FILE PHOTO: Road construction in Ethiopia's Gambella region - Courtesy of Gambella Road Authority

Ethiopia has disclosed that the construction of the South Sudan-Ethiopia road, linking Gambella to Paloch in Upper Nile State, will be carried out by Ethiopian contractors and consultants.

According to a media report in Ethiopia, the Ethiopian House of Peoples Representatives has approved the agreement made by the Ethiopian government to provide a 738.2 million dollar loan to South Sudan.

The groundbreaking agreement that promises to reshape regional connectivity will be repaid by the South Sudan government in both cash and crude oil.

In June 2024. the National Legislative Assembly ratified a $738 million loan agreement to finance the construction of a 220km highway linking South Sudan and Ethiopia.

The loan agreement, which involves payment in crude oil to Ethiopia, was presented to lawmakers by Changkuoth Bichiok Reth, former Chairperson of the Finance and Economic Planning Committee.

The highway, intended to connect western Ethiopia with north-eastern South Sudan, necessitates legislative consent from both nations to proceed.

The road on the South Sudan side will connect Paloch, Guelguk, Mathiang-Maiwut, and Pagak to Ethiopia’s border areas.

The agreement was signed by Eyob Tekalign, State Minister of Finance of the Federal Democratic Republic of Ethiopia, and South Sudan’s former Minister of Finance and Planning, Dier Tong Ngor.

According to a media report in Ethiopia, this unprecedented financial assistance will fund the construction of a vital 220-kilometre road along South Sudan’s border, a project set to enhance trade and transportation in East Africa.

The loan, which features a four-year grace period and a repayment timeline of ten years, highlights Ethiopia’s innovative approach to financial diplomacy.

The infrastructure project will be executed by Ethiopian contractors and consultants, showcasing the country’s capacity for infrastructure development and its commitment to regional cooperation.

This strategic partnership not only facilitates improved connectivity but also serves as a model for resource-backed financing in Africa, utilizing South Sudan’s natural resources to fulfill its financial obligations.

The agreement signifies a strengthened diplomatic relationship and a shared vision for sustainable growth between the two countries.

Ethiopia’s support for South Sudan’s stability and development is a pivotal move in the region’s ongoing efforts to foster cooperation and integration, paving the way for future collaborations that could further enhance economic prospects for both nations.