Speaking this week in the border town of Mandera during the launch, Kenya's Deputy President Rigathi Gachagua said the project will improve socio-economic development between the three countries.
"Infrastructural development is silenced by armed conflicts, we must silence the gun for the industries to roar back, we must silence the violence for socio-economic prosperity," he said.
The U.K.-funded initiative dubbed "Deris Wanaag" in Somali, which translates to "Good Neighborliness," aims to find a lasting solution to the perennial insecurity and instability in the Horn of Africa nations.
Even though various border-crossing points have been officially closed at times over the last decade, militants, criminals and regular migrants still cross borders with little problem. Last year, the Somali militant group al-Shabab sent hundreds of fighters into Ethiopia before being pushed back by regional forces.
British High Commissioner to Kenya Jane Marriot said the project is a strategic investment for Kenya and the Horn of Africa region.
"You have numerous challenges together — drought, resource conflicts, armed proliferation, terrorism — but you also have so much that is good and positive together, and it is that we want this program to help bring on," she said.
Gachagua said the governments will implement measures to eradicate conflict, such as improving road and water infrastructure networks, as well as enhancing education.
The governments said they will tackle the root cause of terrorism through intelligence and putting greater manpower on the border to catch al-Shabab insurgents.
Kenya closed its official border posts with Somalia in 2012 to hinder al-Shabab's movements. The border closures included the Mandera border post as well as Lamu, Wajir and Garissa border crossings.
However, earlier this year Kenya announced it is reopening its border with Somalia and Ethiopia.
Somalia Minister for Security Mohamed Ahmed Sheikh said the project is timely and will effectively tackle cross-border insecurity challenges.
"And in that spirit of collective solidarity, there has never been a better time to forge common destiny and collectively participate in this project to tackle cross-border challenges," Sheikh said.
The project launch happened a day after a security compact was signed between Kenya and the United Kingdom on Wednesday.