Trade between Kenya and Ethiopia has remarkably increased even before the $670 million (Sh68.8 billion) African Development Bank (AfDB) co-funded road linking the two countries is completed.
According to the bank, the 895-km highway corridor has not only eased cross-border traffic between the two countries, but is a major push for economic integration, resulting in jobs and improved livelihoods across the region.
It projects that trade between Kenya and Ethiopia is set to increase fivefold, from $35 million (Sh3.6 billion) to $175 million (Sh17.97 billion) by the end of next year.
A report by the bank says although the Kenyan section of the corridor was completed in 2016 and the last part of the road in Ethiopia will be finished during the first half of 2019, trade has already increased.
“The intensity of foreign investment in the region in the period from 2016 to 2018 should further improve this performance. This is due to reductions in transport and shipping costs of goods and the expansion of markets beyond national borders,” the report adds.
The corridor consists of a 504-kilometre stretch linking Kenyan towns of Merille and Turbi, through Marsabit, and a 391-kilometre stretch running through Ethiopia linking Ageremariam, Yabelo and Mega.
According to the bank, average transport costs between the Kenyan towns of Isiolo and Merille, for example, should fall by half by 2019, from 0.49 cents to 0.28 cents a kilometre.
In addition, it adds, the new international road is expected to generate an additional 900,000 tonnes of volume of goods transported to or from the Port of Mombasa – 20 per cent of Ethiopia’s total maritime freight.