Ethiopia views Italy as one of its most valuable partners for economic cooperation. Ethio-Italian Development Cooperation was originally guided by an agreement signed between the two countries in 1999. Under this, Italy allocated 108.5 million Euros mainly focusing on health, education, and rural development. The agreement was replaced by a new development cooperation framework agreement in April 2009 providing for an outlay of 46.4 million Euros for the period of 2009-2011. This allows for various projects focusing on Rural Water and Sanitation (WASH) and Agricultural Value Chains in the Oromiya, SNNP, Amhara and Tigray Regional States for 9.6 million Euros. Under a bilateral accord signed in November another 8.2 million Euros has been provided for Ethiopia's 2010-2012 healthcare sector development projects. Italy, of course, provided substantial support for the Gilgel Gibe 11 dam which was built by the Salini Construction Company; and during his visit in January 2011, Italian Foreign Minister Frattini attended the formal inauguration of the dam by Prime Minister Meles.
Ethiopia and Italy signed a bilateral Investment Promotion and Protection Agreement in 1994; and Italian businessmen discussed over two hundred direct investment projects in Ethiopia between July 1992 and July 2008 with possible capital involvement of 3.7 billion birr. Of these 54 projects with a total outlay of over 700 million birr are operational, while the rest are in implementation and pre-implementation phases. Given the growing investment and market opportunities of Ethiopia, and the traditional relationship that existed for so long time between the two countries in the business area, Ethiopia believes that this relationship could be far more extensive. It will continue to work hard to encourage greater Italian investment in Ethiopia. It has made it clear it would like to see Italy consider the establishment of a specific Italian industrial zone in Ethiopia, something that both China and Turkey have agreed to.
Trade relations between Ethiopia and Italy have continued to expand rapidly especially since 1997. The overall volume of trade grew more than fivefold between 1997 and 2009. Just over 1 billion birr in 1997, it reached 5.54 billion birr in 2008 before falling back to 3.8 billion birr in 2009. The trade balance, however, remains firmly in favor of Italy with Ethiopian exports amounting to 561 million birr in 2010 and imports from Italy reaching 3.21 billion birr. The main commodities that Ethiopia exports to Italy are coffee, hides and skin. Its imports from Italy include manufacturing goods and construction equipment.
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