Ethiopia and Eritrea had not had diplomatic ties since the war began in 1998, with Abiy himself once fighting in a town that remained contested at the time of his announcement past year. He spent his first 100 days as Prime Minister lifting the country's state of emergency, granting amnesty to thousands of political prisoners, discontinuing media censorship, legalising outlawed opposition groups, dismissing military and civilian leaders who were suspected of corruption, and significantly increasing the influence of women in Ethiopian political and community life.
On Thursday, the Swedish Academy in Stockholm awarded the 2018 Nobel Literature Prize, which it had postponed in the wake of a sexual harassment scandal, to Polish writer Olga Tokarczuk.
He beat teenage climate change activist Greta Thunberg, native Brazilian leader Raoni Metuktire and the New Zealand Prime Minister Jacinda Ardern, who were tipped as potential winners.
Amoudi was eventually released, but his continued detention could have proved troublesome for Ethiopia, where he is one of the country's main investors.
He left most of his fortune to be dedicated to the series of awards, the Nobel Prizes.
Ethiopian Prime Minister Office issued a statement to express pride of Mr. Abiy Ahmed, saying he achieved tremendous peaceful actions on the national and regional levels.
After Abiy came to power in April 2018, he said Ethiopia would comply with a 2002 ruling forcing it to cede territory, including the contested town of Badme.
Haavisto has visited the east African countries of Eritrea and Ethiopia dozens of times and says he knows the Ethiopian prime minister personally.
Lulie added that Ethiopia's transition away from a history of authoritarianism remained a "work in progress", but said Abiy's award would "serve as an impetus to continue this ambitious project of democratising the Ethiopian state and liberalising the political space". "Abiy has had real foreign policy successes, but there has been some misguided optimism from overseas that he can transform the Horn of Africa", said James Barnett, an analyst specialising in East Africa at the American Enterprise Institute. The only person not celebrating the Nobel decision is Eritrean dictator Isaias Afwerki, who worries that he may have to make human rights concessions before his counterpart ascends to the Nobel platform on December 10th. "I was so humbled and thrilled when I just heard the news", Ahmed said.
Recent talks between the Abiy's government and Cairo have broken down after Egypt failed to get assurances that the dam will not affect the river's flow to the country.
The 43-year-old prime minister has embraced the concept of "medemer", a term in Ethiopia's Amharic language that means unity and inclusivity, and has lived it.
Mr Ahmed becomes the 100th victor of the Nobel Peace Prize and here is everything you need to know about who he is and why he was chosen.
"No doubt some people will think this year's prize is being awarded too early", acknowledged Reiss-Andersen, who added that Abiy's efforts "deserve recognition and need encouragement".
Ethiopia, the second most populous country in Africa, is home to the African Union and has historically played a central role in African politics.
The organisation said that this should spur Mr Ahmed to enhance reforms in Ethiopia on human rights with ongoing ethnic tensions which "threaten instability and further human rights abuses".
So far this week, 11 Nobel laureates have been named.
In his will, Alfred Nobel, the Swedish industrialist and inventor of dynamite, decided the peace prize should be awarded in Oslo.