TIGRAI Online

Impacts of Grand Renaissance Dam on Economic Development in Ethiopia

By Teshome Adugna(PhD) e-mail:teshomea2002@yahoo.com
Tigrai Online, September, 03, 2013

1. Introduction

A number of agency such as Oakland Institute, Anti-dam NGOs, Survival International, International Rivers, and the Friends of Lake Turkana, and with the support of Human Rights Watch are doing all possible efforts to stop the construction of hydropower dam in Ethiopia. I think these organizations will survive and mobilize dollar when Ethiopian suffer by poverty. But today all Ethiopian has recognized that poverty is their number one enemy. Due to this fact several efforts have been undertaken to attack

poverty in Ethiopia through sustainable economic development policies and strategies. One of the activities that have been done is the contraction of hydropower dam. During the last ten years the country managed to construct six hydropower dams(Including Gilgel Gibe III) that provide additional 3331 MegaWatt(MW). The constructions of these dams have increased the availability of energy supply by close to six fold. To meet the current annual 34 percent growth rate of energy demand in the country the Government of Ethiopia (GoE) has started the new dam which is known as Ethiopian Grand Renaissance Dam (EGRD). This dam expected to produce 6000 MW; it will be the largest hydroelectric power plant in Africa when completed, as well as the 10th largest in the world. The total cost of the EGRD is about $ 4.7 billion which will be covered by Ethiopia Government and the public at large. The main purpose of this brief article is to present the impacts of the EGRD on economic development in Ethiopia.

2. Impacts of Ethiopian Grand Renaissance Dam on Economic Development

One of the factors that play the broad and wide range in the economic development is the provision of energy supply. The construction of Renaissance dam directly or indirectly will affect many parts of the economy. The first and the direct impact of EGRD is to increase the energy supply from current 2000MW to 8000MW. In other word it increases the Energy supply by 400 percent. This improves the quality and quantity of energy available in the country. According to various study a unit percent increase in energy supply increases economic growth by at least one percent. Therefore, when renaissances dam start operation the national economy increase by an additional 4 percent. In other word the nation manages to produce an additional of a billion USD National Products (Output).

The availability of energy supply increase school enrollment and health service facility in the country. It facilitates the application of modern technology in health and education sector that increase health and education coverage and access in the country. The EGRD provide an additional of two million Euros a day by selling electricity to neighboring countries. Such benefit of the dam diversifies export earnings of the country and at the same time reduces the shortage of foreign reserve. It provides employment opportunity that increases the welfare of the nations at large. Currently more than 5000 people are working in EGRD. When the project completed it facilitate for the establishment of different types of enterprises that provide more employment opportunity in the future. In addition to providing employment opportunity it contributes for the structural change of the industrial sector in the country. It also improves the water storage capacity of the country. When the project completed the dam will hold up to 62-67 billion cubic meters of water, which increase the current water storage capacity of the country by more than 100 percent.

3. Summary

According to the latest World Bank report, Ethiopia is paving the way to join the middle income by 2020. In order to maintain such economic development the country must maintain proper and efficient utilization of its rich natural resource. Ethiopia white gold is water that provides various contributions for economic development. The construction of EGRD offer a number of impacts on the Ethiopian economy: increase energy supply, provide additional foreign currency, increase water storage capacity, regional cooperation/integration and industrial development. Such contribution of EGRD accelerates the reduction of poverty in the country. There are no international laws that say Ethiopian must die in poverty.  In all our capacities we have to put all our efforts for the completion of the EGRD that change the economic structure of the nation for future prosperity.

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