A SERIES OF NOTES ON THE GLOBAL FRONTIER OF DEVELOPMENT. NOTES FROM AFRICA 1: Ethiopia (Part III)
Map of Ethiopia, Administrative Division. Library of Congress, USA / Joe Studwell
THE BEST NEWS – THE GRAND ETHIOPIAN RENAISSANCE DAM (GERD)
If a visitor to the country wants to see what Ethiopia’s developmental state is capable of, a great starting point would be a trip to the Grand Ethiopian Renaissance Dam (GERD), located 15 kilometers from the Sudanese border on the Blue Nile in the Benishangul-Gumuz region.
With a capacity of 6.45 gigawatts, once operational, GERD will be the most powerful hydroelectric project in Africa, generating more electricity than Ethiopia’s entire existing capacity of 4.5 gigawatts.
Similar to Egypt’s Aswan High Dam on Lake Nasser, which was completed in 1970 and has a production capacity of 2.1 gigawatts, GERD is set to have a revolutionary impact on Ethiopia’s economic potential.
The mistakes made by Egypt’s military successors to Nasser — Anwar Sadat and Hosni Mubarak — who undermined and dismantled much of the country’s developmental potential must be avoided in Ethiopia. Identified by American surveyors in 1966, GERD is situated in a natural gorge.
This means the dam cannot be built using conventional methods, such as creating a diversion, constructing the dam, and then closing the diversion. During the rainy season, which typically begins in July, the gorge accumulates too much water, making the creation of a diversion impossible.
Therefore, the dam is built during the extended dry season, from October to June, and when the rains arrive, the floodwaters are allowed to flow through the dam’s lower central section.
By the time the 2019 floods occurred, the foundation and side sections of GERD, along with the first 25 vertical meters of its central section, were already complete. From late 2019 until the rains of 2020, construction crews worked feverishly to add another 35 meters to the central section.
This allowed the first filling, or «impoundment», of 4.9 billion cubic meters of water, creating a reservoir that, at its peak, extended 100 kilometers. Currently, in the middle of the dry season, before water once again overflows the lower central section, the reservoir stretches approximately 50 kilometers.
Since October 2020, over 6,000 workers have been operating in two 12-hour shifts daily, striving to raise GERD’s central section to 107 meters of its maximum 145 meters before the rains begin this year.
If the schedule is maintained, the two largest turbines, currently in the final stages of assembly, are expected to start generating electricity by September or October. With a capacity of 775 MW each, just two out of the dam’s 13 turbines (the rest rated at 400 MW each) will increase Ethiopia’s electricity generation capacity by about one-third.
GERD was initially slated for completion in 2017. However, the project faced significant delays after Meles Zenawi awarded key contracts for steel structures and electromechanical works to the military-controlled company Metals and Engineering Corporation (METEC), which is under the TPLF.
Additionally, METEC was awarded contracts, without competitive bidding, to develop several large-scale irrigated sugar plantations and factories, which also ended in disastrous outcomes.
It remains unclear whether incompetence or corruption played a more significant role in causing these issues. Regarding GERD, METEC procured substandard steel and failed to provide sufficiently robust welding at the turbine intakes and the two «bottom outlets» — pipes on the left side (downstream-facing) of the dam designed to release excess floodwaters when it stops overflowing.
In structures subjected to immense pressure, it is crucial to use appropriately graded steel and ensure welds are completed in a single operation, as multiple welds can weaken the joints. After Abiy Ahmed removed METEC from the project in 2018, inspections revealed that many of METEC’s welds had been redone two or three times, creating a risk of failure.
Africa was increasingly compared to China in the late 1980s and early 1990s. Natural resources and cheap labor are becoming critical to the global economy, which teeters on the brink of a worldwide recession.
Like China, Africa boasts vast reserves of rare earth metals. These are essential for modern technologies, from smartphones to bombers and medical equipment to electric vehicles. Moreover, the cost of extracting these resources can be lower than in China — average wages across the continent are less than 50 cents per hour
Driven by either a desire to embezzle funds or sheer arrogance (most likely a combination of both), the military leadership of METEC refused to work as a subcontractor to the foreign technical director of GERD or to establish a joint venture with an international company.
Ethiopian engineers with experience in hydroelectric projects (something METEC largely lacked) initially recommended that the state-run military firm act as a subcontractor to the Italian construction company Salini, now rebranded as WeBuild.
METEC’s leadership rejected the proposal, insisting on handling the more complex electromechanical aspects of the project. When the engineers suggested that this would require one or more joint ventures with foreign turbine manufacturers and structural engineering consultants, METEC refused again.
