The World Bank has approved a $730 million project to upgrade the Addis Ababab-Djibouti corridor, a vital trade route and a lifeline for Ethiopia’s economy.
The Regional Economic Corridors Project, endowed with a grant from IDA, aims to improve regional connectivity and logistics efficiency in Ethiopia along the key trade route connecting Ethiopia to the port of Djibouti.
“Improved regional connectivity and trade are essential to unlocking Ethiopia’s economic potential,” said Finance Minister Ahmed Shide. “This project is important to support our commitment to fostering inclusive growth and regional integration, as we are now fully focused on sustaining the growth and reaping the peace dividends.”
Over 95% of Ethiopia’s import-export trade (by volume) uses the Addis-Djibouti corridor.
The project aims to upgrade the road to Djibouti, including the Mieso-Dire Dawa section, which is currently in poor condition and unsuitable for growing truck traffic. This section forces road users to take a longer route through Mille, adding 146 kilometers to their journey.
Upgrading the Mieso-Dire Dawa section to a four-lane expressway will reduce transport time, enhance road safety, save fuel and maintenance costs, and reduce pollution, per the World Bank.
“This is a transformative initiative for Ethiopia and the Horn of Africa region,” said Ousmane Dione, World Bank Group Country Director for Eritrea, Ethiopia, South Sudan, and Sudan.
“It will improve connectivity, enhance trade volumes, create job opportunities, and improve access to basic services with a greater flow of goods and people across the Horn,’ the country director added.
Other project benefits, the World Bank says, include enhancing Ethiopia’s trade competitiveness by improving logistics efficiency through regulatory and institutional reforms, investments in logistics facilities, and building the government’s capacity to facilitate the modal shift to railways.
The project will also provide opportunities for private sector participation in operating freight truck terminals while investments in secondary roads will connect local communities to the main corridor, increase job opportunities for underserved communities and women, and contribute to long-term development outcomes.
The project is part of the Horn of Africa Initiative, which aims to tackle common development challenges in member countries, including Djibouti, Kenya, Ethiopia, Eritrea, Somalia, Sudan, and South Sudan.