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GERD: Ethiopia’s Motives and Challenges

The Grand Ethiopian Renaissance Dam (GERD) has been encountering hurdles since laying its foundation stone in April 2011. Ethiopia’s plan was to finalize the construction of the dam in 2017. The date was put off till 2018 and again till 2022 due to problems in funding and implementation. The delays aroused many questions regarding the position of the dam in Ethiopia’s politics after the shifts the country witnessed throughout the past year.

First: Ethiopia’s motives to continue building the GERD

There is no doubt Ethiopia has strong reasons to continue building the dam. The political changes in and around Ethiopia are an additional motive for finishing the construction of the GERD in the nearest time possible. Ethiopia’s motives include:

1- Ending the shortage in electricity and bringing in revenues

Ethiopia had been exporting electricity to Sudan and Djibouti. Two months ago, however, the Ethiopian government embarked on a plan to rationalize electricity consumption because of the water shortage in electricity-producing dams. This resulted in the decrease of Ethiopian electricity by 460 MW, shortage of electricity in households and the reduction of working hours in cement and steel companies.

According to the rationalization plan, consumers were divided into three sections, each receiving electricity for five hours. The plan included suspending electricity exports to Sudan and reducing electricity exports to Djibouti by 50 percent. This resulted in the loss of more than $100 million in revenues from exporting electricity to neighboring countries.

Ninety percent of Ethiopia’s electricity production – estimated at 3,815 MW – comes from hydroelectric power plants, which means that the GERD can generate double the current amount of electricity. This will result in providing the Ethiopian people and companies with double the amount of electricity they currently receive and the government will be able to commit to the agreements it signed with neighboring countries to export electricity – 200 MW to Sudan and 50 MW to Djibouti. Ethiopia will also be able to sign new agreements to export energy to other countries such as Tanzania, Rwanda, Burundi, and Yemen, thereby increasing its economic revenues.

2- Improving the image of Abiy Ahmed and the ruling party

Since Abiy Ahmed was sworn in as prime minister Ethiopia has been hoping to achieve political stability that would reflect positively on the social and economic conditions of the country.

Ahmed has been moving in different directions towards these goals. On the domestic front, he announced his intention to reconcile with opposition movements, welcoming the return of their leaders from exile, dropping the charges against them, and releasing those arrested from the opposition.

On the foreign level, Ahmed ended a 20-year conflict when he visited Eritrea and signed a reconciliation agreement with Eritrean President Isaias Afwerki after which flights between the two countries resumed and their embassies reopened.

As a result, the Time magazine selected Ahmed among the world’s most influential leaders. However, the political reform Ahmed introduced in Ethiopia needed to be consolidated by economic achievements to guarantee his stay at the helm and to send reassuring messages to the outside world about the stability of the domestic front, the improvement of the business environment, and the state’s efforts to develop and improve the living conditions of its citizens. 

Building the GERD will help paint a positive picture of Ahmed’s government on the political and economic fronts.

3- Balancing international partnerships

Ethiopia wants to diversify its international relationships. The policies of Meles Zenawi and Hailemariam Desalegn were based on simulating the Chinese development model and the dependence on China as a main economic partner. This resulted in China’s acquisition of 35 percent of Ethiopia’s foreign investments and 50 percent of its foreign debts.

Ahmed is capitalizing on the GERD to build more balanced and diversified international relationships. This couldn’t have been more apparent than during his European tour in October 2018 to invite countries such as France, Germany and Italy to participate in the GERD project.

4- Using the GERD symbolically on the domestic and foreign fronts

The GERD is a source of inspiration to African peoples that share the same economic conditions with Ethiopia. To them, the GERD is a lesson on building mega projects with local funding and without resorting to foreign loans.

Delegations from Congo, Zambia and Zimbabwe visited Ethiopia to learn from the Ethiopian experience. The delegates said that the local funding of such projects created a national feeling of ownership shared by the people.

Building the GERD strengthens the position of the Ethiopian regime in front of its people and shines the light on Ethiopia as a leading country in Africa.

Second: Challenges facing the continuation of the construction of the GERD

Ethiopia has several motives to continue building the GERD, but it is facing multiple challenges as well, such as:

1- Funding problems

The GERD costs approximately $4.7 billion, or 80 billion Ethiopian birr (ETB), to build. But so far Ethiopia has spent 98 billion ETB on the dam as a result of the depreciation of the Ethiopian currency against the dollar, in addition to mismanagement, as stated by Kifle Horo, the GERD’s new manager. Delays in building the dam have been costing Ethiopia $800 million annually, adding to Ethiopia’s burdened economy.

Until the end of 2018 the Ethiopian people contributed 12.3 billion ETB, or 15 percent, to the construction of the GERD. It was originally planned that the people contribute 20 percent and the government shoulders the majority of costs. But the economic challenges facing the Ethiopian government were increasing. It was required to pay 35 percent of the costs of the GERD – most of which would go to the hydroelectric infrastructure – in addition to the costs of delay.

2- Political instability

Since Ahmed has risen to the helm, he’s been trying to introduce changes to Ethiopia’s political scene. He lifted the emergency rule, released thousands of prisoners, allowed leaders of the opposition and armed movements to return from exile, and provided relative freedom to the media.

However, some observers believe that Ahmed’s decision to allow for the return of political movements, such as the Oromo Liberation Front and its armed wing, was not a wise call because it was a policy that drastically endangered the stability of the country.

Some believe these measures are part of a transitional roadmap heading towards building a democratic state, while others insist the transition was designed “recklessly”, without providing guarantors that dictatorial and ethnic elements would not rise to the surface.

This conflict proves that Ethiopia’s political position is getting more complicated, which in turn affects economic projects such as the GERD. This was clear when the army-affiliated METEC company was assigned the building of the dam and then it was no longer in charge due to its delay in construction and the corruption accusations against its leaders. This is currently a part of the ongoing impasse between some military leaders and the government.

3- Security threats

Conflicts, violence and displacement are the order of the day in Ethiopia, particularly in the north and west. Violence is raging in Benishangul-Gumuz where ethnicities from Benishangul, Gumuz, Oromo and Amhara are in semi-perpetual conflicts, resulting in the killing of tens of Ethiopians and the displacement of the inhabitants of the region.

This article was published first in: The Egyptian Center for Strategic Studies, The Gran Ethiopian Renaissance Dam Crisis: dimensions, Repercussions and Future Courses, Especial Edition, October 2019. 

Mahmoud Salama
Researcher at Public Policy Program

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