Mega-dam to Test AfDB’s Will

Ikal Angelei and Terri Hathaway
Thursday, May 14, 2009

Originally posted in Business Daily Africa

Now gathered in Senegal, the African Development Bank hopes to emerge from its annual meeting as the premier financial institution leading the continent out of two major crises: the global financial crisis and the chronic underdevelopment of Africa’s infrastructure.

Fishermen in Lake Turkana: Filling the dam’s reservoir will drain Lake Turkana, the world’s largest desert lake.
Fishermen in Lake Turkana: Filling the dam’s reservoir will drain Lake Turkana, the world’s largest desert lake.
But the Bank’s consideration of Gibe III Dam in Ethiopia will test whether the Bank is really ready to lead Africa on the road to progress. Bank support for the € 1.55 billion dam would reward a closed-door contract process that can inflate prices, create poverty and enable corruption.

To make matters worse, support for the Gibe III Dam would fuel food insecurity and armed conflict in East Africa, and pave the way for future Bank involvement in low-quality infrastructure and corrupt mega-deals.

Bank support for Gibe III Dam would burden East Africans with a costly infrastructure scheme and tarnish the Bank’s reputation as a leader of Africa’s development.

Set to be Africa’s tallest dam, Gibe III was largely unknown during the first two years of construction until its scandalous details slowly came to light. The Ethiopian government pushed aside its own environmental, procurement and consultation requirements in order to fast track the project.

Bank funding would require the financial institution to overlook the Ethiopian government’s illegal actions. Ethiopians wishing to hold their government or the Bank accountable face a combined challenge of limited project information and fears of government retaliation.

The government’s intolerance for public debate deepened after the January passage of a new law criminalising human rights advocacy by most local NGOs.

Since the Bank began its preparation toward project funding, due diligence has been unacceptably poor and violations of Bank policy are mounting.

Bank funding would also violate the Bank’s procurement rules and send a dangerous signal to African governments that the Bank will support contracts awarded any which way, allowing corrupt practices to gain a further foothold in Africa’s lucrative infrastructure sector.

The project will severely affect one of East Africa’s most remote and neglected corners.

The isolated, local economy which depends on the lower Omo River and Lake Turkana is the only safety net for 500,000 farmers, herders and fishers. The Gibe III Dam threatens to destroy their livelihoods and the region’s natural resources, already under attack by climate change.

Filling the dam’s reservoir will drain Lake Turkana, the world’s largest desert lake, stressing its fragile ecosystem to the brink of collapse. The dam will also lead to increased food aid dependency and resource conflicts among the region’s many well-armed tribes.

This unravelling could destabilise the Ilemi Triangle, an isolated and highly volatile region where Ethiopia, Kenya and Sudan have disputed national borders for decades.

Ethiopia’s government is desperately betting on the Gibe III Dam as a new source of export revenues and to support its own electricity expansion.

But the prestige project will likely rebuild Ethiopia’s unsustainable debt faster than development. An assessment of the project’s costs and predicted revenues has still not been completed.

The project’s closed-door, no-bid contract could be swindling the government out of a far more cost-effective deal. Sufficient environmental and social mitigation have not been included in the project’s cost.

Poor planning is already leaving Ethiopia in the dark, as two other dams have encountered construction delays due to problems which should have been detected during project preparation.

Ethiopia will soon depend on hydropower for well over 90 per cent of its electricity, but drought and climate change will make this a risky energy portfolio.

The project has already triggered two complaints to the AfDB’s investigative unit, after more than four months of questions to Bank staff produced little results.

The Bank is close to fumbling what could be its greatest opportunity so far to demonstrate its regional leadership.

In order to redeem itself, the Bank will need to halt its efforts to navigate the project’s discrepancies through procedural loop holes, and start making efforts to ensure that the project’s weaknesses are addressed head on.

As the Bank takes on a leading role in larger and more costly dams and other infrastructure, it should raise the bar on its standards for sound project preparation and due diligence.

Ms. Angelei is the coordinator of Friends of Lake Turkana based in Turkana.

Ms. Hathaway is the Africa programme director of International Rivers and is based in Cameroon.