The African Development Bank (AfDB) has signed two grant agreements for new projects with the Ethiopian government, which aim to boost youth employment and electricity trade between Ethiopia and Djibouti.

The grants are grouped under the bank’s concessional lending window and will comprise $47-million towards productivity enhancement in agricultural industrial parks and $71-million to power interconnection between the two countries.

The industrial parks and youth employment project will see the development of irrigation and water management infrastructure around Ethiopia’s Integrated Ago-Industrial Parks, offering opportunities for graduates to establish agri-related commercially viable businesses.

To this end, the Arab Bank for Economic Development is also providing financing of about $50-million, in addition to a $5.2-million contribution from the Ethiopian government itself. 

The programme entails the development of 12 607 ha of irrigated land, while 3 000 youths will receive agronomic and business development training.

The irrigation infrastructure will strengthen water users associations, protect the water-shed areas around the irrigation schemes and will be used to provide training for farmers and youth agri-entrepreneurs on soil and water conversation practices.

The programme will be implemented for five years up to 2026 under the supervision of Ethiopia’s Ministry of Water, Irrigation and Energy, as well as the country’s Irrigation Development Commission.

Meanwhile, the Ethiopia-Djibouti Second Power Interconnection project follows an earlier AfDB-financed power interconnection project between the two countries and builds on its accrued benefits over the last decade.

It will enable the construction of about 300 km of interconnector lines, 170 km of transmission lines to reinforce the network within Ethiopia, and the construction of new and the expansion of existing substations in the two countries.

In Djibouti, expected benefits include a 65% increase in customer connections and a sharp reduction in the use of thermal generation plants from 100% to about 16%.

In Ethiopia, the project is expected to lead to higher incomes from the power trade which, over the last ten years, stood at more than $275-million in revenue from power exports.

Upon completion, Ethiopia’s revenue from power exports will increase, while simultaneously boosting Djibouti’s access to reliable, affordable, and clean electricity and lowering its greenhouse-gas emissions.

“By enhancing economic ties through increased cross-border power trade and improved economic competitiveness, the project will contribute towards harnessing regional peace and stability and addressing regional fragility,” says AfDB East Africa regional development deputy director Dr Abdul Kamara.

AfDB is a major player in Ethiopia’s development agenda and currently has operations valued at about $1.76-billion, covering basic services, energy, transport, water supply and sanitation, agriculture, governance and the private sector.