Italy has pledged to help close the remaining financing gap on Ethiopia’s $2.7 billion Koysha Hydropower Project and to finance selected components of the $12.7 billion Bishoftu Airport, following high-level talks in Rome on March 18 between Ethiopian Finance Minister Ahmed Shide and Italian Economy Minister Giancarlo Giorgetti. The commitments, backed by Italian financial institutions and coordinated with a World Bank budget support programme, position Italy as one of Ethiopia’s most consequential bilateral development partners at a moment when both flagship projects are approaching critical construction phases.
The Koysha dam on the Omo River in South West Ethiopia is among the largest hydroelectric projects on the continent, designed to generate 1,800 megawatts across eight Francis turbine units and produce approximately 6,344 gigawatt-hours annually. Built by Italian contractor Webuild (formerly Salini Impregilo) under a contract valued at roughly $2.5 billion (€2.5 billion), the project has had a long and troubled financing history. Initial funding came from a €340 million loan from three banks, supplemented by credit from Italian export agency SACE. Construction stalled repeatedly as financing gaps emerged on a project located on a transboundary river, which made concessional lending difficult to secure. The IMF identified a gap of approximately $879 million at one point. Ethiopia secured a $950 million non-concessional loan in August 2024 to restart final-phase construction. As of March 2025 the dam stood at approximately 65 percent completion.
Italy’s March 18 commitment addresses the remaining financing steps needed to bring Koysha to completion, with both sides agreeing to finalise arrangements within months. The Italian delegation cited significant progress on refinancing structures already advanced, framing the Rome meeting as the final-stage alignment before execution. Once operational, Koysha will add meaningfully to Ethiopia’s grid, which surpassed 6,000 megawatts in late 2024 against a government target of 13,000 megawatts by 2028.
The Bishoftu Airport component is a newer but equally significant development. The $12.7 billion project, 45 kilometres southeast of Addis Ababa, is designed to handle up to 110 million passengers annually and is intended to replace Bole International Airport as Ethiopian Airlines’ primary hub. Italian institutions confirmed support for financing selected components of the project, with both sides agreeing to initiate technical discussions involving the Ethiopian Airlines Group and financial advisors to develop financing structures. Italy’s backing is significant given that Ethiopian Airlines is the continent’s most profitable carrier and the airport’s anchor tenant and strategic driver. The Italian side explicitly commended Ethiopian Airlines’ performance as part of its rationale for engagement.
Italy also confirmed support for Ethiopia’s development policy programme in coordination with the World Bank budget support initiative, providing macro-level backing to Ethiopia’s ongoing economic reform agenda under the IMF-aligned framework.
The Rome talks were attended by Ethiopia’s Ambassador to Italy Demitu Hambisa and senior officials from the Finance Ministry and the Ethiopian Airlines Group. The diplomatic framing was explicit: both governments described the outcome as a foundation for deepening a strategic bilateral relationship with long-term infrastructure and economic dimensions.
Italy’s deepening Ethiopia engagement fits a broader pattern of European countries seeking direct infrastructure partnerships with high-growth African economies outside the China-dominated financing architecture. Ethiopia’s Bishoftu airport ambition has already drawn competitive attention from Kenya, whose JKIA modernisation programme is partly a response to the regional aviation challenge Bishoftu would pose once operational. Italy’s financing role in both Koysha and Bishoftu locks in bilateral ties that will compound over the multi-decade operational lives of both assets.
Bigger Picture: Two of Ethiopia’s largest infrastructure projects, a 1,800-megawatt dam that has been under construction for nearly a decade and a $12.7 billion airport that will reshape East African aviation, are now both backed by the same European partner. Italy’s engagement is not philanthropic. Webuild already holds the Koysha EPC contract, Italian financial institutions stand to structure the airport components, and Italian export credit is embedded in Koysha’s debt structure. What March 18 confirmed in Rome is that Italy is positioning itself as Ethiopia’s infrastructure financing partner of choice at precisely the moment Ethiopia is executing the most ambitious development build-out in its modern history.
Source: Ethiopian News Agency
