A Billion Dollar Project
Ethiopia in 2010, a country with a GDP per capita of 350 USD, planned to build a hydroelectric power dam costing approximately 5 Billion US Dollars, roughly 16% of the country’s GDP at the time, with a planned capacity of 6000MW the biggest Hydropower project in Africa. As of September 2023, the dam is filled, according to Ethiopian officials. This raises the question of how Ethiopia managed this monumental undertaking. That represents a success regarding SDG 7 Clean and Affordable Energy, 9 Industry Innovation and Infrastructure, and 17 Partnership for the goals. Although the dam itself is not without controversy, it provides several key learnings that we can leverage to better work towards meaningful change in the future.
To see what we can learn, let’s look at what happened.
Common interest, common ownership
The country then struggled with severe electricity shortages and a lack of network coverage. Many people in the country had a strong want for electricity, especially companies that were struggling with electricity outages. Making energy policy a matter for everyone. Capitalizing on this, the Ethiopian government embarked on a fundraising marathon, collectively raising approximately 450 Million USD from the Ethiopian population. Government employees donated months’ worth of salary, and diaspora, local business people, and everyday citizens purchased GERD bonds from the government. Interestingly, bonds could be bought for minimal amounts, making them accessible to everyone. Other than raising a significant of money, this created a shared sense of ownership and a lot of political will to execute the project swiftly.
Key Lesson:
- When thinking of problems to tackle, pick an issue or way of communicating it directly relevant to everyone’s day-to-day life.
- Make it as easy as possible for people to participate meaningfully and communicate precisely how people should participate.
Induced demand
An often underappreciated aspect of this project is its effect on Foreign Direct Investment and local investments in industry. Having created the electrical capacity that made these investments feasible in the first place. Before, investors didn’t even consider investing in the region due to a lack of infrastructure. The question has become, “What other projects is the government realizing? How can I get access to the electricity for my project ?”
Key Lesson:
- When aiming for specific change, build the ecosystem where such change can occur more easily first.
The 4-minute mile effect
Even though Ethiopia raised significant funds from its population, a multibillion-dollar gap remained. From the outset, it was believed that the project’s scope far exceeded what the country was capable of. Similarly, It was thought that running a mile in less than 4 minutes was impossible until 1954 when Sir Roger Bannister broke that record. After that, it only took 46 days until the record was broken. Similarly, it was one of the first times that an African nation went above and beyond, demonstrating the willingness and financial commitment to achieve a project of this scale. It was met with the financing necessary to realize its ambitions. The remaining funds came from a consortium of international lenders and investors. Interestingly, the project is funded without developmental aid funding.
Key Lesson:
- When aiming for a large project that exceeds your capabilities, demonstrate that you can grow far and above and beyond to attract the support necessary.
