Dim Amor

Finance Minister Bezalel Smotrich met yesterday in Washington with Ethiopian Finance Minister Ahmed Shide, as part of an economic diplomatic initiative aimed at deepening economic cooperation between Israel and one of Africa's fastest-growing economies. During the meeting, which took place as part of Smotrich's visit to the U.S. capital, an agreement was reached to advance joint economic opportunities, and the Israeli minister invited his Ethiopian counterpart for an official visit to Israel.

Smotrich characterized Ethiopia as a close friendly nation with a young population and a rapidly growing economy, emphasizing that enormous potential exists for cooperation in energy, agriculture, high-tech, and infrastructure. According to him, the economic ties between Jerusalem and Addis Ababa can become a bridge of regional growth, innovation, and friendship between peoples.

The meeting takes place against the backdrop of impressive economic data that Ethiopia has been presenting in recent years. The country's GDP grew by approximately 8% in 2024, and forecasts for 2025 indicate a similar growth rate of about 7-8%. These figures position Ethiopia as one of the leading developing economies on the African continent, with emphasis on significant acceleration in the industrial and services sectors, alongside the traditional agricultural sector which still constitutes the backbone of the local economy. This growth is made possible thanks to wide-ranging economic reforms being implemented by the Ethiopian government, including opening the economy to foreign investment, improving the local banking system, and efforts to transform the country into a major economic gateway to the African continent.

However, the economic picture also presents significant challenges. Inflation in Ethiopia remains high at approximately 13%, while official unemployment reaches a level of about 19%. The country faces low per capita income, high external debt, and foreign currency shortages, alongside notable dependence on food and fuel imports. Additionally, political and ethnic tensions in various regions of the country harm economic stability and the ability to attract foreign investment. Despite these difficulties, according to forecasts, the Ethiopian government is expected to continue the reform process with the aim of reducing inflation, encouraging investment, and achieving stable economic growth that will improve the population's standard of living.

Thus, Ethiopia presents a complex combination of significant economic potential alongside high risks, with the economy's future success dependent primarily on political stability and the ability to continue advancing the economic reform process.

Relations between Israel and Ethiopia are long-standing and currently on an upward trajectory. Full diplomatic relations were established in the early 1960s and renewed in 1989 after an interruption. For Israel, Ethiopia represents a significant opportunity for deepening regional influence and strategic cooperation with one of the central countries in East Africa.

On the economic level, the country represents a natural destination for Israeli technologies, particularly in fields where Israel is considered a global leader. Ethiopia, as a predominantly agricultural country, faces challenges of irrigation, water management, and climate dependency, and requires advanced technological solutions. Israeli companies are already operating in the country on smart irrigation projects, food production, and solar energy solutions, and demand for such solutions is expected only to grow in the coming years.

Beyond this, new cooperation channels have opened in health, technology, and digital medicine, as well as in minerals and industrial processing sectors. Ethiopia is interested in transitioning its economy from a stage of raw material export to a stage of local processing, thereby creating higher added value. In parallel, significant potential exists for developing infrastructure, transportation, and logistics—areas where Israel can contribute engineering knowledge and advanced information systems. Economic cooperation spans a wide range of industries and sectors, from agriculture and water, through green energy and minerals, to advanced technology and digital solutions.

On the political level, Ethiopia is considered an important partner for Israeli security and policy in Africa. The country contributes to regional stability, maintains stable diplomatic relations with Israel, and serves as an economic gateway to sub-Saharan Africa. In this context, deepening economic ties is not merely a commercial matter, but also part of Israel's broader foreign policy in the region.

However, Israeli investors examining opportunities in Ethiopia must take into account the risks involved in operating in the country. Political instability, high inflation, and local bureaucracy constitute significant challenges that can affect the returns and success of business projects.

Despite the challenges, the combination of Ethiopia's high growth with Israeli innovation and technology presents significant potential for mutual cooperation. The Israeli approach, as reflected in the Finance Minister's remarks, is one of long-term cooperation based on shared interests, political and economic trust relations, and leveraging the potential embedded in Ethiopia's young and growing economy. The Washington meeting represents another step in deepening ties and may lead to opening new cooperation channels in additional areas that have not yet been fully developed.

The invitation for a visit to Israel extended to the Ethiopian Finance Minister is expected to advance continued dialogue and formulate concrete agreements in various fields, while focusing on creating infrastructure for sustained economic relations that will bring mutual benefit to both countries.

Photo of Minister Bezalel Smotrich from X (Twitter) network – usage in accordance with Section 27a of the Copyright Act