EU signs €212.4m deal with Ethiopia

EU signs €212.4m deal with Ethiopia

2013-11-25 13:07

Addis Ababa - The European Union signed a development grant with Ethiopia on Monday worth €212.4m to help finance road construction and projects targeting maternal health and drought resilience.

Ethiopia, Africa's second most populous country after Nigeria, is midway through a five-year economic plan that foresees almost tripling the country's road network and beginning the building of 5 000km of new railway lines.

Addis Ababa's big push on infrastructure is aimed at connecting remote regions and has propelled the economy to double-digit growth for much of the last decade.

"Expanding and upgrading ... (the) road network is playing a central role in the country's economic development - notably in improving access for the rural population to markets and basic service," Andris Piebalgs, the EU's Commissioner for Development, told a signing ceremony.

Once run by communists, Ethiopia's economy is now sub-Saharan Africa's fifth biggest economy, leap-frogging Kenya, after a decade of robust growth. But it remains one of the world's largest aid recipients.

The package includes €49m earmarked for road building. Another €50m will be to help fight the effects of drought in the country's arid south and east and €40.4m will go to improving maternal health.

Earlier this month the United Nations said Ethiopia was making slow progress in improving maternal health and that the rate of maternal mortality - dying in childbirth - was among the highest in the world.

The International Monetary Fund projects the Ethiopian economy will expand 7.5% in each of the next two fiscal years but cautions it needs to be restructured to encourage more private sector investments to avoid a slowdown.

There are signs the huge public spending is hampering the private sector's access to credit, the IMF says.