Ethiopian Prime Minister Abiy Ahmed arrived in Nairobi on Wednesday for a two-day state visit with his host Kenyan President William Ruto.

In a joint communique, the two leaders reaffirmed their commitment to strengthen their economic and trade relations aimed at improving and achieving the social economic growth of their people.

Ruto praised the Kenya-Ethiopia trade partnerships saying it will help boost their quest to become a powerhouse in economic growth.

”We are now ready to take the next step in making the Kenya-Ethiopia partnership a beacon of transformative possibility and a force of good in our region and our continent,” Ruto said.

Abiy paid tribute to Ethiopia’s strong and long-standing diplomatic relationship with Kenya, which he said makes business relations easier.

“We shall surely realise our ambitious economic plans because we have no baggage in our relations,” he said.

Last week, the foreign ministers of the two countries concluded a strategic framework to promote bilateral cooperation aimed at removing “unnecessary” checkpoints and strengthening the Moyale One-Stop Border Post.

“Eliminating trade barriers that include tariffs and non-tariff obstacles, is also another way of easing trade and movement of people between the countries,” Kenya’s foreign minister Musalia Mudavadi said in a statement.

Kenya has agreed to exempt Ethiopians from the $30 electronic travel authorisation fee that foreigners pay to enter the country.

Considering that Ethiopia has strained and fragile relations with its neighbours, it feels comfortable trading with Kenya

Since 2021, according to Kenya’s ministry of investments, trade and industry, the country has been exporting chemical products, machines and foodstuffs to its neighbour, which in return, buys vegetable products, textiles and glass products.

In 2022, Kenya’s Safaricom became the first private telecommunications operator in Ethiopia, ending the monopoly of state-owned Ethio Telecom.

Samuel Nyandemo, a senior economics lecturer at the University of Nairobi, tells The Africa Report that to realise the economic growth between the two countries, the ambitious infrastructure Lapsset project — estimated to cost $25bn and launched in 2012 between regional countries — will work to the advantage of Ethiopia.

“Considering that Ethiopia has strained and fragile relations with its neighbours, it feels comfortable trading with Kenya. Ethiopia needs Kenya to export its products through its sea,” he says.

The Lapsset project is aimed at facilitating trade among the landlocked countries of Ethiopia and South Sudan through Kenya, but has stalled over financial constraints.

Abiy’s visit to Kenya comes as Ethiopia and Somalia engage in a diplomatic standoff after Addis Ababa signed a controversial deal with Somaliland to access the sea.

Regional power deal

In 2023, Kenya began importing electricity from Ethiopia, with an aim of stepping it to 400 Megawatt in the next three years.

According to the Kenya National Bureau of Statistics and Kenya Power, 668.07 million kilowatt-hours were imported from Ethiopia last year, which is 11% of the electricity consumed by its citizens daily.

While in Kenya, Abiy and Ruto visited the substation facilities in Isinya that will also transmit power to neighbouring Tanzania.

“Ethiopia exporting electricity to Tanzania through Kenya is likely to facilitate economic integration in the region and encourage Ethiopia to join the East Africa Community in future,” Nyandemo says.

The Tanzania Electric Supply Company Limited said the country has been experiencing power rationing due to drought and maintenance issues and aims to buy 400 megawatts of power from Ethiopia.