In Depth From Politics to Profits: Ethiopia Reorients Foreign Policy Toward Economic Goals
June 14, 2025
Although Ethiopian diplomacy has long been synonymous with politics and security, recent developments suggest the country is now visibly reorienting its foreign policy compass toward economic interests.
The age-old divide between the Ministry of Foreign Affairs (MoFA) and economic and financial institutions appears to be narrowing, as Addis Ababa increasingly threads economic diplomacy into the fabric of its foreign relations.
Last week saw a series of meetings between officials and experts at the Ministry and the Institute of Foreign Affairs and their counterparts at agencies like the Ministry of Finance, Ethiopian Investment Commission, and the Ethiopian Capital Market Authority.
On Tuesday, they took part in a consultative high-level conference focused on fostering renewed connections between the economy and foreign affairs sectors to pave the way towards enhanced economic diplomacy.
Opening up the forum, Jafar Bedru, executive director of Institute of Foreign affairs (IFA), said the meeting was meant to address “the urgent need to fortify intelligence coordination and synergy among various bodies shaping Ethiopia’s foreign policy and economic strategy.”
He told attendees that Ethiopian diplomacy needs to embrace a proactive business oriented posture with economic diplomacy centered on investment and trade facilitation at its core.
Meanwhile, Hadera Abera (Amb.), state minister for political and economical diplomacy at MoFA, told the audience that a new economic diplomacy guideline had been put into effect earlier in the week.
This policy shift is not incidental. Faced with mounting fiscal deficits, growing need for foreign direct investment (FDI), ongoing attempts at debt restructuring, and limited access to foreign currency, the government has grown more intentional about leveraging diplomacy to secure trade, investment, and development cooperation.
In essence, Ethiopia is attempting to harmonize its external relations with its economic aspirations.
During a panel discussion on Tuesday, Workalemahu Desta (Amb.), political and economic diplomacy advisor at the Ministry, presented a paper titled ‘Leveraging Emerging Opportunities to Strengthen Economic Diplomacy’.
The advisor argued the economy has not grown as much as it should have in light of the opportunities presented by the political upheaval of 2018, as well as by regional and global shifts in the years since. Among them are diversification in global supply chain, rising production costs, escalating geopolitical tensions and accelerated global trends, Africa’s rising strategic and economic importance, the launch of the African Continental Free Trade Area (AfCFTA), the African Union gaining a permanent G20 seat, and the expansion of major global powers’ economic presence in Africa.
Workalemahu argues the developments present great diplomatic opportunities for Ethiopia that can be leveraged to grow its investment and trade.
His paper also posits that trends in global green investments and climate finance momentum, positive trends in international financial support and debt relief, a global push for digital market liberalization, global inflation, and the search for cost effective destinations offer good prospects for the country.
”Ethiopia is at a pivotal moment,” said Workalemahu. “Despite this promising landscape, the current state of Ethiopia’s economic diplomacy remains largely unchanged from the past.”
For decades, the Ministry has operated in a siloed environment where diplomatic missions focused overwhelmingly on security alliances and multilateral politics. Economic diplomacy was often relegated to a secondary tier, handled in isolation by institutions like the Ministry of Trade and Regional Integration, the Investment Commission, and the Ministry of Finance.
Coordination was rare, and synergy even rarer.
In a September 2024 paper published by the IFA, author Abdurahman Edao highlights the shifts in foreign policy in the years following 2018. It states that internal conflicts, diplomatic tensions, pressures, terrorism and border disputes have all played a role in the changes.
”These challenges are hindering the country’s foreign relations and diplomatic goals, affecting Ethiopia’s international reputation,” it reads.
The study suggested that Ethiopia’s foreign policy should prioritize peace at home first and pursue assertive diplomacy abroad.
Workalemahu observes the country continues to falter in taking advantage of opportunities presented by changing regional and global changes due to a lack of strategic thinking and inefficiencies in the operational process.
Continued reliance on a business-as-usual approach and weak implementation in economic diplomacy are among the persistent gaps he has noted.
”We need to shift from business as usual, develop and implement a national investment strategy and operationalize the collaboration between ministries of Foreign Affairs and Finance, and the Ethiopian Investment Commission,” he said.
Workalemahu emphasized the need to introduce KPIs for diplomatic missions, establish a facilitation and aftercare taskforce, resume regular coordination meetings among stakeholders, and adopt a targeted approach for investment and tourism.
In recent months, the Foreign Ministry has rolled out what insiders describe as a “structured economic diplomacy blueprint” aimed at embedding trade and investment priorities across the country’s network of 43 embassies and 20 consulates.
Ambassadors are now required not only to maintain state-to-state relations, but also to serve as chief economic envoys, tasked with identifying opportunities for Ethiopian exports, sourcing strategic investments, and easing the path for Ethiopian businesses abroad.
“Our diplomatic corps must now think like economists and act like trade facilitators. That is the new mandate,” said one senior Ministry official.
A representative from the Ministry of Finance participating in Tuesday’s panel discussion stated that the key economic diplomacy strategies set for implementation have been outlined in the second Home Grown Economic Reform program.
Among the strategies envisioned are periodic updates on information on investment opportunities in Ethiopia, supporting FDI flow support systems, pushing the diaspora to support the economic reform program, and exploring market opportunities for Ethiopian products.
While the rhetoric around economic diplomacy is strong, the operationalization of this renewed focus is still uneven. Experts warn that unless structural constraints are addressed, the outcomes may be underwhelming.
