Ethiopia advances talks with World Bank on infrastructure financing for energy corridors linking Djibouti and Kenya

Ethiopia advanced talks with the World Bank this week on financing infrastructure projects for energy corridors linking Djibouti and Kenya. According to officials, the discussions are part of the Horn of Africa Initiative aimed at enhancing regional connectivity and supporting Ethiopia’s development priorities by improving access to seaports and power networks.

The discussions, officials said, are linked to ongoing projects under the World Bank’s Horn of Africa Initiative (HoAI), a multi-country program involving Djibouti, Eritrea, Ethiopia, Kenya, Somalia, Sudan and South Sudan. The initiative aims to develop regional transport and energy corridors to support economic integration and address shared development challenges in the Horn of Africa, with Ethiopia as a key beneficiary.

World Bank records show that the initial financing for this project began with a $70 million International Development Association (IDA) credit approved on December 16, 2021.

Ethiopia’s engagement with the World Bank under HoAI includes financing for the Addis Ababa–Djibouti Regional Economic Corridor, which is a vital trade route connecting the landlocked country’s roughly 120 million people to the port of Djibouti. On September 19, 2024, the World Bank Board approved an additional $90 million to expand the project’s scope, and a further financing tranche approved on June 18, 2026, brought total World Bank financing for the corridor to $205 million.

In parallel, the World Bank approved a $730 million IDA grant on July 20, 2023, for the Horn of Africa Initiative: Regional Economic Corridor Project, which focuses on upgrading the Addis Ababa–Djibouti corridor within Ethiopia. According to World Bank documentation, the corridor upgrades include rehabilitation and upgrading of road sections, improved logistics and corridor management, and institutional support for cross-border trade facilitation.

Energy infrastructure is also a key component of the talks. The Second Djibouti–Ethiopia Power System Interconnection Project (P173763) is currently underway, with a total cost of approximately $66.94 million. World Bank financing covers $55 million of this, focusing on the Djibouti side of the interconnection, while the African Development Bank provides $11.94 million for the Ethiopian side. The project, scheduled to become effective on March 29, 2022, and close by December 31, 2026, is designed to strengthen cross-border electricity trade capacity between the two countries.

Additionally, Ethiopia and Kenya are connected through the Eastern Electricity Highway Project (EEHP), a roughly 1,000-kilometer, 500-kilovolt high-voltage direct current transmission line with a capacity of up to 2,000 megawatts for bi-directional power transfer. The World Bank has provided IDA credits totaling approximately $684 million for the EEHP, with $243 million allocated to Ethiopia and $441 million to Kenya. The project is part of the broader Eastern Africa Power Integration Program, aimed at regional energy corridor integration.

A multi-country energy and digitalization program called Renewable Integrated and Sustainable Energy and Digitalisation (RISED Ethiopia) further includes Ethiopia, Kenya and Djibouti as participating countries, with financing of $43.668 million. This program represents an additional platform for cross-border energy corridor investments under the Horn of Africa Initiative.

World Bank sources emphasize that these corridor projects are part of a coordinated, multi-donor framework, including partnerships with the African Development Bank and various trust funds, to promote regional integration. Investments in transport and energy infrastructure are intended to reduce transport costs, improve logistics performance, and support Ethiopia’s export competitiveness, especially in manufacturing and agriculture sectors, officials said.

The Addis Ababa–Djibouti corridor, described in World Bank releases as a “lifeline” for Ethiopia’s trade, carries a significant share of the country’s import and export traffic through Djibouti’s port. Corridor enhancements are expected to improve accessibility for populations along the route and strengthen resilience against disruptions.

World Bank project documents also frame the combination of transport and energy corridors as a means to create economic corridors rather than isolated infrastructure projects. This approach links roads, power lines and digital networks across Ethiopia, Djibouti and Kenya, promoting economic integration and job creation in the Horn of Africa region.

Implementation timelines indicate that the Djibouti Regional Economic Corridor Project is active, with phased financing approvals from 2021 through 2026. The energy interconnection projects are in various stages of implementation, with the Second Djibouti–Ethiopia Power System Interconnection Project ongoing and the Eastern Electricity Highway Project either operational or nearing completion.

Officials confirmed that the Horn of Africa Initiative’s portfolio remains active through 2024 and 2025, with continued coordination among participating countries and development partners to advance infrastructure investments that align with Ethiopia’s national development priorities and regional connectivity goals.