Kenya and Ethiopia Strengthen Trade Ties With New Corridor Agreement

Kenya and Ethiopia Forge New Trade Corridor in Landmark Pact
In a move set to reshape regional trade dynamics, Kenya and Ethiopia have signed a landmark agreement to develop a major new economic corridor, significantly enhancing connectivity and streamlining the flow of goods between the two East African powerhouses. The pact, finalized in February 2025, focuses on upgrading key infrastructure, including roads and a modern railway link, and harmonizing customs procedures to reduce transit times and costs. This initiative marks the most significant bilateral effort in decades to unlock the vast economic potential between the port of Mombasa and the landlocked Ethiopian market.
The agreement addresses long-standing logistical bottlenecks that have hampered trade. The primary focus is the Moyale-Hawassa corridor, a critical stretch that will be developed into a high-capacity highway, complemented by plans to extend the Standard Gauge Railway (SGR) from Naivasha, Kenya, to the Ethiopian border and beyond. Crucially, the deal establishes one-stop border posts and synchronized customs systems, aiming to slash the time it takes for a container to travel from Mombasa to Addis Ababa from weeks to days. This is not just a road; it is an economic artery that will pump life into our shared prosperity, declared a senior Kenyan official involved in the negotiations.
The business communities in both nations have welcomed the development with optimism. Kenyan manufacturers see access to Ethiopia’s population of over 120 million as a game-changer for their growth, while Ethiopian exporters anticipate a more efficient and cheaper route to international markets via the port of Mombasa. The corridor is also expected to boost cross-border investment in logistics, warehousing, and energy projects. Reducing the transit time by just a few days makes our perishable goods, like flowers and avocados, significantly more competitive in Europe and the Middle East, an Ethiopian agricultural exporter stated.
The long-term success of the corridor hinges on consistent implementation and sustained political will from both governments. The project requires substantial investment, with funding expected from a mix of public funds, private sector participation, and international development partners. If fully realized, the Kenya-Ethiopia corridor could serve as a model for regional integration, fostering not only bilateral trade but also strengthening the entire Intergovernmental Authority on Development (IGAD) region’s economic resilience and global competitiveness.