Ethiopia recently inaugurated Africa’s largest hydro-electric project, the Grand Ethiopian Renaissance Dam (GERD), expected to generate 5,150 megawatts of electricity. Remarkably, GERD was financed almost entirely from within Ethiopia, showing how developing countries can fund mega-projects without relying on external actors. Self-reliance is not only financially feasible; it also safeguards a nation’s political and developmental autonomy.
Although a small portion of GERD’s cost – mainly turbines and electromechanical systems – was financed through China’s Export-Import Bank, the Commercial Bank of Ethiopia supplied the bulk of funding, covering about 91 percent through domestic loans. The model also encouraged public participation through diaspora contributions, civil-servant wage deductions, bond sales and donations. Restricting foreign financing insulated Ethiopia from heavy reliance on multilateral lenders and shielded it from external conditionalities.
By involving the public directly, Ethiopia strengthened national ownership of the project and demonstrated that development is not solely the responsibility of government, but a shared national commitment.
Decades ago, Tanzania embraced Socialism and Self-Reliance, a policy that committed the government to fund development projects while citizens contributed through domestic labour and community self-help initiatives. Today we may question socialism’s relevance, but the Arusha Declaration endures as both an economic and ideological stance against dependency. And although its outcomes are debated, the approach preserved sovereignty over national priorities and protected our development policy from external interference.
Tanzania’s recent megaprojects offer mixed results on the self-reliance scorecard. By financing the Nyerere Hydroelectric Power Project primarily through domestic resources, Tanzania has revived the spirit of self-reliance that marked the 1960s and 1970s. In contrast, the SGR railway project relies heavily on external financing and loans, increasing debt-servicing costs, exposing the country to foreign-exchange risks, and potentially undermining our long-term development strategies.
For Tanzania, GERD’s financing model is not new but a reminder of our own past. As we gradually rethink future project financing, pension funds, local banks, diaspora bonds, and private savings mobilisation offer viable options. Domestic financing can ease pressure on national budgets and strengthen public ownership of major projects, ensuring development remains aligned with national priorities.
The founding leaders of independent African states who created the Organisation of African Unity (OAU) were guided by pan-African ideals, calling for political and economic cooperation to build a strong, self-determined continent. The GERD reflects those principles, as its benefits cross Ethiopia’s borders to enhance regional power stability and spur industrialization. Even Tanzania will receive power from the dam, showing how Ethiopia’s self-reliance advances collective development.
With the Renaissance Dam, Ethiopia – just as it once successfully resisted colonisation – offers a powerful reminder that self-financing is achievable, sovereignty is defendable, and developing countries can mobilise their own resources to drive development.
