• Ethiopia and the UK signed two memorandums of understanding covering investment reform and green energy infrastructure.
• The UK committed £17.5 million ($24 million) to Ethiopia’s Investment Advisory Facility for 2025/26–2028/29.
• Gridworks will finance $400 million in power transmission projects to support renewables, industry, and regional interconnection.

Ethiopia and the United Kingdom signed two memorandums of understanding on February 1, 2026, to support economic reforms, strengthen public investment systems, and develop green energy infrastructure.

The first agreement covers the launch of the second phase of Ethiopia’s Investment Advisory Facility (EIAF) for the 2025/26–2028/29 period. The UK government will provide £17.5 million, equivalent to $24 million, to support the program. The initiative aims to strengthen public investment management and public asset systems. In addition, the program seeks to improve conditions for inclusive, export-oriented, and private sector–led economic growth and to ensure sustainable transformation.

The second agreement focuses on the development of two electricity transmission projects with Gridworks, a UK public investment company specialising in African power networks. The projects will receive $400 million in financing. The plan includes the 206-kilometre, 132-kilovolt Degehabur–Kebridehar line, which will connect Ethiopia’s Somali region to the central and north-eastern grids. The plan also includes the 198-kilometre, 400-kilovolt Hurso–Ayisha line, which will unlock wind and solar potential in the north-east and strengthen interconnection with Djibouti. These projects will increase power supply to meet rising industrial demand and support the integration of renewable energy.

“The Ethiopian government has set a goal to increase grid connection coverage to 96% of citizens and available electricity capacity to nearly 20 gigawatts by 2030 under the Ethiopia 2030 ten-year plan,” said Ethiopian Finance Minister Ahmed Shide. He added: “These two projects will help achieve these objectives, support industrial growth through more reliable power supply, and accelerate electrification for nearly half of households that remain unconnected.”

The Ethiopian government has implemented reforms to improve the business climate. These measures include the adoption of an investment law in 2020 to attract foreign investment, the liberalisation of the exchange rate regime, and the creation of special economic zones. However, conflicts and political tensions continue to weigh on investor confidence.

Energy remains a critical issue for the country. With the commissioning of the Grand Ethiopian Renaissance Dam (GERD), Addis Ababa significantly increased electricity generation capacity. However, only 44% of Ethiopians currently have access to basic electricity services, mainly due to shortcomings in the national power grid, according to the World Bank.

Ethiopia and the United Kingdom maintain long-standing relations supported by investment programs in areas such as capacity building, climate change mitigation, and security.

This article was initially published in French by Lydie Mobio

Adapted in English by Ange J.A de BERRY QUENUM