Ethiopia, China strike deal on currency swap

Chinese President Xi Jinping (R) meets Ethiopian Prime Minister Dr. Abiy Ahmed (L) at the Great Hall of the People in Beijing during the Forum on China Africa Cooperation (FOCAC).

By Awan Achiek

Ethiopia and China on Friday reached agreement to swap their currencies to boost trade.

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.

The agreement came following the official visit of Prime Minister Dr. Abiy Ahmed to China where he attended the 2024 Forum on China Africa Cooperation Summit.

Ahmed said the two national banks have committed to issuing directives for the cooperation.

“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.

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.

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.

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