Ethiopia’s parliament has approved a $738m loan to South Sudan to build its share of a 220km cross-border highway aimed at improving trade between the countries, Addis Insights reports.

The South Sudan leg will run from Paloch in Upper Nile State to the border town of Pagak.

Ethiopian engineers and contractors will build it.

The decision ratifies an agreement signed in May 2023 between the governments.

During that ceremony, President Salva Kiir of South Sudan said: “Our hope is to move together to help one another; this is what our people want to see. This is a strategic project that connects our people and serves their needs.”

The road is important for South Sudan because it will help it import manufactured goods and export its oil to world markets via Djibouti, which is connected to Ethiopia by a modern railway.

Currently, South Sudanese trade flows through Mombasa, which is 1,700km away.

The agreement specifies that repayment will be made in cash and crude oil over 10 years, following a five-year grace period.