Out-Law News 2 min. read
13 Feb 2017, 11:36 am
Around 220 kilometres of roads will be upgraded to “all-weather high standard asphalt roads” under the terms of the loan-and-grant-deal amounting to a total of nearly $90 million, according to Ethiopian business news website 2Merkato.
The report said 65% of the sum is being advanced in the form of a grant, to directly connect Jimma and Sodo in the country’s southwest and further connect the southern regional town of Sawla to the main trunk road network, linking the local populations to Addis Ababa city and the rest of the country.
Navjeet Virk of Pinsent Masons, the law firm behind Out-Law.com, said: “In a country which is five times the size of the UK but lacks any major rail network, roads are vital to supporting the growth of Ethiopia's economy, which has averaged 10.8% yearly growth since 2005.”
Virk said: “The African Development Bank's financial involvement in this expansion project showcases its continued commitment to improving transport infrastructure development in Africa. This investment also marks another phase in Ethiopia's commitment to upgrading its road network and follows recent projects such as the Modjo to Hawassa Expressway which broke ground in early 2016.”
The Jimma-Sodo-Sawla project forms part of the first phase of the Ethiopia Integrated Transport Program to be carried out by the Ethiopian Roads Authority (33-page / 1.36 MB PDF).
According to the AfDB, the direct beneficiaries of the project “will include small holder farmers, traders, agro-businesses, transporters, women entrepreneurs, mothers, transport sector experts and others”.
The main economic activity in the region is small holder and mixed crop / livestock, the AfDB said. “New sugar factories are under construction south of Sawla and a coal mine to be exploited by cement manufactures may be developed along the project road. The project influence area is not well connected with roads to Addis Ababa, the economic centre of Ethiopia and needs improved road network to ease transport and enhance exploitation of the area’s potential.”
Ethiopia’s transport sector “needs skills to modernise the network and management systems while the facilities for road safety emergency response require improvements”, the AfDB said. “At regional level, the road links the west of the country directly to the Addis Ababa-Nairobi transport corridor, removing the need for south-bound travellers to first go north to Addis Ababa and then south to Moyale, for trade with the Kenya and rest of East Africa.”
In a report published last December, the World Bank said ongoing investments in Ethiopia’s power and transport infrastructure are expected to help boost future growth and exports, despite the impact on the country of “the worst drought in 50 years”.
The bank’s ‘5th Ethiopia Economic Update’ (79-page / 8.19 MB PDF) said the government’s increased focus on new industrial parks was also helping to “improve export performance and stimulate growth in the short to medium-term”.
According to the bank’s country director for Ethiopia, Sudan and South Sudan Carolyn Turk: “Economic growth remained at a respectable 8% in 2015/16, which is impressive especially compared to previous drought situations which often resulted in economic contraction.”
A report published in 2014 by consultancy Deloitte (22-page / 4.13 MB PDF) said investment in Ethiopia had “ratcheted up” over the past 10 years and “is now amongst the highest in the world relative to gross domestic product”. The report said: “This is entirely necessary, since it is estimated that the country needs to invest an average of $5.1 billion per year in infrastructure alone for an entire decade in order to overcome existing constraints to development.”
China is a major infrastructure investment partner in Ethiopia. In January 2014, the Ethiopian Roads Authority awarded contracts for road construction projects worth the equivalent of $320m to three Chinese companies.
China has backed a $475m metro rail project in Addis Ababa with construction carried out by the China Railway Engineering Corporation and largely financed through a loan from the Export-Import Bank of China.
