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dam-l Large Dams, debt & Poverty in Africa/LS
Another submission to the World Commission on Dams by a South African NGO.
The Impact of Large Dams on Debt and Poverty in Africa
Proposed Submission for the WCD Africa Hearings in Cairo
Alternative Information and Development Centre - Johannesburg
The African continent is caught in a debt trap in which countries are
paying substantial amounts in attempting to service their debts, yet
their total debts are getting larger. There is a transfer of funds
from Africa to the developing world that, in 1996, amounted to Africa
paying out $1.31 in debt service for every $1 received in aid. In the
face of growing indebtedness, debt service charges are on the increase
and the trend in aid grants is on the decline. Africa's share of trade
in the world economy has also plummeted in the last 20 years. In
short, the problem is getting worse.
This debt crisis is a major contributor to worsening poverty on the
continent. The 260 million people in sub-Saharan Africa are subsisting
on less $1 a day, half lack access to clean water and health services,
a third of the children are not at school and life expectancy is only
53 years.
The impact of financing of mega-projects, including financing of large
dams, on overall indebtedness and poverty should therefore be of
critical concern. Typically, large dams in Africa are primarily
financed by a combination of loans from the World Bank and regional
and national agencies, funds and banks in the developed world. These
loans are generally repayable in US $ or other developed-country
currencies.
The construction of the dams entails a high degree of foreign exchange
leakage. Equipment and technology is imported from developed
countries. Large parts of salary bills paid to managers, technical
experts, engineers and skilled workers are returned to the employees'
countries of origin. Profits made by the construction and engineering
companies are also repatriated to the companies' home countries.
This transfer of funds and loss of foreign exchange is then compounded
by the repayment of the loans. The loans are repaid by governments
either through government budgets, in which case the repayments impose
further constraints on social spending over and above those caused by
the servicing of other debt, or by means of passing on the costs to
citizens directly in the form of increased prices for water or
electricity. These increases can be of a magnitude that puts basic
services out of the reach of the poor. In the case of the Lesotho
Highlands Water Project (LHWP), the construction of the first phase of
the project entails a five-fold increase in the cost of raw water to
Gauteng and surrounding provinces in South Africa. This cost is being
passed on to consumers in the form of increased tariffs.
It could be argued that these to date largely unconsidered costs may
be outweighed by the benefits accruing from dams. However, there are a
number of factors impacting on the purported benefits of large dams in
Africa. First, the benefits realised from dams in Africa have rarely
matched the benefits initially claimed. For example, the sedimentation
rates of the Aswan and Gariep Dams were underestimated. The Orange
River Development Project (ORDP) fell well short of the predicted
benefits for irrigated agriculture.
Second, the construction of dams in Africa has been accompanied by
cost overruns. The finance for the Diama and Manatali Dams in Senegal,
Mauritania and Mali was spent before the planned power station could
be built. The ORDP cost approximately four times more than initial
estimates. Reasons for cost overruns include unplanned design changes
and mitigation measures in the face of unexpected problems. For
example, additional construction is required to deal with erosion
caused by transferred water from the LHWP. The high cost of foreign
technical assistance, project delays and inflation are other factors.
These cost overruns are compounded by repayment of loans denominated
in foreign currency in the face of devaluing local currencies.
An additional cost that needs to be considered is that related to
corruption. The alleged involvement of 12 consortia in the recently
exposed corruption in the LHWP strongly suggests an endemic problem
for which client governments and citizens ultimately foot the bill.
Third, the building of large dams in Africa has resulted in large
social and environmental costs, both anticipated and unexpected.
Social costs include, on the one hand, the more predictable problems
of resettlement and loss of land and, on the other, unexpected
consequences such as wars. Agricultural problems arising out of the
Manatali Dam were a major reason behind conflict between Senegal and
Mauritania. A key feature of the South African invasion into Lesotho
was their lethal attack on a Lesotho army barracks overlooking the
Katse Dam.
Environmental consequences include the destruction of mangroves such
as those at the mouth of the Zambezi due to the impact of the Kariba
and Cahora Bassa Dams on river flow. The proposed Bui Dam on the Black
Volta is a threat to the black hippopotamus and the Epupa Dam, if
built, will result in the submergence of the Epupa Falls and the
ecosystem in the spray of the falls.
Fourth, in many instances, the social and economic costs have a
negative economic and developmental impact. The spread of biting
blackfly in the ORDP affected livestock farmers and the submerging of
the Epupa Falls will result in the loss of income-earning potential
from tourism.
Fifth, and of particular importance given the prevailing climate of
debt and poverty, benefits have tended to accrue to the better off
whereas costs have been borne disproportionately by often already poor
affected communities and the poor in society more generally.
Communities in Senegal are suffering from the dramatic increase in the
incidence of malaria. The building of dams in Africa has led to the
spread of schistosomiasis or bilharzia. Communities removed from dam
sites have lost land and income-earning potential and those downstream
have been affected by a lack of water for health and agricultural
needs and changes in the river fish population.
Sixth, the costs and benefits of alternative forms of water supply,
irrigation and energy need to be taken into account. Water demand
management, the building of small dams, developing alternative forms
of electricity supply and using land that would otherwise be submerged
for agriculture and tourism will generally prove to be more
appropriate in meeting the needs of the poor, creating employment and
initiating development.
The significant and substantial costs of large dams on the poor in
Africa, within the context of increasing debt and worsening levels of
poverty, suggest that the debate on dams needs to place more emphasis
on dam financing, its relationship to debt and the impact of large
dams on the poor.
Should a more detailed submission be requested, it will include an
expansion of the above arguments, incorporating available data and
information. It will argue the case for more research into dam
financing, the relationship between dam financing and debt and the
costs and benefits of large dams with specific attention to the poor.
It will stress the need for these factors to be taken into account in
all decision-making processes in relation to large dams.
George Dor
60 Isipingo Street, Bellevue East 2198,
South Africa
Tel: (27) (11) 648 7000
Email: george@sn.apc.org
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Lori Pottinger, Director, Southern Africa Program,
and Editor, World Rivers Review
International Rivers Network
1847 Berkeley Way, Berkeley, California 94703, USA
Tel. (510) 848 1155 Fax (510) 848 1008
http://www.irn.org
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