In this exclusive interview, Capital’s Groum Abate speaks with Ambassador Roland Kobia, the outgoing Ambassador of the European Union to Ethiopia, who is concluding his full three-year tenure. With a deep understanding of the complex political and economic landscape, Ambassador Kobia has played a pivotal role in keeping EU’s relationship with Ethiopia, focusing on trade, development aid, and humanitarian support.

During his time in office, Ambassador Kobia has witnessed significant challenges, including ongoing conflicts, economic downturn, while also focusing on EU’s commitment to promoting peace and stability in a challenging context. In this interview, he shares insights into the EU’s views and priorities in Ethiopia, the impact of recent macroeconomic reforms, and the importance of a meaningful, sustainable partnership for the future.

As he prepares to leave his post, Ambassador Kobia reflects on the achievements and challenges of his tenure, providing a comprehensive overview of the EU’s engagement with Ethiopia and the path forward for both parties. Join us as we delve into his experiences and perspectives on the evolving relationship between Ethiopia and the European Union. Excerpts:  

Capital: What are the current priorities and focus areas of the European Union’s engagement with Ethiopia?

Ambassador Roland Kobia: The EU covers all aspects of the bilateral relationship with Ethiopia. There has been a lot of political work done over the last few years. We also cover areas such as security, trade, development and humanitarian support. As you may know, the EU and the EU member states together are consistently among the top three trading partners of Ethiopia. Often, we are the number one or number two partner for Ethiopian exports, imports and also for foreign direct investments (FDIs). Many European companies have invested in Ethiopia and are creating dozens of thousands of jobs here, ensuring corporate social responsibility, and providing good working conditions for employees.

So there is a lot of trade. One surprise I had when I arrived here was that very few people knew that the EU is the main trading partner of Ethiopia. Everybody thinks about China or others, but not about Europe. There is something strange about this. We are a key trading partner, qualitatively and quantitatively. One reason for that, besides our longstanding relationship and proximity, not only geographical but also cultural and historical, is that the EU has granted Ethiopia the most favorable trade regime we can offer anywhere in the world. We have for many years indeed given  Ethiopia a unique preferential trade regime called “Everything but Arms” (EBA). As the name suggests, this means that all Ethiopian products, except weapons, can be exported to the European Union under very highly privileged conditions. This means that Ethiopian products can be exported to the EU market, one of the biggest and richest market in the world, without any customs duties (0% tax) , and no quantitative restrictions. There is no limit to the quantity that can be exported. This is a unilateral, non-reciprocal favor we have granted to Ethiopia to help boost its economy and export capacity. In addition and in complement to trade, we also provide massive development aid. With EU Member States, we are clearly in top two of the largest donors of development aid, mainly through non repayable grants (which do not increase the debt). We also give some soft loans through the European Investment Bank.  The support we provide does not need to be reimbursed. I am currently managing an envelope of 120 billion birrs, which is about 1 billion Euro, for Ethiopia. And lots of funds are still available, and at disposal of the country if we can have a dialogue thereon. 

Our work encompasses various social sectors, from peace and reconciliation, human development and business environment. This covers notably education, health, governance, human rights. In addition to these areas, we also provide humanitarian aid, which is in addition to the mentioned figure. Furthermore, we aim to promote people-to-people contacts between Ethiopia and Europe. This involves initiatives such as offering scholarships through the Erasmus Mundus Plus program. Recently, I welcomed 50 master’s students who will be studying in Europe. Every year, we send numerous Ethiopian students to Europe for free education. We also organize activities to enhance mutual understanding between the people of Ethiopia and Europe. It is important to note that we collaborate extensively with the member states of the European Union, many of whom are present here in Ethiopia. This collaboration covers various aspects, including counterterrorism and peacekeeping operations. The European Union is the primary financial supporter of peacekeeping operations conducted by the African Union, including AMISOM, ATMIS, and potentially the post-ATMIS operation that the AU is yet to decide upon. As the first financer, we also need to be integral part of that conversation. Our collaboration with Ethiopia is therefore broad and significant, but its full potential must be untapped through more dialogue.

