In a historic first, Ethiopia has extended a loan exceeding $738 million to South Sudan, the world’s youngest nation, to fund the construction of a road connecting the two countries. This substantial loan aims to foster stronger economic ties and improve connectivity between Ethiopia and South Sudan, benefiting both nations.

The loan, which comes with a four-year grace period and is repayable over ten years, represents a milestone in Ethiopia’s financial diplomacy. The project involves a 220-kilometer road that will be constructed along South Sudan’s border, undertaken by Ethiopian contractors and consultants. This cross-border infrastructure development is expected to enhance trade, transportation, and regional integration in East Africa.

The loan agreement specifies that repayment will be made in both cash and crude oil, demonstrating a unique arrangement that leverages South Sudan’s natural resources to meet its financial obligations. This strategic partnership not only strengthens diplomatic relations but also establishes a model for resource-backed financing in infrastructure projects across Africa.

This unprecedented move underscores Ethiopia’s commitment to supporting the stability and development of neighboring South Sudan, marking a new chapter in the region’s efforts toward sustainable growth and cooperation.