Ethiopia’s Finance Minister Ahmed Side has announced a $4.8 billion pledge for the massive $12.5 billion Bishoftu International Airport to be built near Absera, 40 kilometers south of Addis Ababa. It will become Africa’s largest airport and strengthen Ethiopian Airlines’ leading position in passenger and cargo flights to and from the continent.
A special presentation at the 8th Africa Investment Forum held in Rabat from November 26-29 saw strong interest in the project from development partners, commercial financiers, export credit agencies and institutional investors from across Africa, Europe, North America and Asia.
Government-owned Ethiopian Airlines has committed to investing $3.2 billion in capital for the new airport.
The African Development Bank (AfDB) has pledged $500 million in debt, and Bishoftu Airport will be the bank’s second largest infrastructure investment, with the West African rail corridor being the largest. AfDB is also the first mandated lead arranger, global coordinator and bookrunner to raise $8 billion in debt financing for the airport. Ethiopian Airlines Group Chief Commercial Officer Lema Yadecha and former African Development Bank Group President Akinwumi Adesina signed their appointment agreement with Ethiopian Airlines on August 11 in the presence of Ethiopian Finance Minister Ahmed Side.
An unnamed Chinese bank reportedly pledged $500 million as part of the $4.8 billion.
innovative financing
This financing involves securitization, which packages future revenue streams from passenger fares to cargo handling into investable securities. According to a report in Addis Fortune, Ahmed said the blended financing structure would allow private investors to “de-risk” concessional capital, while guarantees from the AfDB and other multilateral institutions would lower borrowing costs.
According to the Ecofin agency, Ethiopian Airlines Group executives also pitched the project to European investors in Paris on November 3. CEO Mesfin Taseu Bekele told Ecofin News: “We earn 90% of our sales in foreign currencies… outside Ethiopia. Therefore, the impact of exchange rate changes is not significant.”
When does work start?
The new airport will be Africa’s largest airport and will become a major logistics and cargo hub, facilitating trade and activity across Africa and the world. According to an article in Fana News Agency, the first phase is valued at approximately $12.5 billion and is designed to accommodate 60 million passengers per year, with full development expected to raise the total number of passengers to 110 million. Positioned as Rica’s largest airport, the project also incorporates extensive cargo facilities and an airport city development featuring a logistics centre, hospitality, retail and direct rail and highway connections to the capital. According to an August AfDB press release, the airport will handle 3.73 million tonnes of cargo annually.
The bank announced in August that “groundwork is expected to begin in the second half of 2025, with the first phase to be completed by November 2029. The multi-billion dollar project will also include an airport city with facilities such as shopping malls, hotels and recreational areas, as well as direct rail and highway access to Addis Ababa.” However, a recent article by Fana states, “Ethiopian Airlines Group has formally presented the project information memorandum and financial model to potential funders, while pre-qualification of EPC contractors is underway and bid submission is expected by mid-December 2025.” The Economist says talks are underway with 15,000 potentially displaced people, and the AfDB says Ethiopian Airlines has allocated $350 million to restore livelihoods and resettle communities affected by construction.
Bole Airport has been experiencing double-digit annual passenger growth for a decade and is nearing capacity, according to Addis Fortune. Once the new airport is completed, it will also serve domestic customers. Bishoftu has the potential for size and expansion, and its proximity to important road and rail corridors, including ongoing regional infrastructure such as the Djibouti-Addis railway and cross-border highways.
AfDB praises Ethiopian Airlines
Mr. Adesina said: “Speed and scale are now Ethiopia’s hallmarks. And scale is what we are signing today, a testament to the power of vision, determination and determination to put Africa on top…Ethiopian Airlines is Africa’s oldest and best airline, connecting capitals, people and markets with globally acclaimed cargo facilities, and is critical to the region’s economic integration.”
According to an AfDB press release, “The Ethiopian Airlines Group, Africa’s largest and most successful airline serving over 145 destinations and with over 79 years of operation, sees the new airport as a cornerstone of its Vision 2040 growth strategy. The project is also aligned with the African Union’s Agenda 2063 and Africa’s Single Air Transport Market, both of which will foster greater integration and connectivity on the continent.” The letter of intent was signed on March 24.
