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Kenya and Ethiopia have announced their intention to sign a special-status trade agreement to eliminate trade barriers and enhance cross-border investment.

Ethiopian Prime Minster Meles Zenawi met with Kenyan President Mwai Kibaki and Prime Minister Raila Odinga in Nairobi on Friday (March 2nd). Zenawi attended the groundbreaking ceremony for the Lamu port Friday morning.

"There is a huge potential that exists between the two countries that we have not exploited. The demographics are in our favour, but we have not taken advantage to increase trading amongst ourselves," Odinga said, according to Kenya's The Standard.

Odinga said the special trade status would boost private-sector collaboration between Ethiopia and Kenya. "We need to come up with mechanisms that can mutually benefit our two countries and enable us to exploit the huge potential that remains untapped," he said.

In 2010, Kenyan exports to Ethiopia were worth $43.1 million and imports were worth $2.1 million, according to Kenya's Capital FM News.

"We need a pact that addresses specific Kenyan and Ethiopian issues," Zenawi said. "We are not worried about the pact favouring either country. We are open to ideas on how to develop trade between the two countries."

Kenya and Ethiopia also signed an agreement on Friday under which Kenya will purchase up to 400 megawatts of electricity per year from Ethiopia.