Addis-Djibouti Corridor to Get Major Upgrade That is Key to Unlocking Connectivity and Trade for Ethiopia and the Horn of Africa

The Addis-Djibouti corridor, a vital trade route and a lifeline for Ethiopia's 120 million people, will get a significant upgrade thanks to the newly approved Horn of Africa Initiative’s Regional Economic Corridor Project. The project, endowed with a $730 million grant from the International Development Association* (IDA), aims to improve regional connectivity and logistics efficiency in Ethiopia along this key trade route connecting landlocked Ethiopia to the port of Djibouti.

“Improved regional connectivity and trade are essential to unlocking Ethiopia’s economic potential,” said H.E. Ahmed Shide, Minister of Finance of the Federal Democratic Republic of Ethiopia. “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,” he added.

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. This upgrade is crucial for Ethiopia's economic growth and social development, as it will improve the efficiency and capacity of this crucial trade route.

Other project benefits 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. Additionally, 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.

"This is a transformative initiative for Ethiopia and the Horn of Africa region. 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,” said Ousmane Dione, World Bank Group Country Director for Eritrea, Ethiopia, South Sudan, and Sudan.

“The Addis-Djibouti Regional Economic Corridor project is one of the priority operations that we are supporting in the Horn to help connect hinterland to ports and markets, and to increase opportunities for regional trade. It’s expected outcomes extend beyond economic growth and social development in Ethiopia, as it will enhance regional integration and generate spillover benefits for the entire region,” said Boutheina Guermazi, World Bank Director for Regional Integration for Africa and the Middle East.

The project is aligned with the World Bank Group’s Country Partnership Framework for Ethiopia^[1], and 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. These projects align with the African Continental Free Trade Area, promoting socioeconomic development, reducing poverty, and increasing Africa's competitiveness in the global economy.

 * The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives. IDA is one of the largest sources of assistance for the world’s 74 poorest countries, 39 of which are in Africa. Resources from IDA bring positive change to the 1.3 billion people who live in IDA countries. Since 1960, IDA has provided $458 billion to 114 countries. Annual commitments have averaged about $29 billion over the last three years (FY19-FY21), with about 70 percent going to Africa. Learn more online: IDA.worldbank.org. #IDAworks

References

1. ^{^} Country Partnership Framework for Ethiopia (worldbankgroup-my.sharepoint.com)