Mekelle, February 27፡2025 (Tigray Herald)
AliExpress Enters Local Market,Regulation Remains Uncertain
Chinese e-commerce giant AliExpress, part of the Alibaba Group, announced last week that it will start accepting Birr for transactions. The service, set to begin on February 24, 2025, is also being rolled out in Morocco, Egypt, Tanzania, Algeria, and South Africa.
The company was established in 2010 by Alibaba and expanded its business-to-consumer services to Ethiopia in August 2024. It sells over 200 million products on its platform worldwide. AliExpress representatives believe its entry into Ethiopia will help strengthen supply chain management, customs processing, and delivery efficiency in the long run. Its officials say the latest move will reshape the e-commerce ecosystem in Ethiopia, a market with untapped digital potential.
However, questions remain about the payment settlement mechanism, as regulators at the National Bank of Ethiopia (NBE) say key details are still in the air. While there has been talk of a currency swap agreement between Ethiopia and China, it has yet to be finalised.
“We’re eager to see how they plan to begin operations,” said a senior official at the NBE, requesting anonymity. “The payment settlement operation between Birr and Yuan remains unclear to the National Bank.”
Cross-border transactions typically require authorisation from central banks in both countries before funds can be converted into the necessary foreign exchange.
“Nothing has been agreed yet,” the official told Fortune.
AliExpress representatives, meanwhile, appear ready to press on. According to Hamza Anabi, who oversees part of the AliExpress Global Business Programme, the new venture is designed to “drive growth and improve customer satisfaction” by allowing people to settle payments in local currencies. Executives disclosed that the company has completed internal preparations and integrated with local payment operators. It has also partnered with local technology firms to handle key aspects of its services, such as order logistics and transaction processing.
Executives at local companies involved in the project say they have been working steadily to ensure the technology side of the operation proceeds smoothly. Africom Technologies, Paperless Technologies Solutions, and Echelon Groups are among those that have partnered with AliExpress to establish a foothold in the country.
“We link orders, messages, and transactions from local shoppers to AliExpress’s back-end system,” said Baheru Zeynu, founder and chief executive of Africom.
He disclosed that AliExpress’s Ethiopia Country Manager, Geoffry Jiang, had emailed announcing that all internal preparations were ready.
Another local partner Paperless Technologies and Africom have been working with banks to integrate payment systems. Yesunew Hailu, CEO of Paperless, disclosed that AliExpress and two more banks – Hibret Bank and the Commercial Bank of Ethiopia (CBE) – are building compatibility. According to AliExpress, at least four financial institutions — Abyssinia and Dashen, as well as Telebirr and M-Pesa — have already completed their integrations.
Dashen Bank has launched a “Super App” that supports cross-border transactions through an integrated application programming interface.
“Our API integration is complete and can support AliExpress transactions,” Asfaw Alemu, president of Dashen Bank, told Fortune.
The app, which has been downloaded over 100,000 times and handled 2.5 billion Br in transactions, provides users with direct access to AliExpress services. Asfaw believes this will expand client portfolios, improve the Bank’s liquidity, and enhance overall customer satisfaction. Revenue from commissions and service charges is expected to strengthen the app’s revenues.
Despite these promises, several issues could complicate the rollout. Among them is the unresolved currency swap agreement. Officials from Ethiopia and China had discussed using their respective currencies for bilateral trade to alleviate Ethiopia’s foreign exchange shortages. Finance Minister Ahmed Shide said the deal was in its final stages, announcing its progress following the Forum on China-Africa Cooperation (FOCAC) meeting in Beijing last September. The agreement was meant to encourage trade and investment, support macroeconomic reforms, and address chronic currency supply problems.
Though negotiations with the United Arab Emirates (UAE) on a separate deal have reportedly advanced, the NBE official disclosed that discussions with Chinese officials remain inconclusive. He said the Central Bank has yet to officially approve any mechanism enabling local currency payments to be converted into foreign exchange for cross-border e-commerce purchases.
“Such transactions require clarity to ensure compliance with all relevant regulations,” he told Fortune.
Yet, AliExpress seems determined to move forward, betting on the increasing appetite for online retail in one of Africa’s most populous countries.
The government has shown interest in promoting electronic commerce. Ethiopia’s recently ratified national e-commerce strategy to encourage businesses to sell online, attract foreign exchange revenues, and open the sector to domestic and international players. The strategy envisions three business models—business-to-business, business-to-consumer, and consumer-to-consumer—and provides guidelines for oversight.
A national e-commerce committee has been formed to coordinate these efforts. Its Chairman, State Minister for Innovation & Technology, Yishrun Alemayehu (PhD), acknowledged that customs bottlenecks represent a notable obstacle.
“It’ll take time, but it will be resolved,” he said.
Ethiopian Airlines launched a 55 million-dollar e-commerce logistics facility at Bole International Airport in February 2024. The hub is expected to process and distribute merchandise ordered through global online platforms, including AliExpress. However, observers warn that some of the biggest challenges lie in areas beyond logistics. According to local players, unpredictable customs tariffs represent a recurring obstacle for e-commerce businesses. Regulations vary by product, and duties can sometimes match or exceed the original purchase price, frustrating both sellers and consumers.
A frequent AliExpress buyer in Addis Abeba, who moonlights as a TikTok Seller, said she was pleased about being able to use the Birr but remains sceptical of the overall cost.
“I plan to enter the trading business formally,” she said, describing her frustration when customs tariffs end up equaling the value of the item she has ordered. “It can kill profit margins for traders like me.”
Customs officials say they cannot always provide fixed duty rates because prices differ between manufacturers and countries.
“There is a possibility of amending the rules if needed,” said Kassaye Ayele, tariff director at the Ethiopian Customs Commission.
Duties are assessed once a shipment arrives and goes through one of the country’s nine customs branches.
Domestic businesses see opportunity and risk in the arrival of a deep-pocketed multinational competitor. While some believe AliExpress could encourage innovations and set new standards for logistics, others worry that big discounts and promotions will lure customers away from emerging local e-commerce platforms.
“It should be a worry for local companies,” said Brook Genene, chief sales officer at a startup that intends to launch its e-commerce platform.
He wondered how local trading portals might compete with a global giant’s low prices and brand recognition.
Business and economic consultant Moustafa Abdella expects heightened competition to force domestic firms to adapt and improve. He stated that homegrown companies can offer faster delivery and a closer understanding of consumer preferences. He also cautioned that a surge in demand for Chinese imports could widen Ethiopia’s trade deficit if too much money flows overseas for retail goods.
In 2022, Ethiopia’s imports from China reached 2.92 billion dollars, while exports from Ethiopia to China stood at 175 million dollars, highlighting an ongoing trade imbalance.
“The actual impact depends on implementation and usage,” he said, urging policymakers to adopt a clear regulatory framework for cross-border e-commerce. “Protecting consumers who buy items from abroad is essential, along with encouraging local manufacturers to remain competitive.”
Moustafa recommended that local companies consider partnerships with foreign peers, arguing that forming partnerships may help smaller businesses gain access to global supply chains and technical expertise. He believes inconsistent pricing, customs delays, and unstandardised procedures across border checkpoints have traditionally discouraged many consumers from shopping online, but those concerns may recede if officials streamline import processes.
“Unexpected costs and delays frustrate many consumers,” he said, urging the government to invest in digital customs infrastructure, impose quality control measures on imported goods, and protect strategic domestic industries from being overwhelmed by foreign competition.
Source፡Addis Fortune
