The Japanese government has extended to the Government of Rwanda a loan facility of $68m (about Rwf58billion) toward upgrading the Ngoma- Ramiro road in Eastern Province.
The financing deal was signed Thursday at the Ministry of Finance and Economic Planning in Kigali.
The loan facility, with a repayment period of 40 years, has an annual interest rate of 0.01%, after a 10-year grace period.
The agreement was signed by Takayuki Miyashita, the Japanese ambassador to Rwanda, and Claver Gatete, the Minister for Finance and Economic Planning.
The project will entail developing the road's carriage capacity and link it to both the Central and Northern corridors.
This, according to Minister Gatete, will result into increased cross-border trade, as well as make Rwandan traders and exports more competitive in the region.
The funds will specifically be used to upgrade and pave the unpaved road segment between Ngoma and Ramiro - covering about 53 kilometres, according to Gatete.
The road is of regional importance since it connects Rwanda to neighbouring countries such as Burundi and DR Congo, he added.
The project is expected to be finished in the next two years with Rwanda Transport Development Agency (RTDA) acting as the implementing agency.
The road is also expected to contribute towards revitalising regional transport from the Indian Ocean through the Central Corridor that is from the Tanzania port of Dar es Salaam to Rwanda, thereby boosting regional trade.
The road is also expected to serve as a by-pass for cargo transport from Dar es Salaam Port to Kigali, according to officials.
According to Amb. Miyashita, the project is expected to benefit the local communities by boosting local employment and improving social services, including education and health as well as facilitating sustainable trade.
"Japan has been supporting Rwanda on various projects, including the construction of Rusumo International Bridge, as well as One Stop Border Post (OSBP) facilities meant to reduce the cost of doing businesses and make border procedures more efficient," he said.
Takayuki added that regional integration in Africa remains a key priority for his government.
Last year, the governments of Rwanda and Japan sealed a $18.8-million (about Rwf16 billion) financing agreement to support irrigation farming in Rwamagana District in Eastern Province.
The support was mainly focusing on the rehabilitation of irrigation facilities as part of the support towards the implementation of Phase III of the Strategic Plan for Agriculture Transformation.