Ethiopia has entered negotiations with China to convert part of its $5.38 billion debt into yuan-denominated loans, a strategic move aimed at easing foreign-exchange pressures and strengthening bilateral trade. The talks, confirmed by National Bank of Ethiopia Governor Eyob Tekalign, mark a significant step toward de-dollarization among BRICS nations.
According to Bloomberg, discussions held in Beijing last month involved the Export-Import Bank of China and the People’s Bank of China, focusing on trade facilitation, debt restructuring, and payment frameworks.
“China is a very important partner for us now… It really makes sense to arrange some currency swap … we’ve requested officially and then working on it,” Tekalign told Bloomberg after the IMF’s annual meetings in Washington.
The move mirrors similar efforts across Africa. Earlier this month, Kenya converted three major railway loans from dollars to yuan, saving an estimated $215 million annually in interest payments. Nigeria, too, renewed a 15-billion-yuan swap deal with Beijing in late 2023 to stabilize naira-yuan settlements.
Ethiopia’s financial challenges have been compounded by the pandemic and a two-year conflict in Tigray, leading to a default on its $1 billion international bond in December 2023. Since then, Addis Ababa has secured over $3.5 billion in relief under the G20 Common Framework, co-chaired by France and China.
Now a full member of BRICS, Ethiopia’s move aligns with the bloc’s broader strategy to reduce dependence on the US dollar in international trade. The BRICS+ agenda, strongly backed by Beijing, encourages the use of local currencies for settlements — a shift that could reshape Africa’s economic landscape amid growing global financial polarization.
