In an effort to address the severe shortages of hard currency plaguing Ethiopia and Nigeria, the central banks of both countries have reached an agreement to swap blocked funds.
This landmark agreement involves the exchange of funds held by Dangote Cement in Ethiopia for those of Ethiopian Airlines in Nigeria, resulting in Ethiopian Airlines receiving a significant boost of $100 million. However, despite this development, approximately $80 million of the airline’s revenue remains blocked in private banks in Nigeria.
As reported by Ethiopian media outlet, The Reporter, shedding light on the ongoing challenges faced by both countries due to forex shortages. The central banks of Ethiopia and Nigeria have come together to devise a solution that benefits both nations.
Ethiopian Airlines, the largest foreign carrier operating in Nigeria, has been adversely affected by the forex scarcity. The airline’s extensive flight network covering major Nigerian cities like Lagos, Abuja, and Kano has generated substantial revenue from the strong demand of Nigerian travelers venturing abroad. However, the airline has encountered difficulties repatriating its earnings due to Nigeria’s critical shortage of foreign exchange.
Consequently, the central bank swap arrangement enables Ethiopian Airlines to access its blocked funds held in Nigerian banks, providing the airline with a much-needed infusion of $100 million. This injection of capital will bolster the airline’s operations and aid in addressing financial constraints caused by the forex shortages.
On the other hand, Nigeria stands to gain access to funds held up in Ethiopia through this currency deal. Dangote Cement, a prominent Nigerian company operating in Ethiopia, has encountered challenges repatriating its earnings due to the forex shortages experienced in the East African nation. With this agreement in place, Nigeria will now have access to the blocked funds, offering some relief to Dangote Cement and aiding the country’s efforts to alleviate its own forex challenges.
While this fund swap is a positive step towards mitigating the impact of forex shortages in both countries, it is essential to recognize that approximately $80 million of Ethiopian Airlines’ revenue remains blocked in private banks in Nigeria. Finding a resolution to release these funds will be crucial for sustaining the airline’s operations and supporting its continued contribution to Nigeria’s air travel sector.
Moving forward, it is hoped that further initiatives and policy measures will be implemented to tackle forex shortages comprehensively, enabling businesses to operate smoothly and contribute to the economic growth and development of both Ethiopia and Nigeria.
