Meles casts the tax net wide for his dam

The Indian Ocean, No. 1316, September 17, 2011

Perhaps Prime Minister Meles Zenawi would like to go down in history as the man who initiated the gigantic mobilization to finance the Great Renaissance Dam. This ambitious plan to build a hydro-electric dam on the Blue Nile in the west of the country should reach a capacity of 525oMW within the next few years, for a cost of € 3.5m to € 4m. To make up for the reluctance of the international donors and also to stimulate national pride, he spurred a vast operation to gather funds by selling treasury bonds. In fact, it is very much like enforced savings: with an annual inflation rate nearing 40% these treasury bonds yielding an interest of 5.5% to 6% are of no interest whatsoever. Those who most enthusiastically put their hands in their pockets are precisely the accredited contributors to the EPRDF (ruling coalition) who are fully aware that it is the price to pay to stay in the government's good books.

Meles Zenawi's private lender. During a ceremony held in Addis Ababa on 11 September to thank the leading acquires of treasury bonds, Meles Zenawi bestowed particular satisfaction to the Saudi-Ethiopian magnate Mohammed Hussein Al Amoudi. This EPRDF partisan who was already the main contributor to the organization's congress last year (ION 1285) undertook this year to acquire bonds for 1.5 billion Birrs (€ 64 million). This makes him the largest private donor in Ethiopia. The other large contributors are businessmen and companies close to the regime, like Samuel Assefa, head of Sunshine Construction, a company in whose future Azeb Mesfin, the Ethiopian Prime Minster's wife has taken a substantial interest (20 million Birrs or € 856,000); Saber Argaw of Al-Sam (22 million Birrs) and Tekleberhan Ambaye of the construction company Tacon (21 million Birrs). Also on the list are the Oromia Coffee Cooperative Union (Ocfcu) headed by Tadesse Maskela (20 million Birrs), the holding company EFFORT affiliated to the TPLF (hard core of the ruling coalition) which released 157 million Birrs (€ 6.7 million) and Tiret, the investment fund linked to Amhara national Democratic Movement (ANDM, member of the EPRDF) for 25 million Birrs.

Highly regulated “voluntary” contributions. In each area of activity, overseeing ministers meet once or twice a month with heads of companies to hold “collection parties” to take a stock, complete with detailed figures, of the purchases of the treasury bonds issued by the authorities. This recently gave rise to a bitter-sweet exchange of letters between the government and the association of entreprenures in the housing sector. The government has asked them to invest 200 million Birrs (€8.5 million), but finally they managed to beat the figure down and at the beginning of August the 53 entrepreneurs in the sector collected 121 million Birrs (€ 5.1 million). For their part, the employees of the federal government contributed from their salaries to the tune of 205 million Birrs (€ 8.7 million). According to various tallying witness reports, these contributions most often result from strict directives from the top officials in the administration, from which the employees are unable to opt out. And those who drag their feet beware! The Vice President of the Benishangul Gumuz Regional State, Sebsible Nesatse, and several civil servants in this administration were dismissed from their posts last month. Officially, it was because of poor management and even corruption, but certain sources see this as a purge of officials who oppose the construction of the Great renaissance Dam in their region.

A collateral victim. Environmental NGOs and Egypt are making strong protests against this project. In addition, the Norwegian consulting company Norplan was wrong-footed. Its engineers are working on the Mandaya dam (with a capacity of 2000 MW) on the Blue Nile, which is situated upstream of the Great renaissance Dam and would be drowned by the water held back. According to the Northern European magazine Development Today, Norplan has instigated a study to persuade the Ethiopian government to reduce the height of the renaissance Dam by 20 to 25 meters from the currently planned 145 meters. This would reduce the dam's electricity generating capacity by 15% to 185, but would enable the Mandaya dam to be completed. Work on the later dam is currently suspended.