Does "echwe" mean "failed" or is it used in the sense that it means "eliminate"?

Yes, echwe (from the French word: échouer) means "to fail, to go under, to fall through".

example:

Li echwe egzamen an.

He failed the exam.

Biznis li a echwe.

His business fell through.

Li te eseye anpil, men li echwe.

She tried really hard, but she failed.

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