Haavisto has visited the east African countries of Eritrea and Ethiopia dozens of times and says he knows the Ethiopian prime minister personally.
Ethiopia reached a peace deal with Eritrea last year, ending a 20-year military stalemate following their 1998-2000 border war.
For the first time, the country had no journalists in prison, media groups noted previous year. Little more than a year later, an estimated four million people joined the teenager in a global strike on September 20 - with activists, many of them schoolchildren, joining the protests from Thailand to Afghanistan to Haiti.
Thunberg was one of several high-profile nominees for this year's Nobel Peace Prize, with New Zealand Prime Minister Jacinda Ardern also tipped to win the award before the announcement this morning.
The Nobel Prize committee also recognized Abiy for his role in other peace and reconciliation processes in East and northeast Africa.
"It is a case of wanting a constructive intervention in the peace process ... to give leverage and encouragement", he told Reuters.
He is the bookmakers' second favourite to win a Nobel Peace Prize on Friday, after climate activist Greta Thunberg.
United Nations Secretary General Antonio Guterres applauded the committee's choice.
"'We are proud as a nation!" his office said.
He has paid tribute to the governments and people of Ethiopia and Eritrea for making the achievement possible.
"Additionally, Abiy Ahmed has sought to mediate between Kenya and Somalia in their protracted conflict over rights to a disputed marine area".
Those reforms - including unbanning political parties, releasing imprisoned journalists and prosecuting officials accused of torture - have drawn ecstatic crowds at rallies.
From partial liberalisation of the state-controlled economy to overhauling the security forces that have helped the ruling coalition maintain a tight grip on power since 1991, the promises have raised hopes in the country and overseas.
Yet Abiy progressed quickly through the power structures created by the ruling coalition, the Ethiopian People's Revolutionary Democratic Front (EPRDF), after it took power from the Derg military junta in 1991. "But there is a lot of work to do to achieve a new domestic political settlement between fractious actors, and there are also major obstacles to advancing the Eritrea peace process, suggesting that Abiy's hardest challenges lie ahead", he said Friday.
"Three of our party leaders are still in jail suspected of being the plotters of the June coup attempt but still haven't been formally charged", he said.
He is now the 100th Nobel Peace Prize victor.
"However, we still have legitimate concerns and grievances that Abiy needs to address".
For Vanessa Tsehaye, an Eritrean political activist, Abiy's peace efforts with Asmara had "prolonged the suffering" of Eritrean people by "legitimising and prolonging the rule" of Isaias, a leader accused by critics of having turned Eritrea into a "one-man dictatorship".
Olav Njoelstad, director of the Norwegian Nobel Institute, says he has now spoken with Ethiopian Prime Minister Abiy Ahmed, the 2019 victor of the Nobel Peace Prize.