Capital: How is the EU’s relationship with Ethiopia currently, in light of the conflict all over the country?

Ambassador Roland Kobia: I will not hide that the EU has always had doubts about using war to settle problems. The “war versus peace”, “cooperation versus confrontation” has been an irritant in our bilateral relation. We advocate for political settlements, dialogue rather than automatically resorting to war to settle problems. Conflicts have a huge human, reputational and economic cost. So, not only in Ethiopia, but around the world, the European Union is trying to promote peace. Sometimes, we feel pretty alone in this. We promote solutions that enable the people to find a lasting resolution to their problems through sitting around the table and finding a solution.

We believe that war can – if at all – only be the last resortafter you have tried everything for a peaceful settlement. . Dialogue should always be first, not last. But here we found it very unfortunate that war was the first resort of trying to settle things. So the EU expressed its opinion. There’s no secret in that. I think we have been very clear in our positions and that has led to some years of political challenges I had to go through with my team. But, with political maturity, we are trying to overcome that and to gradually normalize the relationship with Ethiopia. I hope that this will come. But again, now that the war in Tigray is over, there’s still a war in Amara, high instability in Oromia. There are still instabilities in some other regions, like Benishangul, or Gambela, or terrorism in the Somali region with Al Shabab. So all this, I think, needs to find a solution so that Ethiopia can be at peace with itself, between the different parts of Ethiopia, the different people of Ethiopia, the different groups of Ethiopia. And we very much hope that Ethiopia will very quickly be able to find that solution peacefully.

Capital: So how are the European companies affected by this instability anymore?

Ambassador Roland Kobia: This a very important question because, as we just said, Amhara is a region where there is war. Oromia is going through very high instability with conflicts, banditry, kidnappings, ethnic polarization and instability. The issue is that most of the European companies are in Oromia and Amhara. These regions have the largest number of investments from foreign companies, notably European companies who create thousands of jobs. Flowers, breweries, and many other companies are located there. Therefore, it is a significant problem for them to have war or conflict causing instability in these regions because it affects their investments and it affects the jobs they have created for Ethiopians. Due to the insecurity – they have to slow down their activities, resulting in job losses. It is unfortunate to have this instability, particularly in these two regions where the level, quantity, and quality of investment are high. Insecurity and war make it impossible to conduct business.

As a result, some businesses have to slow down, and others have to shut down. Moreover, there are missed opportunities for potential investments due to the current war. New companies cannot come because it is just too difficult and dangerous. From a business point of view, there are many missed opportunities. Ethiopia needs to kick off its economy, create jobs, and implement policies that benefit the suffering people. One of the best ways to achieve this is by creating investment opportunities. It is unfortunate that this insecurity exists. It heavily impacts companies because it adds to existing problems such as foreign exchange issues, corruption, lack of transparency, and fiscal harassment.

Therefore, there are several problems that affect the normal operations of companies. There are alternatives to companies willing to be active in Africa. Companies that can no longer operate here have the possibility to go to Kenya or other countries. If companies cannot work in Ethiopia, they will go invest elsewhere. This is regrettable for Ethiopia.

Capital: Is the FDI from Europe declining?