Ethiopian Airlines drives connectivity across Africa and the rest of the world through an extensive hub-and-spoke network with sub-regional hubs.
According to an article in Addis Insight, the airline reported record revenues of $7.6 billion in the fiscal year ending June 30, 2025, added 13 new aircraft to its fleet and launched six new international destinations. Noting an 8% year-on-year increase in revenue, AFDB said the airline “transported 19 million passengers, of which 15.1 million were transported internationally and 3.9 million domestically.”
Ethiopia’s reforms and connections with neighboring countries
Minister Ahmed said the interest in this large investment was also linked to a menu of liberal policy reforms, part of a broader “homegrown reform agenda” that prioritizes transparency, market liberalization and private sector participation.
Reforms include tariff reductions, tariff harmonization, digital infrastructure upgrades, and alignment with the African Continental Free Trade Area (AfCFTA) and the Intergovernmental Authority on Development (IGAD) protocols for Eastern Africa. “It is hoped that as Ethiopia becomes more interoperable with neighboring countries, the new airport will become more than just a national asset, but a pan-African gateway.”
Business case explanation
The Economist’s website on Dec. 16 said the planned 110 million passengers a year would “outstrip the number of passengers in 2024 that pass through Atlanta, the world’s busiest airport, almost every year since 1999…”
“The business case for a new airport is compelling. Most of Africa’s national airlines are poorly managed and chronically loss-making. In contrast, ET has long been run by competent professionals. It was about the same as the second, third and fourth largest airlines combined.It is often the cheapest option, and sometimes the only option, when flying from one African capital to another or to Europe.
The report states that Bole Airport has an annual passenger capacity of 22 million passengers and ET expects it to be able to handle 66 million passengers by 2035. “Furthermore, planes need to be lighter to take off at an altitude of 2,300 meters above the capital. From Bishoftu, about 400 meters below, ET’s aircraft will be able to carry either more cargo or more fuel, making it possible to offer direct flights to, for example, North America.”
“Some believe the airline can easily afford its hefty price tag. ET has been profitable every year for nearly two decades, even during the COVID-19 pandemic. In the year to July, revenue rose 8% to $7.6 billion, up 15% from a year earlier. “Ethiopian Airlines is pretty much a blue-chip company if you’re looking at infrastructure in Africa,” said aviation consultant Sean Mendis. Both AfDB, the US and China have expressed interest in funding the airport. ”
But the magazine warns that civil war or war with neighboring Eritrea could derail the project, and that global competition is heating up for ET dominance in Africa, including from Emirates, Qatar Airways and Turkish Airlines.
Africa Investment Forum releases investment capital
At the AIF, which was held for three days in Rabat, Morocco, 39 profitable projects were introduced at a board meeting, and one of the biggest projects was the announcement of a $15 billion deal with Bishoftu Airport, according to Addis Fortune. “Forums are no longer just a place to pitch ideas. You go home with deals, term sheets and timelines,” the paper quoted AfDB’s senior director of syndication and client solutions, Max Magor Ndiaye, as saying.
According to an AIF press release, AfDB President Sidi Ould Tarr announced the results at the end of the meeting. He said investors responded strongly because the projects on the board’s agenda were backed by social and environmental impact studies and robust financial models. About two-thirds of the proposed deals targeted the energy and transportation sectors.
Photo AIF2025 – AfDB President Dr. Sidi Ould Tarr at the closing ceremony. Photo courtesy of AfDB.
This year’s 2025 meeting received financial support from 32 global private organizations, twice as many as in 2024. More than 2,000 delegates representing private capital providers, international investment banks, commercial banks, multilateral development finance institutions, entrepreneurs, and government representatives took part to consider project structuring, capital mobilization, and women’s access to finance. African sovereign wealth and pension funds are also participating, indicating plans to free up domestic capital.
(Main photo: Ethiopian Airlines planes on the runway 2015, photo credit: TheoSid on Depositphotos).
