Export-Import Bank of India will lend $300 million to Ethiopia to help construct a railway to a planned port on the Red Sea in neighboring Djibouti.
Exim Bank will open the credit line once technical studies are completed on the 210-kilometer (130-mile) link from Asaita in northeastern Ethiopia to Tadjourah, Managing Director T.C.A. Ranganathan said in an interview yesterday in Addis Ababa.
The port will have a dedicated terminal for shipments from Toronto, Canada-based Allana Potash Corp., which is developing a $642-million potash mine in Ethiopia’s northeast.
The government of landlocked Ethiopia plans to lay more than 2,000 kilometers of standard-gauge track during a five-year national growth blueprint through mid-2015. The country is seeking to spur a mining boom, attract increasing investment for telecommunications and manufacturing and help make the economy less reliant on small-scale agriculture.
Revenue from mining is expected to “surge” after the award of 24 new concessions in 2006-07, bringing its expected contribution to 10 percent of gross domestic product in a decade, according to the website of the Ethiopian Embassy in Washington. Mining and quarrying accounted for less than 1 percent of the Horn of African nation’s GDP in 2010, according to the U.S. Geological Survey.
Ethiopia accounted for 11 percent of global tantalum output, a material used in transistors for mobile phones, computers and digital cameras and it also produced cement and gold, according to the survey. It has deposits of opal and soda ash, among other minerals.
“We must assist Africa and partner with them in their development by offering whatever expertise we have,” Ranganathan said.
The Exim Bank funding can be spent buying goods and services from India, according to a press statement released by the Mumbai-based lender today. Ranganathan and Ethiopian State Finance Minister Ahmed Shide signed the loan agreement in New Delhi on June 13, according to the statement.
State-run Ethiopian Railways Corp. says the government has secured or is in talks to get export financing from banks in Turkey, China, Russia and Brazil.
Exim Bank has previously extended credit worth $640 million for sugar factories and $65 million on the power transmission network in Ethiopia, according to the statement.
Earlier loans from Exim Bank have carried a 1.5 percent interest rate with a 5-year grace period and maturity of two decades on longer, according to information on the website of Ethiopia’s Finance Ministry.