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    BusinessEthiopia’s Central Bank agrees to swap currency with African countries

    Ethiopia’s Central Bank agrees to swap currency with African countries

    Date:

    The regulatory body will tap into Afrexim Bank’s Currency SWAP program

    The National Bank of Ethiopia (NBE) expressed its interest to be part of Afrexim Bank’s Central Bank Currency SWAP program, which enables financial institutions and businesses make and receive payments in Birr with trading partners.

    In a signing ceremony held at the premise of the central bank, Yinager Dessie, governor of NBE, affirmed the government’s interest to utilize the Central Bank Currency SWAP program, which he calls is an exciting opportunity.

    The program is part of ten areas of collaboration identified by Afreximbank and the NBE. This includes support to the private sector and commercial banks through the provision of a line of credit of up to USD 500 million to support trade activities under Afreximbank’s Africa Trade Facilitation Program (AfTRAF).

    Five banks, including the Commercial Bank of Ethiopia, Bank of Abyssinia, Dashen, Awash and Abay banks, are already eligible for the funding.

    “AfTRAF incorporates various products devised to increase intra and extra-African trade volumes, diversify the nature of trade and assure the confidence of trade partners in the settlement of international trade transactions for critical imports into Africa,” said Benedict Oramah (Prof.), president of Afreximbank, who was in Addis Ababa last week. 

    Ethiopia agreed to be a part of the Pan-African Payments and Settlements System (PAPSS), which was developed by Afreximbank and launched in Ghana earlier this year, in a bid to boost intra-African trade by facilitating payments, clearing and settlement of cross-border trades across the continent.

    Expected to save Africa more than USD five billion annually in payment transaction costs, PAPSS will put an end to the current practice, which requires African banks use international banking relationships to clear and settle payments.

    Besides a plan to utilize PAPSS, Ethiopia is negotiating with the executives of Afrexim Bank to get financial support from Afrexim under its Pandemic Trade Impact Mitigation Facility (PATIMFA), which allows the country to avert defaults on debt servicing and payments for international trade partners.

    This is excluding the pledge made by the Afrexim to arrange financing for the imports of wheat by Ethiopia to fill its strategic food reserves, which is at an alarming stage because of surges in the number of people in need of urgent assistance and drought. 

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