Abiy Ahmed is being compared with Mandela and Gorbachev. Can he help transform a region beset by war, tyranny and poverty?

The flags of the two nations flew bright and sharp. The two leaders waved at the happy crowds. The formal meetings overran, amid ostentatious displays of bonhomie. Even the hatchet-faced security officials appeared relaxed.

The meeting of Abiy Ahmed, Ethiopia’s 41-year-old prime minister, and Isaias Afwerki, the 71-year-old president of Eritrea, in Addis Ababa on Saturday left seasoned Africa observers gasping for breath.

“The pace of this is simply astounding,” said Omar S Mahmood, of the Institute for Peace and Security Studies in Ethiopia’s booming capital.

The meeting between Abiy and Isaias concluded an intense bout of diplomacy that appears to have ended one of Africa’s longest-running conflicts. “Words cannot express the joy we are feeling now,” Isaias said, as he had lunch with Abiy. “We are one people. Whoever forgets that does not understand our situation.”

Many Ethiopians expressed their exhilaration on social media. “The events of these past … days between Ethiopia and Eritrea are like the fall of the Berlin Wall. Only amplified 1,000 times,” Samson Haileyesus wrote on Facebook. The reaction in Eritrea has been equally ecstatic.

Analysts say such hyperbole may be justified. The bid for peace with Eritrea is just the latest in a series of efforts that may bring revolutionary reform to Africa’s second most populous nation, transform a region and send shockwaves from the Mediterranean to the Cape of Good Hope.

Since coming to power in April, Abiy has electrified Ethiopia with his informal style, charisma and energy, earning comparisons with Nelson Mandela, Justin Trudeau, Barack Obama and Mikhail Gorbachev. He has reshuffled his cabinet, fired a series of controversial and hitherto untouchable civil servants, including the head of Ethiopia’s prison service, lifted bans on websites and other media, freed thousands of political prisoners, ordered the partial privatisation of massive state-owned companies, ended a state of emergency imposed to quell widespread unrest and removed three opposition groups from a list of “terrorist” organisations.

Nic Cheeseman, an expert in African politics at Birmingham University, said Abiy’s extraordinary campaign was a test of the argument that only repressive government can guarantee the levels of development so desperately needed across Africa.

Despite an International Monetary Fund forecast predicting that Ethiopia, which has relied on a centralised economic model and political repression for decades, would be the fastest-growing economy in sub-Saharan Africa in 2018, even the officially sanctioned press has admitted the country’s serious difficulties.

Facebook Twitter Pinterest Isaias Afwerki, centre left, and Ethiopia’s prime minister, Abiy Ahmed, centre, greet each other at the airport. Photograph: Mulugeta Ayene/AP

There is a shortage of foreign currency, growing inequality, a lack of jobs for a huge number of graduates, environmental damage, ethnic tensions and deep hunger for change.

Different interest groups have come together in recent years to constitute a powerful groundswell of discontent, with widespread anti-government protests led by young people. At least 70% of the population is below the age of 30.

“Ethiopia was on the edge of the abyss. They have realised they cannot continue in the same old way. Only an advanced democratic system would prevent the country coming to pieces and a disaster that Africa has never seen before,” said Andargachew Tsege, a British citizen unexpectedly pardoned in May after four years on death row on terrorism charges. Abiy invited Tsege, who was abducted by Ethiopian security services four years ago, to a meeting two days after his release. They spoke for 90 minutes.

No one claims that Isaias, the “hard and rigid” ruler of Eritrea since 1991, has much in the way of new ideas. A nation of about 5.1 million people, Eritrea is the only African country where elections are not held. As many as 5,000 Eritreans flee their country every month, notably to avoid indefinite military conscription. Many head to Europe. The economy has flatlined for decades. The UN has accused the regime of crimes against humanity.

“The entire history of [Isaias] is as a ruthless Marxist-Leninist ... Enemies were shot and killed. Economically, his position has always been: we are completely self-reliant. Is this guy going to become a happy-clappy liberal? It is possible he wants to be Eritrea’s Mandela but seems unlikely,” said Martin Plaut, a senior research fellow at the Institute of Commonwealth Studies at the University of London.

Once a province of Ethiopia that comprised its entire coastline on the Red Sea, Eritrea voted to leave in 1993 after a decades-long, bloody struggle.

The thaw began last month when Abiy said he would abide by a UN-backed ruling and hand back to Eritrea disputed territory. Analysts say conflicts across the region fuelled by the rift are now likely to die down.

For the moment Abiy’s reforms have popular support, and the crucial backing of much of the ruling Ethiopian People’s Revolutionary Democratic Front, the rebel coalition that came to power in 1991.

But there is resistance. Last month, a grenade was thrown at a rally organised to showcase support for the reforms in Addis Ababa’s vast Meskel Square. Two died. “Love always wins ... To those who tried to divide us, I want to tell you that you have not succeeded,” Abiy said after the attack.

'These changes are unprecedented': how Abiy is upending Ethiopian politics Read more

Much depends on the determination of the Ethiopian leader. Seen as a relative outsider before being picked for the top job by the EPRDF council, Abiy is the first leader from Ethiopia’s largest ethnic community, the Oromo, who have complained for decades of economic, cultural and political marginalisation. The EPRDF is split by battles between four ethnically based parties as well as fierce competition between institutions and individuals.

Born in western Ethiopia, Abiy joined the resistance against the regime of Mengistu Haile Mariam as a teenager before enlisting in the armed forces. After a stint running Ethiopia’s cyberintelligence service, he entered politics eight years ago and rose rapidly up the ranks of the Oromo faction of the EPRDF, which has historically been at odds with the Tigrayans, who compose only 6% of the total population but have long had disproportionate political and commercial influence. In a major break with precedent, Abiy has been pictured with his wife and daughters, whom he has publicly thanked for their support.

As Abiy’s reforms gather momentum, the risks rise too. “Democracy can be achieved through benevolent leadership, but it can only be consolidated through democratic institutions. What we are seeing now is more of a personality-cult kind of movement,” said Mekonnen Mengesha, a lecturer at Wolkite University.

Like other African countries– such as Kenya and Zimbabwe just over a decade ago – Ethiopia has seen previous efforts to reform its closed, autocratic system that have not ended happily.

“It’s really exciting and great news, but Abiy has not done anything that really threatens the regime,” said Cheeseman. “And until a government is actually faced with losing power you don’t know what will happen.”