Ethiopia's multi-billion-dollar dam promises economic boost

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ADDIS ABABA - Ethiopia's mega-dam on the Nile, being inaugurated on Tuesday, is expected to provide a huge boost to the economy and double electricity production in a country where nearly half the population lacks power.

Megastructure

The Grand Ethiopian Renaissance Dam (GERD) is touted as the largest hydroelectric facility in Africa.

The $4-billion megastructure stretches nearly two kilometres (just over a mile) across the Blue Nile near the Sudanese border and is expected to eventually hold 74 billion cubic metres of water and generate 5,000 megawatts of electricity -- more than double Ethiopia's current capacity.

In Africa's second most populous country, some 45 percent of the 130 million inhabitants do not have access to electricity, according to World Bank figures from 2023, and nearly a third of the population lives below the poverty line.

Nearly 97 percent of electricity produced in Ethiopia, a country with numerous lakes, already comes from hydroelectric.

'Energy revolution'

The mega-dam will also enable significant economic development, experts say, especially in Addis Ababa where many rely on diesel generators due to frequent blackouts.

"The dam has a big importance for Ethiopia in terms of access to electricity for citizens and empowering industries that were producing under their capacity because of power outages," said Samson Berhane, an economic analyst based in Ethiopia.

It promises an "energy revolution", added Tigabu Atalo, another analyst in Addis Ababa, who sees a boost to tourism and fishing in the dammed waters.

"I anticipate modern new and vibrant towns appearing in these areas," he said.

'$1b per year'

Prime Minister Abiy Ahmed estimated this week that GERD would add $1 billion to Ethiopia's economy each year.

The dam also promises to help with Ethiopia's chronic lack of foreign currency caused in part by the heavy controls of its largely state-run economy.

With power lines stretching as far as Tanzania, and growing demand for power across east Africa, "the dam will generate a lot of foreign exchange", said Berhane.

Difficulties in importing fuel is also part of the reason why Ethiopia last year banned the import of gasoline and diesel vehicles, with a view to replacing almost all by electric vehicles by 2030.

"EVs are expected to consume a significant amount of power as the fleet grows and the GERD will definitely support that," said Atalo.