Ethiopian Prime Minister Abiy Ahmed has won the 2019 Nobel Peace Prize for his peacemaking efforts with neighbouring Eritrea.

Ethiopia and Eritrea fought a border war from 1998 to 2000 and shared hostilities until relations were restored in July 2018.

The prize, worth nine million Swedish crowns, or around $1.35 million, will be presented in Oslo on December 10.

Berit Reiss-Andersen, the chairwoman of the five-member Norwegian Nobel Institute that awards the Nobel Peace Prize, said Mr Abiy was named for his moves to end his country’s conflict with Eritrea within months of coming to office in 2018.

“The prize is also meant to recognise all the stakeholders working for peace and reconciliation in Ethiopia and in the east and northeast African regions,” the Norwegian Nobel Committee said in its citation.

Greta Thunberg, the 16-year-old climate activist, was the bookies’ favourite to claim the prize, with New Zealand Prime Minister Jacinda Ardern, the Hong Kong protest leaders and indigenous Brazilian leader Raoni Metuktire also tipped to be in the running.

Greta Thunberg at a climate change protest in Berlin in July. Photo: Getty

At 43, Abiy Ahmed is the youngest head of government in Africa.

“This victory and recognition is a collective win for all Ethiopians, and a call to strengthen our resolve in making Ethiopia, the new horizon of hope, a prosperous nation for all,” the prime minister’s office said.

It quoted Abiy as saying: “We are proud as a nation.”

Since taking office in April 2018 after the resignation of Hailemariam Desalegn following three years of street unrest, Abiy has announced a series of reforms that hold the promise of fundamentally changing the country of some 100 million people.

From partial liberalisation of the state-controlled economy to overhauling the security forces that have helped the ruling coalition maintain a tight grip on power since 1991, the promises have raised hopes in the country and abroad.

BREAKING NEWS:
The Norwegian Nobel Committee has decided to award the Nobel Peace Prize for 2019 to Ethiopian Prime Minister Abiy Ahmed Ali.#NobelPrize #NobelPeacePrize pic.twitter.com/uGRpZJHk1B

— The Nobel Prize (@NobelPrize) October 11, 2019

Abiy’s landmark achievement to date is securing peace with neighbouring Eritrea.

What remains to be seen is whether Abiy – who joined the Ethiopian army in his teens and rose through the ruling EPRDF coalition over the past two decades – can reshape Ethiopia and open it up to the world from within the current system.

He faces challenges including resistance to change from vested interests within his coalition, and the possibility that violence, including in June when a rogue state militia leader killed the region’s state president and other top level officials, could escalate.

He also faces high expectations from young Ethiopians who want jobs, development and opportunities.

-with AAP