Ambassador Roland Kobia: FDIs from the EU is not declining, but it’s not increasing either, because there are no new investments under the current circumstances of war, insecurity and an unfriendly business environment. Once there is peace and security in the country, I can assure you that many European companies are ready to come to invest and create jobs in Ethiopia because Ethiopia is an important country and a great market. It’s a country with enormous potential, but you cannot ask a businessman to invest in a place with so many issues impeding a serene business. They will not do it, and this does not only relate to European companies. I know many non-European companies, even some Asian companies, that face the same difficulties , some of them even leaving Ethiopia to go elsewhere. So it’s not a European problem, it is horizontal. And I would even go one step further. I would say that it’s a missed opportunity even for Ethiopians who would like to invest, because you have a lot of entrepreneurs. Local Ethiopians or Ethiopians  from the diaspora who would like to come back to Ethiopia to invest their money and return to their homeland. But they are not doing it or not enough, again because of war and insecurity. So really, if you want to develop a country, if you want the country to shine and blossom and to return to its place as a real beacon of power and attractiveness, you need peace. I know it looks both simple and difficult, but if there is political will, I think it is possible.

Capital: In 2025, the EU is adopting the deforestation bill that will see agricultural exports, including coffee, banned from its territory?

Ambassador Roland Kobia: There has been a lot of misinformation about this issue, and I we all know about the unfriendly countries that have  been spreading this disinformation through their usual trolls. 

So let me clarify this: First of all, the law on deforestation is a law that does not apply only to Ethiopia. It’s a law that applies to all countries of the world. So it is not a measure of the EU directed at Ethiopia, as disinformation says.

Secondly, it’s a law that is motivated by something that Ethiopia is itself very committed  to and very much in agreement with, and that is climate change. We see that the Prime Minister is pushing the green agenda, the green policies, his “Green Legacy”, that the government is pushing anything that is related to greening and climate change. And the EU Deforestation Regulation is a law that has been adopted precisely to contribute to the fight against climate change. 

Number three, these new EU rules are meant to ensure that the products do not contribute to deforestation or forest degradation worldwide, so they do not only concern coffee, but also cocoa, palm oil and other commodities. But in the case of Ethiopia, it affects export of coffee. 

Fourth, I think you should not look at it as a problem, you should look at it as an opportunity. The coffee sector in Ethiopia is a long-standing very important sector, and we know that it is important for Ethiopia. We value that, and we Europeans are amongst the biggest importers  of Ethiopian coffee. Notably, if you take a single country, Germany alone is importing about 15% of the Ethiopian coffee. So Europe is a big buyer of Ethiopian coffee. And Ethiopia likes to sell coffee to Europe because we are good payers. However, the coffee sector has been left un-reformed for many years, resulting in a lack of competitiveness and efficiency. The country needs to produce more coffee of higher quality. The atomized system of the coffee sector in Ethiopia makes it difficult to compete with coffee producers like Brazil, Vietnam, and other African countries who are more competitive and have more efficient production methods. The legislation should be seen as an opportunity for Ethiopia to overhaul its coffee sector, which already produces fantastic coffee that is highly appreciated worldwide. We are currently working with the authorities and coffee associations to find solutions.

I am hopeful that we will soon have a solution and can focus on the opportunities instead of the problems. This legislation will provide an opportunity for the entire coffee sector to improve and offer more coffee, better quality, diversified and sustainable products. Consumers in Europe, Northern America, and Asia are increasingly sensitive about the sustainability of products and how they are produced. If the coffee sector in Ethiopia can show that it is sustainable, protects the environment as well as small farmers’ rights, and contributes to job creation, it will be a strong marketing argument to sell coffee.

I am confident that after the transition period, countries like Ethiopia will benefit from this deforestation legislation. While some work will be required during the initial one or two years, I am certain that Ethiopia will be able to increase production and improve quality.

Capital: Would it affect how farmers produce their crops? 

Ambassador Roland Kobia:I It’s actually pretty straightforward. The EU does not want to modify the way Ethiopia produces its coffee. This is Ethiopia’s decisions. So we are not, through this legislation, saying that the very atomized, small parcels of coffee production should be changed. If Ethiopia wants to keep that system, it’s fine. The only thing we are looking at is what we call traceability. We need to be able to trace where the coffee comes from to ensure there was no deforestation behind it.

