Somalia's president visited Ethiopia on Saturday, his office said, the strongest sign yet of improving relations between the two neighbours after a year of tensions over Addis Ababa's plans to build a naval base in a breakaway Somali region.

Somalia and Ethiopia are set to restore full diplomatic relations after a visit by Somalia's President Hassan Sheikh Mohamud to Addis Ababa, as efforts intensify to heal a year-long rift that threatened further instability in the Horn of Africa.

The two countries are looking to build on a recent peace deal that aims to defuse mounting tension in the Horn of Africa.

The rift began when Ethiopia signed a controversial agreement with Somaliland, Somalia’s breakaway region, reportedly offering to recognise its independence in exchange for a Red Sea port and a milita

Ethiopia and Somalia renewed their diplomatic relations during a visit of Somali President Hassan Sheik Mohamud on Saturday to Addis Ababa. Mohamud and Ethiopia's Prime Minister Abiy Ahmed "agreed to restore and enhance their bilateral relations through full diplomatic representation in their respective capitals.

Ethiopia and Somalia agreed to work together on a multinational force battling Islamist insurgents, signaling a further reduction of diplomatic tensions between the neighboring countries.