Ethiopia and Saudi Arabia have been rapidly strengthening their economic and political alliance over the past year. These two nations, positioned on opposite sides of the Red Sea, have historically maintained a cordial yet distant relationship. However, a flurry of high-level visits and landmark agreements signed in 2023 has brought the countries into closer alignment.
In November 2023, Prime Minister Abiy Ahmed led an Ethiopian delegation to Saudi Arabia for the inaugural Saudi-Africa Summit. This gathering aimed to enhance political coordination, address regional security threats, promote economic transformation through research and local energy solutions, and boost investment cooperation between the two nations.
During the summit, Ethiopia's Finance Minister Ahmed Shide met with his Saudi counterpart Mohammed Al Jadaan. They discussed Ethiopia's on-going economic reforms, development initiatives, and debt restructuring efforts. The Saudi Finance Minister reaffirmed his government's commitment to supporting Ethiopia's development activities.
Furthermore, Ethiopia and Saudi Arabia signed a ground breaking memorandum of understanding to collaborate in the critical domains of petroleum and energy. This cooperation agreement, signed between the finance ministers, paves the way for joint ventures in oil supply, energy technology transfer, and energy investments.
The growing partnership was further cemented by a recent visit to Riyadh by a high-level Ethiopian delegation led by Deputy Prime Minister Temesgen Tiruneh and Foreign Minister Taye Atske-Selassie.
Temesgen engaged in a discussion with Prince Faisal Bin Farhan, to explore avenues for deepening the ties between the two nations. During the discussion, Temesgen asserted Ethiopia's ongoing efforts to enhance collaboration with Saudi Arabia in economic, security, and overseas employment domains.
He underscored the significance of convening a joint commission meeting in the future, formalizing the overseas employment agreement process, and bolstering cooperation in trade and investment.
Furthermore, the Ethiopian Deputy Prime Minister emphasized the critical importance of Ethiopia's legitimate pursuit of access to a seaport for regional economic integration. Prince Faisal Bin Farhan commended the progress achieved by Ethiopia under the leadership of Prime Minister Abiy Ahmed.
He highlighted Ethiopia's pivotal role as a bridge and key player in Saudi-African relations, emphasizing the significance of collaborative efforts between the two nations across diverse sectors. Discussions during the visit also delved into regional peace and security, emphasizing the shared commitment to cooperation in fostering peace and stability in the region.
The high-level Ethiopian delegation's visit reportedly coincides with the country's preparations to repatriation of over 70,000 Ethiopian nationals facing challenging circumstances in Saudi Arabia. This repatriation process is set to begin in early April. Many Ethiopians have travelled to Saudi Arabia seeking better economic opportunities, but often face exploitation and deportation.
The two countries have been working to address the issue of undocumented Ethiopian immigrants in Saudi Arabia. Dozens have already been repatriated following bilateral agreements. It's estimated that over 750,000 Ethiopians currently live in Saudi Arabia, many working as domestic workers.
Beyond this the two countries ties are incising in recent years in the area of agriculture, investment and other. On the beginning of June, Prime Minister Abiy Ahmed met with representatives of a high-level investment delegation from Saudi Arabia, concluding their three-day visit to Ethiopia.
Discussions focused on investments in agriculture, housing, and tourism, with a special emphasis on local fertilizer production. The visit by the high-level delegation, comprising 79 investors, resulted from bilateral talks between Prime Minister Abiy Ahmed and Saudi Crown Prince Mohammed bin Salman in November 2023 during the Saudi-Africa Summit.
Moreover, Plan and Development Minister Fitsum Assefa (PhD) has called on Saudi businesspeople to invest in Ethiopia and utilize country's lucrative opportunities that have been facilitated to allure Foreign Direct Investment (FDI) in the past few years of reform period.
During the Ethio-Saudi investment and trade forum, the Minister said that the policy reforms particularly implemented in six economic sectors, including international trade, capital and labour market, and foreign direct investment is making positive changes.
Accordingly, Saudi Arabian investors can engage in various investment areas through exploring business opportunities including tax incentives, she indicated. The visit of Saudi delegation marks a significant milestone in the economic relations between the two countries, Fitsum said, adding that Ethiopia is committed to create more developed investor-friendly environment.
"Ethiopia offers vast opportunities for foreign investors, particularly in manufacturing, agriculture, and other critical sectors," she noted. She highlighted that sectors such as agriculture, manufacturing, construction, and real estate are particularly lucrative for foreign investment.
The importance of the geographical proximity and historical ties between the two nations these factors create a robust foundation for mutual cooperation and benefit, she stated. She also expressed her confidence that the discussions and site visits during the forum would pave the way for increased Saudi investment in Ethiopia.
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
Chairman of the Federation of Saudi Chamber, Hassan Moejeb on his part expressed his optimism about the potential for enhanced collaboration. "Our trade relationship with Ethiopia has been vibrant for centuries," Moejeb noted.
"I hope we will identify new areas for cooperation following these discussions," he added. Ethiopian Investment Commissioner, Hana Aryaselassie also expressed that the forum represents a strategic effort by Ethiopia to attract foreign investment and bolster economic growth. By opening up its diverse sectors to international investors, Ethiopia aims to leverage its resources and strategic location to become a key investment destination in the region, she stated.
The delegation, comprising about 80 businesses, which led by Chairperson of the Federation of Saudi Chamber, will spend three days here, visiting various tourist destinations and industrial sites within and outside of Addis Ababa to get a comprehensive understanding of the investment landscape in Ethiopia, according to Ministry of Foreign Affairs.
Meanwhile, the Ethiopian Chamber of Commerce and Sectoral Associations and the Federation of Saudi Chamber have signed a memorandum of understanding aimed at creating collaborative platform. So far, Saudi Arabian companies have initiated 233 projects in Ethiopia that have created a significant number of jobs. The visit of the Saudi delegation represents a strategic effort by Ethiopia to attract foreign investment and drive economic growth.
