The ministry said preparations for the collaboration with China were going well.
Deputy State Health Minister, Dr Dereje Duguma said Prime Minister Abiy Ahmed is advising the Chinese government on the matter and that manufacturing will begin in September.
He did not give details of the production capacity but said Ethiopia will completely stop importing test kits.
The country is also planning to export the product to other African nations.
Manufacturing the test kits locally will help Ethiopia, Africa’s second most populous nation of over 106 million people, to boost its national COVID-19 testing capacity.
There are currently 52 Coronavirus testing centers in Ethiopia, with more than 20,000 test samples analysed per day.
As of Sunday, Ethiopia had tested 1,018,847 people across the nation.
“As we pass one million tests, I would like to sincerely thank all our health workers working tirelessly, particularly those working as sample collectors, our lab technicians, rapid response teams, contact tracers, logistic teams, drivers and all coordinators and leaders of all labs and facilities across the country” said Liya Tadesse, Minister of Health.
“I also thank the community for your support in the process and for wearing masks, and for practising social distancing and hand hygiene to stop the spread.”
According to coronavirus case tracker Worldometer, Ethiopia had confirmed 58,672 cases of the virus by September 9, including 21,307 recoveries and 918 deaths. It had 36,447 active cases, 326 of them being patients in intensive care units.