance Minister Ahmed Shide. The agreement aims to enhance trade flexibility, increase foreign direct investment (FDI), ease foreign exchange shortages, and strengthen Ethiopia’s economic partnerships.

“The two national banks have committed to issuing directives for the cooperation,” Ahmed told the Ethiopian Broadcasting Corporation.

China is one of Ethiopia’s largest trading partners. Ethiopia primarily exports oil seeds, flowers, coffee, and meat to China, while importing a wide range of goods from the world’s second-largest economy. Chinese exports to Ethiopia increased from $254 million in 2001 to $4.07 billion in 2016 illustrating the growing ties between the two countries over the past two decades.

It is also worth noting that AliExpress, a major online retail service owned by Alibaba Group, recently entered the Ethiopian market.

According to Ahmed, the details of the currency swap will be finalized in future discussions, but the agreement has already been reached. This deal is similar to the one Ethiopia signed with the United Arab Emirates in July 2024, which involved a bilateral currency swap agreement valued at up to 46 billion birr ($816.79 million).

The agreement comes as Prime Minister Abiy Ahmed is on an official visit to China to attend the 2024 China-Africa Summit. During the visit, Abiy met with Chinese President Xi Jinping. His delegation includes Ahmed, Belete Molla (PhD), Minister of Innovation and Technology, Mekdes Daba (MD) Minister of Health, and Zeleke Temesgen (PhD), Deputy Commissioner of the Ethiopian Investment Commission. However, Mamo Mihretu, Governor of the National Bank of Ethiopia is missing from this team.

“Ethiopia greatly appreciates China’s continued and multifaceted support. Despite facing various challenges, we are making significant strides in agriculture, manufacturing, industry, tourism, telecommunications, and other sectors,” Abiy wrote on X, formerly Twitter.

Abiy also met with officials from the China Communications Construction Company (CCCC), the construction giant behind major projects in Ethiopia, including the Sheger riverside development project. An Ethio-China business exhibition is also part of the visit.

During the summit, President Xi Jinping pledged to increase China’s support across Africa, committing nearly $51 billion over three years to fund infrastructure projects and create at least 1 million jobs.

Trade between China and Africa reached a record high of $282 billion in 2023, as the modern China-Africa relationship marked its 70th anniversary.