The Grand Ethiopian Renaissance Dam, or GERD. Reuters
The Grand Ethiopian Renaissance Dam, or GERD. Reuters
The Grand Ethiopian Renaissance Dam, or GERD. Reuters
The Grand Ethiopian Renaissance Dam, or GERD. Reuters

Ethiopia's Abiy seeks to allay Egyptian and Sudanese fears over GERD


Hamza Hendawi
  • English
  • Arabic

Ethiopian Prime Minister Abiy Ahmed sought on Thursday to allay Egyptian and Sudanese fears over a hydroelectric dam Addis Ababa is building on the Nile, assuring the two downstream nations that they stood to benefit from the $5 billion project.

In a two-page statement, Mr Abiy listed the benefits of the Grand Ethiopian Renaissance Dam, or GERD, to his Horn of Africa nation, saying the power it will generate will transform the lives of 60 million people who now live without electricity.

The statement offered no real changes to Ethiopia’s long-standing position on the GERD nor did it make fresh proposals to break the stalemate in a decade of negotiations between the three countries over the dam.

However, its release comes days after regional news reports spoke of Ethiopia preparing for a third annual filling of the dam, which is located about 20 kilometres from the Sudanese border.

The Ethiopian leader wrote that the dam’s regulation of the flow of the Blue Nile would shield Sudan from water shortages, enable it to better run its own hydroelectric dams and spare it the destruction of floods.

He said Egypt would benefit from water conservation through the dam instead of losing billions of cubic metres of water to evaporation.

The dam, he added, would also prevent future “spillages” from overtopping Egypt’s Aswan dam.

The Grand Ethiopian Renaissance Dam. Reuters
The Grand Ethiopian Renaissance Dam. Reuters

Egypt and Sudan have for years been trying in vain to persuade Ethiopia to agree to a legally binding deal to govern the filling and operation of the GERD and to protocols to deal with future droughts.

Ethiopia has maintained that recommendations alone should suffice, declaring its handling of its resources a matter of national sovereignty.

The Blue Nile, whose source is on the Ethiopian highlands, accounts for about 85 per cent of the Nile's water. The remainder mostly comes from the White Nile, which originates in Central Africa.

The three countries last held a round of negotiations on the GERD in April last year, but talks broke down when Sudan and Egypt began trading acrimonious accusations with Ethiopia.

Egypt has long maintained that the dam, which is more than 80 per cent complete, could significantly reduce its share of the Nile’s water, wiping out hundreds of thousands of farming jobs and upsetting its delicate food balance.

Sudan says that without a deal with Ethiopia, the GERD could cause destructive flooding and disrupt the operation of its own power-generating dams.

“The … GERD is a good example that is demonstrative of the principle of co-operation,” My Abiy said.

“The dam … holds multiple benefits for the two downstream countries of Sudan and Egypt, as well as the East African region at large.

“It is time for our three countries of Ethiopia, Egypt and Sudan to nurture the narrative towards building peace, co-operation, mutual coexistence and development of all our people without harming one another.”

Ethiopia’s first two annual fillings were carried out without prior notification, causing Egypt and Sudan to vehemently protest against Addis Ababa’s “intransigence” and condemn its unilateral action.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Updated: January 20, 2022, 11:02 PM