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World Bank Splashes $730m to Turn Ethiopia's Rocky Road into a Superhighway

Jul 21 , 2023

A large grant, approved by the World Bank, signals a significant boost for trade and revamps the Mieso-Dire Dewa route - a vital economic artery where more than 95pc of Ethiopia’s import-export trade transits. Part of an initiative for the Horn of Africa’s regional economic corridor, the project is hoped to transform the road into a four-lane expressway.

The trade route, which extends from Addis Abeba to Djibouti's ports, has witnessed an exponential increase in traffic over the years. However, its current dilapidated state has compelled drivers to seek alternate routes, adding an additional 146Km through Mille town, in Afar Regional State.

The project is anticipated to eliminate these inefficiencies, providing an impetus for a more robust logistics sector. The upgraded expressway is expected to have a cascade of economic benefits, including reduced transport time, and lower fuel and maintenance costs.

The International Development Association (IDA), part of the World Bank that aids the world’s poorest countries, provides financing for this substantial project, estimated to cost 730 million dollars.

Ahmed Shide, minister of Finance, highlighted the critical role of regional connectivity and trade in driving Ethiopia's economic growth. He signalled his government's commitment to focus on this growth trajectory in the aftermath of the recently signed peace agreement between the federal government and the TPLF.

The reconstruction project also presents a lucrative opportunity for the private sector to operate freight truck terminals.

Backed by the World Bank, the Regional Economic Corridor Project is part of a broader initiative to address developmental challenges in the Horn of Africa.

“This is a transformative initiative for Ethiopia and the Horn of Africa region,” said Ousmane Dione, World Banks country director for Eritrea, Ethiopia, South Sudan, and Sudan.

Dione emphasized the importance of regulatory and institutional reforms, investments in logistics facilities, and strengthening the government's capacity to facilitate the shift to railways for optimized benefits from the project.

The announcement of today's grant coincides with a 120 million dollar disbursement from the African Export-Import Bank (Afreximbank) to finance Djibouti ports and a free trade zone. This forms part of a 155 million dollar investment required to develop the Djibouti Damerjog Industrial Development Free Trade Zone, a project expected to play a significant role in intra-African trade.

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