The Ethiopia-Djibouti Railway

Akhil D -

Hey everyone! In today’s blog, I want to go into a deep dive into one of the case studies I am working on. The Ethiopia-Djibouti Railway, funded by MDBs including the African Development Bank (AfDB) and the World Bank, connects landlocked Ethiopia to the Port of Djibouti, significantly improving trade and transportation efficiency in the region.

One of the key areas of investment is in the Ethiopia-Djibouti Transport Corridor Project Phase I, will enhance logistics and road access to Ethiopian seaports and deepen regional economic, trade, and transport integration. The project will construct 60km of the new 126km 4-lane expressway from Adama to Awash. The expressway is along the southern export-import route through the Dewele/Galile border point, a shorter route to the sea by 120km compared to the existing northern route passing through the Galafi border point.

The project will cost 181.60 million units of account (UA) and is financed by an ADF Grant of UA 69.64 million to Ethiopia and an ADF Grant of UA 3.80 million to DoE contribution of UA 108.16 million. The road work will take 4.5 years, and the various Djibouti consultancy services will take up to 3 years. The project beneficiaries include businesses in agriculture, trade, and export-import sectors. Djibouti will benefit from increased trade, port revenues, jobs, bankable projects, and improvable capacity in the management of the transport sector.

Shown below are some specific financials I consolidated from my research.

Thank you for reading. See you next time!

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Comments:

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    nicholas_a
    Hi Akhil, how do the units of account compare to something like USD? Is there a reason for using UA instead of a certain currency?
    March 6, 2024 at 10:43 am - Reply
    Ms. Bennett
    Interesting work, Akhil. Which type of project is this case study? Infrastructure? Are you just looking a the cost of the project? Or other data points to determine impact of the project?
    March 7, 2024 at 10:22 am - Reply
    akhil_d
    Thank you for your comment Nich! Multilateral development banks use units of account to standardize financial transactions across diverse currencies, ensuring stability, comparability, and risk management. This practice streamlines operations, enhances transparency, and facilitates international cooperation in financing projects for economic development and poverty reduction.
    March 18, 2024 at 3:54 pm - Reply
    akhil_d
    Thank you for your comment Ms. Bennett! I classified this project as a transportation infrastructure project. I also looked at the World Bank's financing plan, AfDB's expenditure schedule, and key economic metrics such as Economic Internal Rate of Return (EIRR), Net Present Value (ENPV), and Sensitivity of EIRR.
    March 18, 2024 at 3:56 pm - Reply

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