Ethiopia Extends $738 Million Loan to South Sudan for Cross-Border Road Project

Ethiopia has granted South Sudan a $738 million loan for a 220-kilometer road project that will connect key border regions. Repayment will be structured through crude oil sales from South Sudan to Ethiopia. This initiative, supported by Ethiopian contractors, marks a significant step in enhancing economic and diplomatic ties between the two nations, featuring a four-year grace period and a ten-year repayment plan.

Ethiopia has recently provided a substantial loan of $738 million to South Sudan to support a critical cross-border infrastructure project. This initiative centers on the construction of a 220-kilometer road that will enhance connectivity between the two nations. Specifically, the roadway will link border regions in South Sudan, including Paloich, Maiwut, and Pagak, to Ethiopian border areas, fostering improved trade and economic relations between Ethiopia and South Sudan. The financial arrangements for this project stipulate that South Sudan will repay the loan through the sales of its crude oil to Ethiopia. This agreement aligns with a bilateral deal that both nations formalized in May 2024, symbolizing a commitment to economic cooperation. The engagement emphasizes Ethiopia’s role as a financier, thereby not only bolstering infrastructure but also establishing a model of resource-based financing applicable within the African continent. Construction will be undertaken by Ethiopian contractors and consultants, who are expected to deliver this project efficiently. The terms of the loan feature a four-year grace period, followed by a ten-year repayment framework, which is seen as a sustainable method to boost South Sudan’s economic development. This partnership is envisioned to enhance diplomatic ties while simultaneously serving as a precedent for other resource-backed infrastructure projects across Africa.

This infrastructure project marks an important milestone in the relationship between Ethiopia and South Sudan, both of which have been seeking stronger economic and diplomatic ties. The loan reflects Ethiopia’s commitment to fostering regional stability and development by investing in essential infrastructure. By linking critical transportation routes between the nations, the project aims to facilitate trade, enhance mobility, and ultimately support the economic resilience of South Sudan, which is still emerging following years of conflict.

In summary, Ethiopia’s $738 million loan to South Sudan for the construction of a 220-kilometer road presents a significant advancement in cross-border cooperation. With repayment linked to crude oil sales, this initiative not only aims to enhance economic development in South Sudan but also strengthens diplomatic relations between the two countries. The project serves as a promising model for similar infrastructure financing endeavors throughout Africa, reinforcing the importance of strategic partnerships in regional development.

Original Source: africa.businessinsider.com