Ethiopia Extends $738 Million Loan to South Sudan for Cross-Border Road Project
Ethiopia has granted South Sudan a loan of $738 million to construct a 220-kilometer road connecting the two nations. The repayment will derive from South Sudan’s crude oil sales to Ethiopia. This initiative, part of a broader partnership, aims to enhance connectivity and reflects the growing economic cooperation between the countries.
Ethiopia has taken a significant step towards fostering closer ties with South Sudan by offering a loan of $738 million for a strategic cross-border infrastructure project. This initiative focuses on the construction of a 220-kilometer road that will link key border regions of both nations, including Paloich, Maiwut, and Pagak. The funding arrangement stipulates that loan repayment will be sourced from crude oil sales made by South Sudan to Ethiopia, thereby underlining the financial cooperation between the two countries. The loan agreement, reached under a bilateral framework established in May 2024, underscores Ethiopia’s commitment to play a pivotal role in South Sudan’s economic development. The construction will be executed by Ethiopian contractors and consultants, ensuring both nations benefit from the collaboration. Importantly, the terms of the loan include a four-year grace period followed by a ten-year repayment schedule, making it a feasible option for South Sudan’s fiscal landscape. This partnership not only enhances diplomatic relations between Ethiopia and South Sudan but also presents a promising model for resource-backed financing in infrastructure projects throughout Africa. Upon completion, the road will facilitate seamless connectivity, contributing to regional stability and economic growth for both nations.
The cross-border road project between Ethiopia and South Sudan is a critical infrastructure initiative aimed at bridging gaps between the two nations. The partnership reflects ongoing efforts to strengthen political and economic ties, particularly as South Sudan seeks to bolster its infrastructure amidst economic challenges. The agreement showcases Ethiopia’s growing influence in regional development and highlights a trend toward resource-backed financing, which has the potential to reshape infrastructure development across Africa. Historically, both nations have maintained diplomatic relations, yet this project marks a significant escalation in their cooperative efforts, particularly after South Sudan’s independence in 2011. The project is strategically important as it will enhance trade, security, and nurture further bilateral agreements.
In summary, the $738 million loan provided by Ethiopia to South Sudan for the construction of a 220-kilometer road represents a landmark initiative aimed at strengthening economic and diplomatic ties. With strategic repayment options tied to crude oil sales, the project serves as a model for infrastructure development through resource-backed financing. The collaboration is expected to facilitate improved connectivity and promote economic growth within both nations, highlighting an emerging trend of cooperative regional development in Africa.
Original Source: africa.businessinsider.com
