Last updated: October 2024
Ethiopia is a priority partner of Italy and the European Union in sub-Saharan Africa, an essential point of reference for the stability of a region that has long-standing relations with our country and plays a crucial role in international security today.
Bilateral political relations continue on a level of excellent cooperation, especially since the return by Italy of the Axum Stele (April 2005), which opened a new chapter in relations between the two countries. Bilateral visits are frequent, as evidenced by those of the President of the Republic Sergio Mattarella in March 2016, Ethiopian Prime Minister Abiy Ahmed Ali in January 2019 and January 2023 in Rome, and Prime Minister Giorgia Meloni in April 2023.
Ethiopia’s role in some of the major conflict situations in the Horn of Africa, such as Somalia or South Sudan, makes it an indispensable partner in this region of the world.
But beyond the historical and geopolitical reasons that justify intense bilateral relations, there are concrete economic interests for Italy in Ethiopia today. The sustained positive trend recorded by the country in recent decades (over 10% average GDP growth since 2004), the openness – albeit timid – to international investors, the low cost of labour, the considerable size of the market (with a population of over 120 million), the availability of national energy sources (hydroelectric), direct air links with Italy and, last but not least, the presence of a limited but well-integrated Italian community, represent the strengths on which to build more dynamic economic-commercial relations.
Trade interchange, still below its real potential and highly concentrated, has grown steadily over the years. In 2023, the interchange reached 263 million euro, substantially stable from the previous year, with Italian exports amounting to 182 million and imports to 81 million. The main sectors in which Italian companies operate are infrastructure and transport, agricultural machinery and industrial vehicles, textiles, energy, telecommunications, agro-industry, and mining.
Ethiopia is the fifth largest destination market for Italian exports to sub-Saharan Africa. Italy is the twelfth largest customer and twentieth largest supplier worldwide, and the second largest trading partner at European level. Our export market share is 1.55%, behind only the UK (2.39%) but ahead of France (1.26%) and Germany (1.02%). Approximately half of our export is based on machinery and equipment, especially specialised and general-purpose industrial machinery (engines and generators). This is followed by steel products, textiles, automotive components (grain, metal products and metal construction elements). As for imports, they are concentrated in the agricultural sector (coffee, oilseeds and other permanent crop products) and in tanning and textile products. These figures do not take into account the phenomenon of triangulations (via Gulf countries) and goods produced by Italian companies at plants in third countries (e.g. IVECO in China and Piaggio in India).
Italian Foreign Direct Investments in Ethiopia amount to €723 million for 2023, with a constantly growing trend over the last five years. Ethiopian FDI in Italy, on the other hand, amounts to 400 million euro.
The Italian economic presence in Ethiopia is made up of a varied group of resident entrepreneurs, many of whom have been in the country for over forty years (with the exception of the Menghistu regime, which forced many of them to leave the country only to return after 1991), and of groups and companies that have started to operate in Ethiopia more recently, driven by the strong economic growth that has characterised the country in the last decade. Some of the country’s major infrastructure projects are entrusted to Italian companies: this is the case of Salini-Impregilo, which has carried out twenty major projects in Ethiopia worth over €9 billion, most of them in the hydroelectric power sector. The Group was most recently involved in the two main hydroelectric plants of the country’s Energy Development Plan, namely Koysha (Gibe IV) on the Omo River and the GERD (Grand Ethiopian Renaissance Dam) on the Blue Nile, after the Gilgel Gibe I, Gilgel Gibe II and the Gibe III hydroelectric project. In the assembly of commercial vehicles, CNH/IVECO has been operating in Ethiopia since 1970 through the JV AMCE (Automotive Manufacturing Company of Ethiopia), of which Iveco holds 70%, while the remaining 30% is owned by the Ethiopian Ministry of Industry and Trade.
Italian operators are generally optimistic about the country’s future, but do not fail to point out the critical aspects that characterise this context and that affect all private companies, whether foreign or local.