Ethiopia follows the Nigerian path: “Ethiopia’s national currency dropped 30 per cent against the dollar after its central Bank floated its birr currency on Monday. This move is aimed at securing International Monetary Fund (IMF) support and advanced debt restructuring support.” When I heard that on BBC World Service this morning, I shouted “currency hit again”.
The value of Ethiopia’s currency has fallen by 30% against the US dollar after the government relaxed currency restrictions, one the country’s biggest banks, the Commercial Bank of Ethiopia, has said. The government reversed its long-standing policy of fixing the exchange rate in a bid to secure a loan of $10.7bn (£8.3bn) from the International Monetary (IMF) and World Bank.
Some Ethiopians have received the news with apprehension fearing that it will lead to a sharp rise in the cost of living at a time when inflation is already high.
The country has been struggling with chronic foreign currency shortages particularly in recent years. The economy has suffered due to a brutal two-year civil war in the northern Tigray region, which ended in 2022, and ongoing conflicts in other regions, making it difficult for the country to attract much needed foreign investment.
China gives the loans but the IMF comes to the rescue and then introduces measures to ensure it is repaid. Both China and the IMF are doing what they have to do, the real issue is the African leadership. China did not force anyone to take loan, and the IMF is not imposing itself on any nation.
Remember: debt dey pass debt; always better to borrow from home. Unfortunately, Africa does not have the institutions which can fund these loans, and that is the real debt!
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Why? In an Igbo novel, Uwadiegwu, the author dropped a great hint: when you borrow, go to your kinsman so that if the debt goes bad, he may lock you up, but at the same time he would be expected to take care of your family since he is your kinsman! That is how debts work: pains are lesser when the debt is home. America borrows dollars and they’re responsible for printing dollars. No other country enjoys that combo.
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