Uganda will expand a major road linking its capital Kampala with Rwanda after signing a deal on Thursday for a $151 million loan from the African Development Bank (AfDB).

The 40-year loan will partly finance a new 23km, 4-lane toll road to help de-congest traffic on an existing road, the finance ministry and AfDB said, adding the government would fund the remainder of the $192 million project.

In recent years East African countries have been investing heavily in transportation infrastructure to help boost trade.

A significant chunk of that investment has been directed toward upgrading sections of what is known as East Africa's Northern Corridor, a transport artery that loops in Uganda, Rwanda, Burundi and eastern Democratic Republic of Congo, stretching eastward to the Kenyan sea port of Mombasa.

Matia Kasaija, Uganda's finance minister, said at a signing ceremony that the project was aimed at "increasing overall competitiveness and creating additional wealth and employment".

The project would result in "enhanced trade and regional integration, and reduction in transport costs", Kasaija added.

Uganda, a prospective crude oil producer and Africa's largest coffee exporter, also plans to build a six-lane, 77-km, $1 billion expressway from Kampala to Jinja, an industrial hub in eastern Uganda.

AfDB, the World Bank and the European Union provide most of the funding for Uganda's transportation infrastructure.

-Reuters