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.

Somalia announced that obstacles to Ethiopia's participation in the new African Union mission in Somalia (AUSSOM) have been overcome, and the final stage of the composition and size of Ethiopian forces is expected to be sorted out shortly.

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.

Somalia's president will visit 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.