Tuesday, July 16, 2013

Ethiopia: Renaissance Dam leaves diaspora cold

From Africa Energy Intelligence

n�703 - 16/07/2013

Renaissance leaves diaspora cold

Efforts by Addis Ababa to get Ethiopians living abroad to help finance a huge dam seem to be falling flat.
Ethiopia issued a bond in 2011 to drum up funds from Ethiopians living overseas and called it the �diaspora bond.� Earmarked for the construction of the 6000 MW Grand Renaissance Dam (GRD) on the Blue Nile that is due to cost $4.8 billion the issue hasn�t caught on. Ethiopian embassies abroad which were asked to collect the money have failed to stir much excitement about the bonds. Their interest rate is low, between 1.25% and 2% but the interest is guaranteed. Another bond was issued in 2008 by theEthiopian Electric Power Corporation with a guaranteed annual rate of between 4 and 5%.

According to Ethiopian embassy sources, only a few hundred thousand dollars had been raised by mid-2013 from major communities of Ethiopians living in Chicago and San Diego in the United States and Oslo in Norway. In 2011, Bereket Simon, who was then Ethiopia�s communications minister, announced that $400 million had been raised for the EEPCO bond and other infrastructure programs launched by the government. But that figure included money from Ethiopian civil servants.

As a result, most of Ethiopia�s funding for Renaissance will have to come from the government (at least $3 billion). The remainder is to be put up by Chinese banks. In 2011, the National Bank of Ethiopia ordered commercial banks to buy government bonds to the equivalent of 27% of their loans.

The failure of the appeal to the Ethiopia�s diaspora to dig into their pockets hasn�t discouraged Nigeria from doing likewise.

Last May, vice president Namadi Sambo announced in Toronto the Abuja was issuing a bond worth several billion niaras to get Nigerians living abroad to finance infrastructure in power projects.

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