It might be a bit more complicated if you have many producers, than if you have just a few hundred big ones. In Ethiopia, there are thousands and thousands of small holders. But with technology, everything is possible to find the right solutions and enable Ethiopia to adapt to the system. And now we are looking at technologies that can very easily look at the small parcels and say, that parcel is fine, there were no trees. It has not been affected by deforestation and there is no problem, so you can continue to produce the way you want. So, again, we are not trying to interfere with the production in Ethiopia. What this new regulation is aiming at is that if you produce wild coffee, Ethiopia has the capacity to go a step further and produce other types of coffee that can be exported to more countries. Ethiopian coffee is already selling well, but you could produce more, sell more, and get more revenues for the farmers, for the population, for everyone. So there is also a possibility to look at alternatives, not getting rid of what exists, but keeping what exists and also producing less wild coffee, not just specialist coffee, but coffee that is more commercial.

I think the beauty of this issue is that it enables people to say, the coffee sector has been like this for many years. It has hardly changed. Why don’t we look at it? Let’s look at it and decide if and how we can improve it. In every challenge there is a clear opportunity for farmers to do better, and get a better are of profits of their labor.

Capital: How do you see the recent macroeconomic reforms?

Ambassador Roland Kobia: The macroeconomic reforms are taking place in the framework of the agreement that Ethiopia has reached with the International Monetary Fund. The agreement was long-awaited, and much needed. The negotiations have taken a long time, almost two years. So it is good that we see the end of it and that Ethiopia is now able to access the package of the IMF, which is worth 3.4 billion USD, and overall 10,5 billions with the package of the World Bankand the debt restructuring. FWhat can we draw from this important moment ? First of all, it is very important to note that Ethiopia has decided to seek support from the traditional multilateral institutions (that some countries want to weaken) The IMF is very much supported by the West, by the Americans, by the European Union and is Member States, and many other countries still supporting multilateralism and a stable world order. Even if Ethiopia tried to find alternative sources of financing, finally the government decided to go with the IMF. So the money is not coming from Ethiopia’s new friends, and that shows the very solid and strong bonds and relationship with the traditional international financial institutions. . 

Number two, what is important with this agreement is that it requires Ethiopia to carry out deep reforms, to move gradually from what was a rather central economy, a rather protectionist economy, into a more free-market oriented economy. That needs reforms and it will need a bit of time. That is normal. Ethiopia has, as far as I know, never engaged really in a liberal economy. There have been periods in which it was a bit better, but it was never a free-market economy.

So with this IMF agreement, the government has decided to move gradually towards a more free economy, to open up the country, and to carry out the macroeconomic reforms that are needed to put the economy back on its feet. It is very important to understand that the money that will come, will need to be accompanied by reforms. There can be no financial support if there are no reforms. So who moves first? We call this frontloading. Do you need the reforms first to get the support or do you provide the money first and then implement the reforms? That is something that needs to be negotiated between the government and the IMF.

But they need to at least go hand in hand. Every few months, there will be a monitoring mission of the IMF. They are going to come at the end of September or early October. And then they will come again in December. They will come here to assess if the reforms are being implemented. I very much hope that Ethiopia is committed to making the necessary reforms which are difficult but which Ethiopia has accepted as part of the agreement. And I hope that it will enable the Ethiopian economy to perform better and to be able to generate a more powerful economy for the country.

I want to insist on te buy-in o the people of Ethiopia for the success of the reforms. We need to be very careful about the impact of these reforms. The danger I see is that reforms need time to bring and feel concrete benefits, but the impact is very quick and notably the impact on the population. And we are already seeing because of the forex reform, because of the leveling of the exchange rates, because of inflation, because of a certain price hike in certain sectors, that the population is going through a difficult time, once more after Covid, the wars etc. Therefore, before we see the long-term benefits of these reforms, we need a short-term social cushion for the population. The government needs to put into place reforms and policies that will enable to soften the impact on the population.

