
Money Market Watch | Nov 03,2024
Jul 27 , 2024
By Hintsa Andebrhan
Two weeks ago, the central banks of the United Arab Emirates (UAE) and Ethiopia signed a memorandum of understanding on a bilateral currency swap deal worth up to three billion Dirhams (816 million dollars at last week’s exchange rate). The agreement establishes a framework for using local currencies to settle cross-border transactions between the two countries.
Currency swap agreements have clear advantages in reducing exchange rate risks for both parties. However, it does not take an expert to recognise that such agreements are typically more beneficial for countries at similar levels of economic development. Yet, with strong policy pillars such as regulations and legal provisions to manage investments and trade, the currency swap could potentially benefit Ethiopia and the UAE.
The pressing question is whether this currency swap agreement is framed by strategic policy principles that protect Ethiopia's natural resources.
UAE's central import policy focuses on natural or cultured pearls, gemstones, and precious metals, such as gold, copper, diamonds, iron, and steel. Examining Abu Dhabi's primary imports from Ethiopia over the past five years, data reveals that the major imports were gold (546 million dollars), coffee (58.9 million dollars), and sheep and goat meat (52.2 million dollars).
Ethiopia's exports to the UAE have surged, increasing at an annualised rate of 114pc from 3.31 million dollars in 2017 to 149 million dollars in 2022. Abu Dhabi's imports from Ethiopia are heavily centred on natural resources, particularly gold.
It is evident that strategic objectives drive the UAE's import policy, and President Mohammed bin Zayed Al Nahyan's administration adheres to this playbook.
According to the UN COMTRADE database and international trade data, Ethiopia imported goods worth 564.73 million dollars from the UAE in 2022. Of these imports, 33pc were liquid and mineral fuels, while the balance comprised imports of fertilisers, plastic, vegetable and oils, sugar, and sugar confectionery.
The trade imbalance shows that the UAE has a considerable advantage over Ethiopia in economic benefits derived from the flow of natural resources.
This disparity is evidence of the need for Ethiopia to develop strategic plans before entering into economic deals blindly. Economic pundits and policy consultants should put pressure to safeguard Ethiopia’s economic interests and for Prime Minister Abiy Ahmed’s (PhD) Administration to clarify its governing arrangements with the UAE. There is a need for transparency and public disclosure about the purpose of such deals and their strategic economic and political benefits beyond temporary solutions.
While engaging in political and economic business with the UAE is not inherently problematic, it is imperative that all agreements, whether with the UAE, the United States, Russia, China, or any other country, prioritise the interests of Ethiopia and its people.
Ethiopian policymakers and economic advisors around Prime Minister Abiy should encourage him to focus his economic policies and decisions on protecting Ethiopia's natural resources.
Ethiopia has four main assets that require strong political protection: its policy sovereignty, human capital, natural resources, and dignity. As the head of the political powerhouse, Abiy should ensure these assets are not compromised.
Without a strategic framework, the currency swap agreement between Ethiopia and the UAE may only offer temporary relief from the current foreign exchange crisis. If the trade circle within this agreement includes natural minerals like gold, tantalum, opal, coffee, and livestock, Abu Dhabi will likely benefit more than Addis Abeba. It is challenging to argue that this agreement is fair in economic principles without adequate protective measures.
PUBLISHED ON
Jul 27,2024 [ VOL
25 , NO
1265]
Money Market Watch | Nov 03,2024
Radar | Jul 24,2023
Money Market Watch | Jun 29,2025
Year In Review | Jan 02,2024
Fortune News | Apr 03,2023
Commentaries | Aug 01,2020
Radar | Oct 08,2022
View From Arada | Sep 03,2022
Fortune News | Sep 29,2024
Photo Gallery | 140598 Views | May 06,2019
My Opinion | 134094 Views | Aug 14,2021
Photo Gallery | 130852 Views | Apr 26,2019
My Opinion | 130659 Views | Aug 21,2021
Dec 22 , 2024 . By TIZITA SHEWAFERAW
Charged with transforming colossal state-owned enterprises into modern and competitiv...
Aug 18 , 2024 . By AKSAH ITALO
Although predictable Yonas Zerihun's job in the ride-hailing service is not immune to...
Jul 28 , 2024 . By TIZITA SHEWAFERAW
Unhabitual, perhaps too many, Samuel Gebreyohannes, 38, used to occasionally enjoy a couple of beers at breakfast. However, he recently swit...
Jul 13 , 2024 . By AKSAH ITALO
Investors who rely on tractors, trucks, and field vehicles for commuting, transporting commodities, and f...
Aug 23 , 2025
Banks have a new obsession. After decades chasing deposits and, more recently, digita...
Aug 16 , 2025
A decade ago, a case in the United States (US) jolted Wall Street. An ambulance opera...
Aug 9 , 2025
In the 14th Century, the Egyptian scholar Ibn Khaldun drew a neat curve in the sand....
Aug 2 , 2025
At daybreak on Thursday last week, July 31, 2025, hundreds of thousands of Ethiop...
Aug 23 , 2025 . By BEZAWIT HULUAGER
The fuel industry is facing its biggest shakeup in decades as federal regulators roll...
Aug 23 , 2025 . By BEZAWIT HULUAGER
Two domestic companies, IE Networks and Liyana Healthcare, have emerged as the first...
Aug 23 , 2025 . By NAHOM AYELE
A new directive authorises state-run hospitals and clinics to outsource not only non...
Aug 29 , 2025 . By BEZAWIT HULUAGER
The federal government has turned its attention to an unlikely export sector: healthc...