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.
That is a good arrangement. But what is the source of this 700 million USD?
1) Ethiopia it self is borrowing from IMF and other creditors and it is under immense pressure to secure much needed foreign currency?
2) Ethiopia has obligations to repay its debt.
3) Can Ethiopia really extend loans of such amount of money??
Ethiopian contractors will build the road, using Ethiopian labour and equipment, which will very likely not require Ethiopia to spend dollars or other foreign currency. In fact, the project will earn Ethiopia foreign currency when South Sudan pays back.
Dirges you are failed to rise any argument. If you are normal minded you will support you country engaged through positively reacting to the issues your intention is like with banda, you are banda
[…] According to a media report in Ethiopia, Ethiopia has extended a landmark loan of over $738 million to South Sudan, marking a significant step toward strengthening economic ties between the two nations. […]
[…] According to a media report in Ethiopia, Ethiopia has extended a landmark loan of over $738 million to South Sudan, marking a significant step toward strengthening economic ties between the two nations. […]
I think this is great! Let’s collaborate and support one another more in Africa, and not always depend on western countries to finance our development. They probably would have declined to fund the project on the basis of lacking value for money!
I think this is a best deal South Sudan ever had with a neighbour and will definitely be graced by local population, simply coz no money will be paid to hyenas in South Sudan known for taking loan, misuse them and expect current or future generations to pay for what never make an impact on the population in South Sudan but was used by corrupt individuals, this is a welcome development, I commend Ethiopia for reenergize our historic relati onship between two people and countries, Ethiopia must have a great neighbor like South Sudan instead of always being played around by some roughs elements always.
I hope this cooperation also include power supply to South Sudan from Great Renaissance Dam in Ethiopia.
There’s a little twick in this transaction, it’s a road infrastructure connecting both countries and is beneficial to both,which seemingly is more beneficial to Ethiopia in terms of consultancy and labor construction, why is a loan extended to South Sudan with Ethiopia as retainers!!!?
I’m so excited to finally see African countries working with another African countrie I hope other African countries are talking note and making changes it’s time for the old dictators to step aside and hand over leadership to leaders with new vision just like Ethiopia is doing keep our young people in Africa to build Africa using our natural resources may God continue to bless mother Africa
[…] to build its share of a 220km cross-border highway aimed at improving trade between the countries, Addis Insights […]
This is the greatest and the first diplomatic action taken by Ethiopian. Neighborhood and borderlands integrated development is very important to build concrete friendship and to the peaceful neighbors.
This type of investment is better structured by way of PPP, where repayment should be also structured by way of toll gates to repay back. Governments in Africa in view of the corruption in place should be confined to provision of strong institutions and regulation.9
It will be done if executed because corruption in this country is too rampant, is like a new worms coming