One of the things that the IMF is asking is to increase government spending for pro-poor policies, meaning all the policies that are made to benefit the people. Because unfortunately, over the last years, there has been a reduction in pro-poor spending. It’s not me saying this, these are the World Bank figures. According to the World Bank, Ethiopia has reduced its public spending for the poor people of Ethiopia. This needs to be corrected, and more spending is needed. I see that there can be money in Ethiopia. I see a lot of projects in Addis Ababa, in Ethiopia, infrastructure projects, projects in Addis Ababa, projects outside of Addis Ababa for the airport, the new airport, for other infrastructures. So there is money. But the money needs to go to the right place. And the people need to be helped to contribute to the efforts of the government, to ensure that these policies and reforms will take place and that they will take place with as little impact as possible on the people who are already suffering a lot. This is our hope. 

Therefore, I think it is a good decision that the government has made to go with the IMF package because it is not just money that comes without any requirements. There are requirements, but positive an structural ones  that will push Ethiopia to modify its macroeconomic and its microeconomic landscape. 

Investments and the business sector at licro-economic level are also key to support macro-economic reforms.  The business sector needs to be part of the improvements because that will bring a key contribution to the implementation of the IMF package. So I very much hope that the agreement will bring a positive development and that the implementation phase will be as smooth as possible.

Capital: Do you think the reforms will work with all these conflicts and rampant corruption in the country? 

Ambassador Roland Kobia: There are a number of difficulties that need to be addressed. Corruption at different levels is one important one. As the old wisdom says, corruption is a cancer that produces metastasis in all circles of society and breaks the economy and the reputation of a country. Corruption has multiple negative effects, and notably limits the possibility of budget support into the treasury as it reflects on the public finance management needed for that. 

There are also issues with the lack of fiscal transparency, extra budgetary public spending and others. The generation of revenue is lacking, so the government will need to generate more revenues. One needs to be very cautious about how you do that for the sustainability of the economy. Do you increase customs duties? Do you increase taxes? Do you tax companies even more? That is for Ethiopia to decide with the IMF and partners involved. So all this transparency, or lack thereof, needs to be worked on. The IMF will require that, and the IMF will be closely monitoring for the release of the various tranches. For the sake of the Ethiopian people, I very much hope that it will work.

Capital: What role is the EU playing in supporting peace, security and human rights in Ethiopia?

Ambassador Roland Kobia: Supporting peace, security and human rights is one of the main things that the EU does in Ethiopia, just as we do around the world. For the last three years, I have not stopped telling everyone, privately and through  media when they could, that what Ethiopia needs to move towards peace. It was not always a popular message, but we decided to stick with it. In our political dialogue with the government, we have been trying to convince the authorities to move towards peace, to stabilize the country, to reduce increasing inter-ethnic polarization. We have been the first and biggest supporter of all the initiatives by Ethiopia for peace, the National Dialogue, the DDR process, transitional justice. The EU was the first to provide financial support to DDR and the National Dialogue Commission. And we are still today the biggest supporter in terms of money as well as politically. And I have always supported these initiatives personally.

But of course, these initiatives also need to take place in an environment that is conducive. The State has to create an environment for these initiatives to be able to produce positive outcomes. This is the bread and butter of our work here, to promote peace, reconciliation, stability. I will not hide that we were a bit disappointed two years ago that we were not invited to participate in the Pretoria talks, because we had proposed that, because the EU is a peacemaker. We promote peace all over the world. The EU has received the Nobel Peace Prize for our internal and external work on peace. And we have been helping many countries around the world with their peace processes. So we proposed our help, our support, our services for the negotiations with Tigray, but the government decided not to invite us. We were disappointed about that as it was not signaling a “strategic engagement”, but that was the government’s decision, we took note of it. . And we are still ready to contribute and help with other conflicts, e.g. the conflict in Amhara, for finding a solution to the instability in Oromia, and the other conflicts. We are trying to help a number of actors who are working on these issues. Mark my words, the EU always supports peace, everywhere. What is most dear to us is to see a country at peace because then peace becomes the foundation of everything else. With peace, you can engage in trade, you can develop, there is respect for human rights, people can have lasting jobs, healthcare, education, and lead normal, happy lives. Without peace, this is very difficult.

