Reportedly, Ethiopia has registered a record high export revenue last year, surpassing the benchmark of over a billion dollars for the first time. It was considered to be a breakthrough to the administration of Prime Minister Meles Zenawi, which is struggling to create an export driven economy.

 

A closer look into who had bought what from Ethiopia reveals that China stands tall and above the other 100 countries in becoming the most important export destination. Even Germany, the traditional trade ally that has a distinct privilege of sometimes having a trade deficit with Ethiopia, was far below China, although its 99 million dollars in imports still puts it in second place.

 

Buying products worth 134.6 million dollars, China claimed 13.3pc of Ethiopia's exports to the world. Much of what it had bought was agricultural produces, a.k.a. primary products. And it was not coffee that the Chinese were most interested in. Sesame, which has global sales of 400 million dollars, was a hot-cake to Ethiopian exporters last year, although China is one of the largest producers, followed by its neighbour, India.

If Ethiopian authorities felt that business would continue to be as good as last year, hardly could they be blamed. If they were to gamble in getting a half billion dollar concessional loan from China to the Commercial Bank of Ethiopia (CBE), in order to finance projects of telecom, power and cement, it was understandable. It was only the Chinese government that is generous enough to offer not only cheap loans to be paid in 10 years and with a grace period of three years, but also reluctant to ask the government to provide a guarantee.

The loan was meant to be paid in kind: exports to China, to be processed only through the state owned CBE, that are planned to finance what China could give in hard currency.

What goes wrong in this equation, according to gossip, is the export of sesame this year may not be as exciting as it was last year. Not only is China expected to produce much more than what it had last year, the competition from Sudan and Nigeria could be a major challenge to Ethiopia's ability in fulfilling its commitment. With this as a backdrop, is the Chinese government reluctant to release the desperately needed loan in foreign currency to Ethiopia, gossip corridor wondered?

Wondering is not something that came from nowhere. It is the latest pilgrimage to Beijing by members of Ethiopia's economic team late last week that provoked such uncertainty. Teklewold Atnafu, the rather quiet governor of the central bank, has left for Beijing, accompanied by Abe Sanu, president of CBE, and one of the latter's aides. The delegation has probably included Sufian Ahmed, minister of Finance and Economic Development, according to gossip.         

Half a billion dollars should be nothing to China when compared to the one trillion dollars it has in foreign exchange reserves. Compare that to a country such as Ethiopia, which is struggling to reach at 1.5 billion dollars in reserves. The government has high hopes that its officials paying homage to Beijing would persuade Chinese authorities or simply win their sympathy, claims gossip.