Ethiopia and Russia have a long history of diplomatic relations that dates back to the 19th century. The two countries established formal diplomatic ties in 1898, and since then, they have maintained cordial relations. In recent years, the relationship between Ethiopia and Russia has been characterized by cooperation in various fields, including politics, security, and economy.
On the economic front, the trade volume between Ethiopia and Russia has been steadily increasing in recent years. In 2020, the trade volume between the two countries reached 111 million USD, with Ethiopia exporting more of agricultural products such as coffee, and leather to Russia, while importing machinery, vehicles, and chemicals, report of the Ministry of Foreign Affairs of Ethiopia stated.
Ethiopia and Russia have been building stronger economic ties in recent years, and these efforts were highlighted by talks between the Ethiopian Prime Minister, Abiy Ahmed (PhD) and President of the Russian federation Vladimir Putin last week. The two leaders discussed a range of economic issues, including increasing trade and investment between the two countries.
Russia is a major producer of oil and gas, and Ethiopia is working to expand its energy infrastructure to meet the growing demand. The two leaders discussed the possibility of Russian companies investing in Ethiopia’s energy sector, as well as the potential for cooperation on renewable energy projects.
Another area of interest for both countries is agriculture. Ethiopia has a large agricultural sector, and Russia is one of the world’s largest producers of wheat. The two leaders discussed the possibility of increasing trade in agricultural products, as well as the potential for Russian companies to invest in Ethiopian agriculture.
In addition to these specific areas of focus, the talks between the two leaders also touched on broader economic issues. The two leaders discussed the importance of improving the business environment in both countries, and of creating a more favorable climate for investment.
The response from the Ethiopian government to the talks with Russia has been generally positive. After the talks between Prime Minister Abiy Ahmed and President Vladimir Putin, both leaders issued statements expressing their commitment to strengthening economic ties between their two countries.
In a statement following the talks, the Primer emphasized the importance of increasing trade and investment between Ethiopia and Russia, and noted the potential for cooperation in a range of areas, including energy, agriculture, and manufacturing. He also expressed his appreciation for Russia’s support for Ethiopia’s economic development, and invited Russian companies to invest in the country.
Similarly, the President highlighted the potential for increased economic cooperation between Russia and Ethiopia, and expressed his belief that “there is great potential for bilateral cooperation in various areas, including trade, investment, and technology transfer.” He also noted that Russia is interested in expanding its presence in Africa, and sees Ethiopia as an important partner in this effort.
Pointing his view on the Second Russia-Africa Economic and Humanitarian Summit, the European and American Affairs Director General at the Ministry of Foreign Affairs (MoFA) Ambassador Zenebe Kebede told the Ethiopian Press Agency (EPA) that the summit would forge stronger ties and safeguard Ethiopia’s national interests.
Mentioning that extensive discussions have been held on the interests of Africa and Russia general and that of Russia and Ethiopia particular, Ambassador Zenebe noted that the two countries have been working together in a range of issues to elevate the long- standing brotherly relations.
He, therefore, said that the delegation represented by Prime Minister Abiy Ahmed (PhD) participated in the summit to cement Ethiopia and Russia ties. Adding to the point, he explained that the summit will have positive output for Ethiopia and other African countries.
Approached by The Ethiopian Herald, Mekonnen Abera, an Economist said that the economic ties between Ethiopia and Russia have the potential to bring significant benefits to the Ethiopian economy. Indicating that one of the key areas of focus in the talks between the two leaders was increasing trade and investment between the two countries, he explained that this could have a number of positive impacts on Ethiopia’s economy.
As to him, increasing foreign direct investment is amongst the positive outcomes. “If Russian companies invest in Ethiopia’s energy and agricultural sectors, this could lead to increased foreign direct investment (FDI) in the country. FDI can bring in capital, technology, and expertise, all of which can help boost productivity and economic growth”, he noted.
Pointing out Ethiopia is heavily dependent on exports of a few primary commodities, particularly coffee and gold, Mekonnen emphasized that increasing trade with Russia could help Ethiopia to diversify its exports and reduce its reliance on a few key products, which would make the economy more resilient.
Apart from increasing FDI and diversifying exports, the two countries’ economic ties may bring new technologies and know-how that could help to improve productivity and efficiency in Ethiopian industries. This could help to make Ethiopian businesses more competitive in global markets. Increased investment and trade could also lead to job creation in Ethiopia, particularly in the energy and agricultural sectors. This could help to reduce unemployment and poverty in the country, he mentioned.
In addition to the aforementioned potential benefits, there are also a number of other ways in which the economic ties between Ethiopia and Russia could benefit Ethiopian economy. In this regard the economist stated that if Russian companies increase their investment in Ethiopia’s energy and agricultural sectors, it could provide access to much-needed capital for these industries. This could help to fund the development of new infrastructure and technologies, which in turn could lead to increased productivity and economic growth.
Coupled with this, it may bring new technologies and expertise that could help to improve the efficiency and productivity of Ethiopian industries. This could help Ethiopian businesses to become more competitive in global markets and increase their exports. It is also significant to provide job training and skills development opportunities for Ethiopian workers. This could help to improve the quality of the country’s workforce and increase the productivity of its industries, he noted.
Overall, the economic ties between Ethiopia and Russia have the potential to bring significant benefits to Ethiopia’s economy, particularly in terms of increased investment, diversification of exports, and job creation. However, it will be important for policymakers to carefully manage these ties to ensure that they do not create undue risks or negative externalities, the economist underscored.
Moreover, the talks between the two leaders represent a significant step forward in the economic relationship between Ethiopia and Russia. Both countries have expressed a strong interest in deepening their ties, and there is a considerable potential for increased trade and investment in the years ahead. As Ethiopia continues to pursue economic growth and development, it is likely that Russia will remain an important partner and ally in this effort.
Overall, the Ethiopian government has welcomed the talks with Russia and appears to be optimistic about the potential for increased economic ties between the two countries. Furthermore, it is to be recalled that Russia has expressed interest in investing in Ethiopia’s energy sector, particularly in the construction of solar and wind power plants. Russian companies also have been involved in the exploration and extraction of natural resources in Ethiopia, primarily in the mining sector.
BY HIZKEL HAILU
THE ETHIOPIAN HERALD TUESDAY 1 AUGUST 2023
