Italy commits €180M in grants and soft loans to Ethiopia for agriculture, industry, health, and education support under new cooperation pact.
ADDIS ABABA, July 29, 2025 – Italy and Ethiopia have entered into a landmark €180 million (approx. US$209 million) bilateral cooperation agreement aimed at accelerating Ethiopia’s development across key sectors including agriculture, industrialization, health, and education. The deal was formalized on the sidelines of the UN Food Systems Summit held in Addis Ababa.
According to Ecofin Agency, the package comprises both soft loans and direct grants. This reflects Italy’s intention to maintain and deepen its strategic partnership with Ethiopia—a country considered central to stability and growth in the Horn of Africa.
Focus Areas of the Agreement
The cooperation framework will target several core areas:
- Agriculture and Food Security: To support Ethiopia’s efforts in modernizing farming systems and improving food security amid climate vulnerabilities.
- Industrial Development: Funding will also promote value addition and job creation in emerging manufacturing sectors.
- Health and Education: Projects will aim to improve access to essential services and strengthen human capital.
Ethiopia’s government welcomed the deal, describing it as a timely boost to national development goals outlined in the Ten-Year Development Plan, which seeks inclusive, sustainable growth across the country.
Italy’s Renewed Engagement in Africa
This new agreement underscores Italy’s broader commitment to engagement in Africa, especially in the context of EU-backed strategies to foster development partnerships rather than dependency. Italian representatives at the summit emphasized the long-standing ties between Rome and Addis Ababa, noting that Ethiopia remains a priority country for Italy’s development cooperation.
“This package is a tangible expression of Italy’s faith in Ethiopia’s future,” said an official from the Italian Agency for Development Cooperation (AICS). “We aim to accompany Ethiopia on its path to prosperity by supporting resilient food systems, inclusive industries, and stronger institutions.”
Implementation Timeline
The implementation of the projects is expected to begin later in 2025, pending the ratification of agreements by both governments. Italian technical teams and Ethiopian ministries will jointly supervise planning, rollout, and impact assessments.
The deal comes at a time when Ethiopia is striving to recover from multiple economic shocks, including post-conflict reconstruction, inflationary pressures, and climate-related challenges.
Reactions and Outlook
Development economists have welcomed the announcement, saying it offers hope for long-term transformation if managed transparently. “The fact that a European country is providing both soft loans and grants is significant,” said Alemayehu Fekadu, a senior policy analyst in Addis Ababa. “It shows a willingness to invest in Ethiopia’s future without placing an unsustainable debt burden.”
While official reactions from Ethiopia’s Ministry of Finance and Foreign Affairs remain limited to joint statements, the symbolism of Italy’s investment during a global summit hosted in Ethiopia has not gone unnoticed.
The cooperation pact also fits into broader multilateral trends, as donor countries seek to balance geopolitical influence with tangible contributions to Africa’s development.
