Japan loaned 89 million dollars to start construction

Nov 30 , 2019

The Jimma-Chida road project will finally begin construction after two years of stoppage as a result of a lack of financing. The project was brought back on track after Japan extended 89 million dollars for construction to begin.

The agreement was signed by Admasu Nebebe, state minister of Finance, and Daisuke Matsunaga, ambassador of Japan to Ethiopia, on November 26, 2019. The financing for the project comes a year after a bid was announced for the upgrading of the project from gravel to asphalt concrete.

"Two years ago Ethiopia’s debt was high, so Japan had doubts about extending the loan," said Yetimgeta Asrat, deputy director-general of the Ethiopian Roads Authority.

At the time, Ethiopia’s external debt stood around 25 billion dollars, according to the International Monetary Fund’s (IMF) 2016/17 report. But the debt level did not decrease thereafter. It stood at 26.9 billion dollars, a large share of which is owed to state-owned enterprises, by last March.

Japan’s government changed its mind after Prime Minister Abiy Ahmed (PhD) held talks with Japanese Prime Minister Shinzo Abe at the seventh edition of the Tokyo International Conference on African Development (TICAD), held in August this year, according to Yetimgeta.

The Jimma-Chida road, which has a mountainous terrain, is about 80Km long and will have a seven-metre carriageway and ditches on both sides of the road. Expected to create a connection between the Oromia and Southern Nations, Nationalities & Peoples (SNNP) regional states, the road is also expected to include bridges and be finalised in four years.

The road project was launched in conjunction with the Sodo-Sawla road that extends for 161Km across the SNNP Regional State. Financed for 1.8 billion Br by the African Development Bank (AfDB), the first phase of the project, extending from Sodo to Dinke, has already progressed 15pc of the way, is expected to be finished by May 2022 and is being constructed by the China Railway Seventh Group.

The second phase, extending from Dinke to Sawla and expected to be finished by January 2023, has reached a five percent completion rate and is being constructed by Beijing Urban Construction Group. All three of the projects are expected to benefit 1.4 million people, specifically smallholder farmers.

Ethiopia has been increasing its road networks. Expanding at an annual rate of 5.5pc, the length of paved roads reached 126,773Km in the last fiscal year. Last year alone, the government spent 33.1 billion Br to construct and maintain roads, a 2.4pc increase from the previous year.

Japan has contributed to the construction of roads in Ethiopia through financing. In the past decade, loans by Japan have been extended to road projects in Degen, Abay Bereha, Sululta and Debre Markos.

“Apart from financing, they have also contributed in-kind and technical assistance," said Yitimgeta.

Henok Semaw, dean and lecturer on business and economics at Haramaya University, believes that while the road project will facilitate trade, the government should strictly follow them up.

“The best means of reducing the burden of debt is to complete such projects on time,” said Henok. “Finishing infrastructure projects on time will make the generation of foreign currency all the more successful.”

PUBLISHED ON Nov 30,2019 [ VOL 20 , NO 1022]

How useful was this post?

Click on a star to rate it!

Average rating 0 / 5. Vote count: 0

No votes so far! Be the first to rate this post.

Put your comments here

N.B: A submit button will appear once you fill out all the required fields.

Editors' Pick