Dam Rising in Ethiopia Stirs Hope and Tension

GUBA, Ethiopia — There is a remote stretch of land in Ethiopia’s forested northwest where the dust never settles. All week, day and night, thousands of workers pulverize rocks and lay concrete along a major tributary of the Nile River. It is the site of the Grand Ethiopian Renaissance Dam, the continent’s biggest hydropower plant and one of the most ambitious infrastructure projects ever in Africa.

Ethiopia is a poor country, often known best for its past famines, but officials say the dam will be paid for without foreign assistance — a point of national pride. Computer-generated images of the finished structure are framed in government offices, splashed across city billboards and broadcast in repeated specials on the state-owned television channel.

“We lean on the generousness of the rest of the world,” said Zadig Abrha, deputy director of the dam’s public mobilization office. “So there is a conviction on the part of the public to change this, to regain our lost greatness, to divorce ourselves from the status quo of poverty. And the first thing that we need to do is make use of our natural resources, like water.”

Ethiopia, one of the world’s fastest-growing economies, has poured its resources into a slew of megaprojects in recent years, including dams, factories, roads and railways across the country.

But its strong, state-driven approach has been criticized for displacing rural communities, elbowing out private investors and muzzling political dissent. The Renaissance Dam, its biggest project, has met with resistance even outside Ethiopia’s borders, setting off a heated diplomatic battle with Egypt that, at one point, led to threats of war.

In Ethiopia, Africa’s second most populous nation, constant power shortages stifle economic growth. The hydropower plant is expected to bring the country’s electricity generation to more than triple its current capacity. Aside from a $1 billion loan from China for a transmission line, the government projects a $4.02 billion cost for the dam, with more than $1.3 billion already spent



Near the border with Sudan, the dam is inching skyward as workers apply layer after layer of concrete that will eventually create a reservoir covering nearly 650 square miles. About 8,500 workers live at the project site, served by several cafeterias, a market, a barbershop and spotty Wi-Fi access. Giant floodlights keep construction going around the clock, and employees often work the whole week through.

From the very beginning, this relentless drive has put Ethiopia at odds with Egypt. The Renaissance Dam is on the Blue Nile, a tributary that contributes most of the water flowing into the Nile River, heightening concerns that it could threaten Egypt’s most vital natural resource. Fears of armed conflict surfaced during the brief tenure of Egypt’s former president, Mohamed Morsi, who said last year that “Egyptian blood” would substitute for every drop of lost water.

But under Egypt’s current president, Abdel Fattah el-Sisi, the icy relationship between the two countries has begun to thaw. Ethiopia’s prime minister, Hailemariam Desalegn, and Mr. Sisi had a cordial first meeting in June, and water ministers from Ethiopia, Egypt and Sudan met for renewed discussions in late August. Egypt’s new foreign minister, Sameh Shoukry, set a diplomatic tone during a visit last month to the Ethiopian capital, Addis Ababa, declaring “a new phase of our relationship based on mutual understanding, mutual respect and a recognition that the Nile binds us.”

Ethiopia’s biggest obstacle to finishing the dam is not geopolitics — it is money. The project is overseen by Ethiopian Electric Power, a state-owned utility that is helping finance the project with its own revenue and loans from state-owned banks. Though the government may raise more money by selling bonds on global markets in the coming years, the current tactic of borrowing from state banks is draining available credit. That could squeeze private enterprise in a country that already has the world’s sixth-lowest rate of private investment as a percentage of G.D.P., said Lars C. Moller, the World Bank’s lead economist in Ethiopia.

“For every dollar of credit and every dollar of foreign exchange the project gets, there’s less for the rest of the economy, including the private sector,” he said.

“But in the long term, the investment is likely to pay off well,” Mr. Moller added, noting that Ethiopia’s plan to sell excess energy to neighboring counties could bring in about $1 billion in annual export revenue starting in 2021, four years after the dam is scheduled to be completed.

Ethiopia’s state finance minister, Abraham Tekeste, said it was a price worth paying. “We know that we are sacrificing in the short term, but this is for a long-term objective,” he said. “We don’t see any contradiction.”

More than $357 million spent so far has come from Ethiopians, both domestically and abroad, who have been encouraged to donate money or purchase bonds, according to Mr. Zadig.

Workers on the government payroll, some of whom make as little as $32.68 per month, have been pushed to buy bonds worth a full month’s salary every year through a system that deducts straight from their paychecks



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