Ethiopia Awards $738 Million Loan to South Sudan for Key Cross-Border Infrastructure

Ethiopia has extended a $738 million loan to South Sudan to facilitate the construction of a 220-kilometer road that will improve connectivity between the two countries. The loan is set to be repaid through South Sudan’s crude oil revenues. This partnership serves as a foundational step towards enhanced diplomatic relations and economic growth for both nations through strategic infrastructure investment.

Ethiopia has taken a significant step in advancing regional connectivity by providing a loan of $738 million to South Sudan for the development of a critical cross-border project. This initiative aims to construct a vital 220-kilometer roadway linking the border regions of both countries. The repayment of this loan will be facilitated through South Sudan’s crude oil sales to Ethiopia, establishing a resource-backed financing model. The project is set to enhance transportation and trade between Ethiopia and South Sudan, connecting key locations, including Paloich, Maiwut, and Pagak, along the South Sudanese side of the border. This infrastructure endeavor, entrusted to Ethiopian contractors and consultants, underscores Ethiopia’s commitment to fostering economic growth in South Sudan, while creating stronger diplomatic ties between the two nations. In accordance with an agreement established in May 2024, the loan terms provide South Sudan a four-year grace period followed by a ten-year repayment schedule. This strategic collaboration not only facilitates South Sudan’s development ambitions but also sets a precedent for similar financing arrangements across the African continent, demonstrating the potential of resource-backed projects to support infrastructure advancements.

The burgeoning relationship between Ethiopia and South Sudan is rooted in mutual economic interests and developmental goals. By securing a loan for infrastructure development, Ethiopia aims to bolster South Sudan’s economic stability while simultaneously enhancing bilateral relations. The 220-kilometer road project represents a significant infrastructure initiative intended to improve connectivity and boost trade between the two nations. Utilizing crude oil revenues as a repayment mechanism introduces an innovative approach to financing public projects in the region, embodying a modern strategy for development.

In summary, Ethiopia’s provision of a $738 million loan to South Sudan marks a substantial investment in cross-border infrastructure. The new road, which will connect various border towns, promises to enhance economic cooperation and support South Sudan’s growth through strategic resource-backed financing. This initiative not only strengthens diplomatic ties between the two nations but also serves as a model for similar projects throughout Africa, promoting regional stability and economic development.

Original Source: africa.businessinsider.com