Ethiopian Prime Minister Abiy Ahmed has won the Nobel Peace Prize for his role in ending the 20-year war between Ethiopia and Eritrea.

Ethiopia and Eritrea, long-time foes who fought a border war from 1998 to 2000, restored relations in July 2018 after two decades of hostility.

The prize, worth nine million Swedish crowns (about £725,000) will be presented in the Norwegian capital of Oslo on 10 December.

The Norwegian Nobel Committee said: “Ethiopian prime minister Abiy Ahmed Ali has been awarded this year’s Nobel Peace Prize for his efforts to achieve peace and international cooperation, and in particular for his decisive initiative to resolve the border conflict with neighbouring Eritrea.”

Prime Minister Abiy's office said Ethiopia is “proud as a nation”, and called on “all Ethiopians and friends of Ethiopia to continue standing on the side of peace”.

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There is a long history of the Nobel Peace Prize going to people associated with ending conflicts, most recently Colombia’s Juan Manuel Santos who was awarded the prize in 2016 for his efforts to bring his country’s more than 50-year-long civil war to an end.

Sixteen-year-old Swedish climate activist Greta Thunberg was reported to be a favourite for this year’s award after being nominated by three Norwegian MPs.

While German chancellor Angela Merkel and protesters in Hong Kong were also rumoured to have made the shortlist.

At 43, Abiy is Africa’s youngest leader.

File image of Eritrean president Isaias Afwerki (second left) with Ethiopia’s prime minister Abiy Ahmed (centre) during a visit to Addis Ababa, Ethiopia, 15 July 2018 (AP) (Mulugeta Ayene/AP)

He took office in April 2018 after widespread protests pressured the long-time ruling coalition and hurt one of the world’s fastest growing economies.

The prime minister quickly announced dramatic reforms and “Abiymania” began.

In a move that caused surprise, he announced that Ethiopia would accept a peace agreement with Eritrea, ending one of Africa’s longest-running conflicts.

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Within weeks, Eritrea’s leader visited Addis Ababa and communications and transport links were restored.

The move saw long-divided families make tearful reunions after 20 years.

Jan Egeland, secretary general of the Norwegian Refugee Council, congratulated Mr Abi Ahmed on winning the prize, adding: “We have witnessed the dramatic improvement in relations between the two countries during Dr Abiy Ahmed’s government after conflict and tension over the years produced displacement and suffering.

“As the recipient of the Nobel prize, [he] must now make resolving ethnic tensions within Ethiopia a priority and work tirelessly to bring peace to his people.”

Since 1901, 99 Nobel Peace Prizes have been handed out, to individuals and 24 organisations.