How a New Dam Gives Ethiopia Power

The Grand Ethiopian Renaissance Dam (GERD) will soon be officially inaugurated. With an estimated $5 billion price tag, the dam was financed by Ethiopians through the bonds they sold, the money citizens contributed, and public spending. As an immense structure, holding 67 billion cubic meters of water, the dam’s goal is to bring light to the 60 percent of the population that is “suffering in darkness.”

My red arrow points to GERD’s location:

The Impact of Electrification

Instead of a slew of statistics, one women’s story can do the best job of showing the impact of electrification. After accessing electricity, this Tanzanian food kiosk owner could close her shop at midnight rather than 6 pm. With her new refrigerators, she can preserve food, sell cold soft drinks, and increase her income. Late at night, in newly lit village streets, she feels safer walking home. Meanwhile, power at home means her children can do their homework after dark. Similarly, the neighbors that established and grew businesses could become her customers.

So yes, electrification boosts business activity, facilitates refrigeration, creates safety, and supports education.

But it’s not quite that easy.

Our Bottom Line: The Invisible Side of Electrification

Through a recent World Bank blog, researchers explained what a successful electrification program requires. They started by telling us that an estimated half billion Africans are unelectrified. However, to light them up by their 2030 goal, strategies need to target the appropriate goals.

Businesses

Instead of the number of connections, the goal has to be “meaningful economic activities.” As they point out, there is no high income low energy country. Africa needs to provide affordable and reliable electricity to businesses.

Energy and income correlate:

Infrastructure

Called complementarities, roads, and digital connectivity should interface with electrification. As a result, if GERD has the sole goal of lighting homes, it will not achieve its economic potential. But to do so, it needs an entire infrastructure.

The last ingredient is patience. It will take time for Ethiopia to enjoy the benefits of GERD.

My sources and more: Thanks to the BBC to Reuters and to Semafor for making a long dam story quite brief. Do also look at this econlife to see why Egypt is so unhappy with the dam. And finally, the best analysis came from the World Bank blog.

Please note that several of today’s sentences were in a past econlife post.