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  • Matt Spencer

Africa’s biggest hydropower project, Ethiopia’s Renaissance Dam

At the construction site in the Benishangul region of Ethiopia, roughly 8,500 workers are labouring tirelessly every day to build the (massive) Ethiopia’s Renaissance Dam – It is a massive project taken on by one of the world’s poorest countries.


From a distance it seems rather ironic that one of the world’s poorest country’s is taking on a several US billion dollar project. Ethiopia’s Renaissance Dam is Africa’s biggest hydro-power project. The GDP per capita in Ethiopia is merely $475. Since day one the construction has progressed steadily using money from local taxes, donations and government bonds. Ethiopians abroad and at home contributed the first $350m, with government workers contributing amounts equivalent to a month of their salaries.

One of the construction engineers working on Ethiopia’s Renaissance Dam expressed how ordinary people are building an extraordinary project Development experts now showcase the dam as proof of an innovative approach to project financing. Ethiopians, private companies and even other countries such as Djibouti are buying bonds.

Furthermore, the Ethiopian Electric Power Corporation, a state-owned utility, is investing its own revenue and the money it is borrowing from state-owned banks for Ethiopia’s Renaissance Dam. Economists warn that using private sector finance to pay for the dam could slow Ethiopia’s economic growth in the future. But the government’s response is that this will be offset by selling electricity to countries in East Africa, a region with improving economic growth.

The recipe for financing Ethiopia’s Renaissance Dam from bonds and taxes is being flaunted as a model for other African countries. In this case, Ethiopia uses a computerised system to track and collect taxes, making evasion difficult. The government regularly carries out awareness campaigns to explain taxation and publicise what collected taxes are funding such as the dam.

Source

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