Capital: How does the EU see Ethiopia’s interest to acquire access to the sea in Somaliland? 

Ambassador Roland Kobia: One has to distinguish objectives and methods, and the two are part of the same coin. Trying to reach an objective is the sovereign right of any country.  This desire is not for the EU to judge. Personally speaking, I think that any country has the right to determine its own objectives. There is no problem with that until it os done the right way. All countries, all the time, act in their own interest. That is totally normal. However, there is a difference between the objective and the method, the process. 

How you execute and objective is the challenge and, based on my experience, the process is as important as the idea. Notably if there are other sovereign partners involved. In this particular case, I believe it is very important to have an objective that is done in a way that goes along legality, international law and the AU Charter. The outcome is intended to benefit Ethiopia, so the implementation should not create problems for Ethiopia. It should bring benefits. In this particular case, as an outsider I have observed that the way it has been handled has generated tension, problems, and even animosity with friendly neighbouring countries. 

It all comes down to dialogue. You need to have discussions, you need to communicate, you need to prepare, you need to consult, and you need to inform the people who are affected by your objective. Yes, it may take a little more time, but at least it will not create problems and the outcome will be sustainable and friendly for generations. It can even be a win-win if done according to legality and the preservation of every party’s interest. Even great ideas require a great process. The idea or ambition alone is not enough.

Capital: Are European businesses and investors looking to engage more with the Ethiopian market?

Ambassador Roland Kobia: I believe I already answered that. My humble advice is that to attract more investments in Ethiopia, as it seems to be a publicly-declared objective of the government, the public authrotities at all levels need to ensure a friendly business environment through ensuring stability, security, and legal predictability.  Currently, I am afraid to say that the business environment is not very friendly.

Capital: The European Chamber in Ethiopia often raises critical policy questions to the government but are openly debunked by the government. What is your say?

Ambassador Roland Kobia: The European Chamber of Commerce, known as Eurocham, is doing incredible work in providing advice on how to improve the business climate in Ethiopia, notably by producing excellent policy papers. They analyze the situation, identify the problems, and propose solutions in these papers.

They have produced policy papers on a variety of issues such as taxation, land, forex, security, and more. They offer solutions to the authorities based on their perspective as businesses. They say, “From our point of view, we believe that if the legislation or the implementation of the legislation…. If it is done in a more conducive way, we will be able to invest more or attract new investments.” The dialogue has not always been easy, and followed by concrete measures. So I can only encourage the two parties, the government and the companies, to sit together as much as they can to find solutions and create a very appetizing business environment where companies want to come, invest, create jobs for Ethiopians, and support families through these jobs. The people need it. I really encourage all the listeners of this interview to read these policy papers made by EuroCham.

EuroCham is a big organization, very powerful with about 180 companies active in Ethiopia, working hand in hand with the national chambers of commerce of the EU Member States, like the French Café or the Dutch Chamber of Commerce, which are also very active. Also, through the EU Member States that try to have a dialogue with the authorities to improve the business environment. So there is a lot of work to be done, but again I believe it is possible. If there is the will to create a more friendly environment for the companies, I am sure it is possible. As with everything else, it is a question of political will. We have seen that when Ethiopia wants to do something, they mobilise everything and they can do it. We just have to see the ongoing Corridor in Addis, the infrastructure projects for the new palace, the new airport, the new corridors in other cities. So, political will can be mobilized also for other issues having a wider impact on the majority of people’s lives.

And in doing this, Ethiopia will live up to its own old wisdom and beautiful saying: “Der beyaber anbesa yaser”!