In this context, Kifle Horo, reappointed by Abiy Ahmed as chief project engineer for GERD in late 2018, initially left the dam project in 2012. Reflecting on his experience, he remarked, «Most of METEC’s staff had never even seen a hydroelectric project. So, what do you expect from these people?»
Since Kifle’s return to GERD, he has enlisted three Chinese contractors and the French division of GE Hydro to oversee the project’s electromechanical components. Now, the race to complete the dam is fully underway.
In each of the two daily shifts, 3,000 cubic meters of roller-compacted concrete (RCC) are placed using a conveyor belt system connected to two plants on either side of GERD. The first two turbines, located on the right side of the dam when facing downstream, are now in the final stages of assembly, after which testing will commence.
The project site buzzes with activity, resembling a true anthill — Ethiopians working together for national development without regard to ethnic divisions.
Kinfe Dagnew, the former CEO of METEC, is now in prison. His overseer, Debretsion Gebremichael, remains one of the top TPLF leaders still at large in Tigray. The construction costs for GERD may reach €4 billion (compared to the initial budget of €3.3 billion), with former METEC suppliers filing lawsuits to enforce their contracts. However, €4 billion for over six gigawatts of generating capacity remains a good deal for Ethiopia.
The dam is a milestone in what could become the world’s first «green» accelerated economic development story. Ethiopia has no coal or gas power plants. The country’s electricity generation is already dominated by hydropower, with wind, geothermal, and solar energy projects being the only other developments completed or included in the national plan.
FOCUS ON THE ECONOMY, FOOLS!
From the perspective of Ethiopia’s development prospects, the most troubling aspect of the Tigray conflict is that Abiy Ahmed’s focus on economic policy appears insufficient.
The country is at the most challenging stage of its development trajectory — drowning in debt, deprived of foreign currency inflows, and under immense pressure from the World Bank and the International Monetary Fund (IMF) to implement what foreigners deem right for Ethiopia. This is a time when Abiy needs to dedicate all his energy and intellect to the economy, yet he seems unable to do so.
Ethiopia urgently needs jobs for its restless youth and expanded exports. The foundation for this already exists: a dozen investment zones are being developed across the country, modeled mainly on China’s approach. Hawassa, the first and largest zone, is already operational.
However, due to the ongoing civil war, the remaining industrial parks are unlikely to be filled quickly. Ethiopian factory wages, at about $60 per month, are comparable to those in China in 1992, when Deng Xiaoping’s southern tour ignited a boom in foreign direct investment (FDI).
Moreover, Ethiopia’s geographical location is better suited for logistics chains to Europe and the eastern United States. But without what the Chinese euphemistically refer to as «stability», Ethiopia’s FDI story will not succeed.
Equally concerning is the possibility that Abiy’s government, under pressure from multilateral institutions and bilateral aid partners, could prematurely liberalize, handing over profit streams to multinational corporations (MNCs) that should remain in Ethiopian hands.
This would be a mistake, opposite to any that could have been made by the Tigray-dominated federal government, which was obsessed with state ownership.
The telecommunications sector reform offers a clear example. The state monopoly, Ethio Telecom, is heavily indebted for unclear reasons. Early in Abiy’s tenure, there was talk of selling up to 40% of the company to a foreign investor.
The current plan under discussion involves selling over 40% of Ethio Telecom and, additionally, auctioning off two new, entirely foreign-owned mobile licenses to companies such as Vodafone and Orange.
Such a strategy makes little sense from a developmental standpoint! With a GDP per capita of around $900, Ethiopia is at the start of a cycle where mobile telephony could become a goldmine, much like what happened in China and other rapidly growing nations.
What the current Ethiopian government is considering reeks of juvenile desperation and is entirely incompatible with the developmental agenda that has been in place since 1991. At this stage, China did not sell its public utility enterprises to foreigners. Instead, it introduced competition in the domestic market, ensured company growth, and then sold just five percent of its equity to Vodafone. This is the approach Ethiopia should adopt.
Unfortunately, Abiy’s administration seems disconnected from the data and research that once made the TPLF-dominated government an effective developmental state. Abiy shuttles back and forth by helicopter, holding numerous meetings, but what does he truly know? What Abiy urgently needs to regain is the level of intellectual rigor that characterized the Tigrayans.
Meles Zenawi made Ethiopia a leader among African developmental states by reading extensively and mastering key areas of agriculture, manufacturing, finance, and international relations. If Abiy and his advisors aim to propel Ethiopia forward at the pace it is capable of, they need to do the same.
