Post 1991 Ethiopia and Saudi Arabia Economic Relations: Challenges and Opportuniteis of Trade and Agricultural Investment

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Addis Ababa University


Ethiopian has had long-standing bilateral relations with the Arabian Peninsula dating back to ancient Axumite kingdom. The relations were manifested in terms of religion, economic, and political aspects. In all of these contacts, the interaction has had both challenges and opportunities. For instance, starting from 1932 (after the formation of Saudi Arabia, taking much of Arabian Peninsula) until 1991, there were no active relations between Ethiopia and Saudi Arabia. However, 1991 was the turning point in the relation between the two countries. In these years, economic interactions took more importance though political and religious contacts still have significance. This research thesis looks into post-1991 Ethiopia and Saudi Arabian economic relations: taking agricultural investment and trade as the main focus. It aims to understand the challenges and opportunities that these agricultural investment and trade bring to Ethiopia when the country conducts its economic relation with Saudi Arabia. The study argues that Saudi Arabia has strategic, religious and economic interest towards Ethiopia. But due to political development in Ethiopia after 1991, economical interests prevailed over other interests. In view of this, the objective of this thesis is to provide empirical evidences regarding the advantages and disadvantages of agricultural investment and the types of export and import items that Ethiopia and Saudi Arabia are trading with each other. The thesis indicates that trade relations and Saudi investment in agricultural sector are increasing tremendously in recent years. To study these issues, the thesis has used qualitative research methodology. In chapter two and three, available literatures were reviewed to discus about historical relations of the two countries. Concerning advantages and disadvantages of the agricultural investment, unstructured interview were conducted with workers of Saudi Star Agricultural Company, residents in Gambella, and pertinent officials in agricultural areas. This study tries to answer research questions: Why has Saudis economic interest increased after 1991 in Ethiopia? What are different factors for trade imbalance which is usually in favor of Saudi Arabia? What are the roles of Saudi agricultural investment for the food security in Ethiopia? The findings from data analysis showed that the economic relationships between the two countries are in favor of Saudi Arabia in agricultural investment and trade. With regard to agricultural investment, Saudi investments in this sector do not solve food insecurity in Ethiopia; it is merely for export to the Saudi market. Also, available data show that Ethiopia imports more commodities from Saudi Arabia than it exports



International Relation