The World Bank said the Addis-Djibouti corridor will get a significant upgrade with a $730 million grant following a newly approved Horn of Africa Initiative’s Regional Economic Corridor Project.

The “vital trade route and a lifeline for Ethiopia’s 120 million people,” received $730 million grant from the International Development Association (IDA), aimed at improving regional connectivity and logistics efficiency in Ethiopia along this key trade route connecting landlocked Ethiopia to the port of Djibouti, WB said.

“Improved regional connectivity and trade are essential to unlocking Ethiopia’s economic potential,” said Ahmed Shide, Minister of Finance. “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.