“There is still a huge capacity gap. Most diplomats were trained in conventional international relations, not in global commerce or trade policy,” said an expert who spoke to The Reporter anonymously. “We need a new generation of economic diplomats who can engage investors, navigate international trade regimes, and broker deals that benefit Ethiopian industries.”
One of the bottlenecks has been a lack of coordination between federal ministries and diplomatic outposts. For instance, Ethiopian embassies are often not informed about key trade negotiations led at ministerial levels, or investment missions coordinated. This creates duplications and missed opportunities.
In response, the Office of the Prime Minister recently mandated a cross-sectoral coordination committee that brings together the Trade, Finance, and Foreign ministries, the Investment Commission, and other sectoral economic organizations. The goal is to ensure policy coherence and real-time information sharing. Whether this coordination body will translate into a unified economic diplomacy framework remains to be seen.
Didimos Getachew, an investment advisor at Ethiopian Investment Holdings (EIH), points out that each of the members of this committee has different needs.
“The kinds of investors EIH, the Ethiopian Securities Exchange, and EIC need the Ministry of Foreign Affairs to mobilize are all different,” said Didimos.
He revealed the Ministry has often failed to meet expectations in onboarding strategic investors to engage in EIH projects.
”More often than not the investors that come through MoFA are interested first to import commodities into the country, sell locally, and then move on to investing. But we’re more interested in long-term investors,” said Didimos.
On the other hand, a diplomat who attended the panel discussion this week argues the country needs to expand its network of embassies and consulates in order to accommodate successful economic diplomacy and bring in investors.
He also raised concerns about resource constraints and the need to facilitate fast-paced updates regarding sub-sectors and priority targets.
One area where the pivot to economic diplomacy is most visible is Ethiopia’s engagement with the Gulf states and African neighbors. In the wake of regional realignments, Addis Ababa is strategically positioning itself to benefit from the Gulf’s surplus capital and Africa’s emerging markets.
The recent Ethiopia-UAE business summit in Abu Dhabi, which saw over USD 500 million worth of MoUs signed, signals a growing appetite for Gulf investment. From logistics to agriculture and fintech, Ethiopian officials are actively courting Emirati, Qatari, and Saudi investors.
On the continental front, Ethiopia is also seeking to operationalize the AfCFTA. The challenge here lies in infrastructure and logistics. Poor port access and weak transport corridors limit Ethiopia’s capacity to benefit from regional markets. Nevertheless, the diplomatic overture to Somalia, Djibouti, and Kenya underscores an economic rationale beneath Ethiopia’s regional push.
Another vector of economic diplomacy is diaspora engagement. The government has launched targeted initiatives such as the “Invest in Ethiopia” platform and diaspora bond schemes.
Ethiopian missions abroad now host regular economic forums with diaspora business leaders. Yet bureaucratic red tape, corruption, and instability back home continue to erode investor confidence.
The officials who took part in this week’s discussions all emphasized the need to reach out to the diaspora.
Tilahun Kassahun, head of the ESX, wants to see data on how many members of the diaspora have opened investment accounts, much in the same way the country keeps tabs on remittances.
Among other things, he aims to engage in buying treasury bills.
On the other hand, Fitsum Arega (Amb.), executive director of the Ethiopian Diaspora Service, stated that extended repayment periods on GERD bonds have become an issue. He called for a digital platform for the sale of bonds.
Beyond capital, economic diplomacy also involves branding. Ethiopia is working to reframe its global image—from conflict to commerce. The appointment of former investment officials to top ambassadorial posts signals a subtle but important shift in emphasis. Yet, major hurdles remain, especially with regard to persistent insecurity and human rights concerns, which continue to cast a shadow over diplomatic overtures.
Experts argue that for economic diplomacy to succeed, Ethiopia needs more than inter-ministerial coordination. It requires a coherent national strategy backed by professional training, data-driven decision-making, and institutional reform.
”The foreign policy of any given country needs only general guidance on how the country relates with others. This should be on peace, tranquility, trade relations, and, of course, peaceful movement of people between countries. That is the kind of guidance needed and that is exactly what Ethiopia’s foreign policy statement says. If you want to focus on economic diplomacy, then between the focus of the current administration and the MoFA, it means that ambassadors need to be changed. Business people need to be appointed because the current ambassadors have only been trained to represent Ethiopia in some important instances,” said Constantinos Berhe, a political analyst.
“Economic diplomacy is not about improvisation; it’s about long-term planning,” said another foreign trade consultant. “It requires country-specific strategies—what Ethiopia wants from India is not the same as what it seeks from Germany or China.”
Some suggest the creation of a National Council on Economic Diplomacy, akin to similar structures in countries like Turkey or Malaysia, which would unify all external economic engagements under one strategic umbrella.
”If our diplomacy is economic-oriented, then our ambassadors should be business people who can articulate business statements, who have the capacity to bring in investments as well as ability to engage with investors,” said Constantinos.
Analysts and experts who spoke with The Reporter agree that Ethiopia’s bid to re-anchor diplomacy in economic fundamentals is timely. With declining donor inflows, stiff competition for FDI, and rising economic nationalism globally, Ethiopia cannot afford to conduct diplomacy as usual.
Whether the country’s institutions will rise to this challenge remains uncertain. But what is clear is that the divide between the economic and foreign policy arenas can no longer be sustained.
Bridging this gap may well determine whether Ethiopia emerges from its current economic woes with a clearer path toward prosperity—or remains stuck in a cycle of disjointed policymaking and missed opportunities.