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New Ethiopia Railway to Ease and Speed Trade

Construction on much-awaited railway connecting landlocked Ethiopia and neighboring Djibouti, where the nearest port is, has been completed.

The China-funded $3.4 billion project, built by China Railway Engineering Corporation and China Civil Engineering, is expected to cut the duration of goods movement from two days to eight hours, the Ethiopian government reported.

Trial service on the 407-mile long freight and passenger train should begin in the first week of October, with trial runs slated to last between three and six months.

Ethiopia has been making every effort to prepare itself for massive growth in trade and this latest move is part of the government’s plan to construct 5,000 kilometers (3,106 miles) of new railway lines across the country by 2020.

A new hydropower plant—also funded by China—is expected to be operational this year too, which would nearly double Ethiopia’s power capacity.

Infrastructure has been one of the country’s greatest challenges as few and subpar roads and railways haven’t made trade, and thus economic growth, all that easy in Ethiopia.

The railway, however, could prove a major sign of changing times and added encouragement for companies with a tepid interest in the country to try doing business there.

More than shrinking lead times, which is of utmost concern in the world of want now, want now, the railway could also make the country more competitive in terms of price.

“It’s going to help a lot with costs,” Siddarth Sinha, founder and CEO of Dubai-based Vogue International Agency, which operates a Velocity Apparelz facility in Ethiopia. “The cost of trucking is a big factor, and timing also,” two factors use of the railway would improve.