Zewde is at present UN under-Secretary-General and special representative of its Secretary General to the African Union.
She replaces Mulatu Wirtu, who tendered his resignation to parliament earlier on Wednesday.
The president’s post is a ceremonial one in Ethiopia. The prime minister, who is the head of state, holds executive power.
“In a historic move, the two Houses have elected Amb. Shalework Zewde as the next President of Ethiopia.
“She is the first female head of state in modern Ethiopia,” Fitsum Arega, Abiy’s chief of staff, said on Twitter.
“In a patriarchal society such as ours, the appointment of a female head of state not only sets the standard for the future but also normalizes women as decision-makers in public life.”
Recently, when the prime minister reshuffled his cabinet, he appointed 10 female ministers, making Ethiopia the third country in Africa, after Rwanda and Seychelles, to achieve gender parity in their cabinets.
“When there is no peace in the country, mothers will be frustrated. Therefore, we need to work on peace for the sake of our mothers,” Zewde told parliament after her approval.
Wirtu, who had held the office for five years, departed one year ahead of his term ending, saying he wanted to be part of change and reforms.
Zewde became the fourth president since the ruling EPRDF coalition came to power.
Since his appointment in April, Abiy has presided over a raft of reforms that have turned the region’s politics on its head, including the pardoning of dissidents long outlawed by the government.
Earlier, the Ethiopian parliament’s two houses in a joint extraordinary session on Thursday approved the resignation request by Ethiopia’s President Mulatu Teshome.
Teshome, who has been the East African country’s head of state since October 2013, on Wednesday submitted his letter of resignation as the Ethiopian parliament’s two houses are scheduled to consider his resignation.
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