Ethiopia and the United Arab Emirates have reached an agreement to trade using their own currencies.
The central banks of both countries have agreed to swap their currencies based on their current purchasing powers, amounting to 46 billion Ethiopian Birr and 3 billion UAE Dirhams.
The memorandum of understanding was signed in Addis Ababa, allowing the two nations to conduct transactions in Birr and Dirhams in addition to the US dollar.
The agreement was formalized by Mamo Mehretu, Governor of the National Bank of Ethiopia, and Khalid Mohamed Balama, Governor of the Central Bank of the United Arab Emirates.
The detailed procedures and instructions for implementing this agreement will be discussed further.
To facilitate the transactions, the currencies will be exchanged at their current purchasing power through regional banks.
This agreement aims to strengthen cross-border cash flow, financial markets, and other economic relations between Addis Ababa and Abu Dhabi.
The national banks have also committed to promoting and developing trade ties, enabling more transactions to be conducted in their local currencies.
Additionally, private banks in both countries will leverage this agreement to encourage foreign direct investment.
To facilitate these transactions, UAE Switch, the UAE’s online money transfer service, and Ethiopia’s ET Switch will be utilized.
During the signing ceremony, Khalid Mohamed Balama stated that “the agreement signifies the growing cooperation between the two countries in trade and investment.”
He further noted that this agreement would create more opportunities for cooperation in the banking and finance sector.
Mamo Mehretu highlighted that “the United Arab Emirates is one of Ethiopia’s key trading partners and a significant source of foreign direct investment.”
He recalled that when Prime Minister Abiy Ahmed took office in 2018, Ethiopia faced a severe foreign currency shortage, and the UAE provided $3 billion to help bridge the foreign reserve budget deficit.
UAE investors and companies have been active in various sectors in Ethiopia, including agro-processing, logistics, construction, hospitality, pharmaceuticals, and chemicals.
The two countries have also signed agreements to collaborate in the military and security sectors, and they conducted a joint military exercise in Addis Ababa last year.
On December 16, 2023, the two countries military planes conducted a joint military airshow in Addis Ababa to Mark Ethiopian Air Force Anniversary.
In celebration of the 88th anniversary of the establishment of the Ethiopian Air Force, a spectacular military air show took place, featuring a joint performance with war jets from the United Arab Emirates (UAE).
Prime Minister Abiy Ahmed, military attachés stationed in Addis Ababa and various other dignitaries were in attendance at the event held in Addis Ababa.
The Ethiopian Defense Forces officially named the collaborative air show “Black Lion Air Show,” symbolizing the strength and prowess of the participating air forces.
