Dubai ports giant DP World and Ethiopia’s Ministry of Transport have agreed a $1bn deal to create a trade and logistics corridor from Ethiopia to Berbera in Somaliland.

The corridor will be based on the 250km motorway between Berbera and the Ethiopian border town of Wajaale that got under way in 2019.

The memorandum of understanding was signed in Addis Ababa on Thursday by Dagmawit Moges, Ethiopia’s minister of transport, and Sultan Ahmed Bin Sulayem, chief executive of DP World.

DP World and its partners plan to invest up to $1bn over the 10 years in a range of projects on Ethiopian territory that are intended to maximise the value of the highway by adding “end-to-end logistics services”. These will include dry ports, silos, warehouses, container yards, refrigerated depots, freight forwarding and clearing activities.

Sulayem commented at the signing: “We strongly believe that developing the Berbera Corridor into one of the major trade and logistics corridors will unlock huge economic benefits for Ethiopia, and support its ambitious development plans. It will create new jobs, attract new businesses and investment along the corridor, as well as diversify and strengthen the country’s access to international trade.”

The sentiments were echoed by Dagmawit. She said the logistics industry was expected to play the “leading catalytic role” in “propelling the country into becoming an African beacon of prosperity”.

The agreement envisages the formation of a joint-venture logistics company to carry out operations along the corridor. Ethiopia will also install IT systems and technology along the corridor to ensure the secure transfer of cargo, DP World said.

The ports operator is presently investing around $440m to increase Berbera Port’s capacity to 2 million containers a year, with the first phase nearly completed.

The highway is expected to be complete by the end of this year. It is being funded by the Abu Dhabi Fund for Development and the UK’s Department for International Development.