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Tensions Along The Nile: Economic Developments And Trade-Offs

Authors: Nicholas Tan and Aryaman Belgaumkar Region Head: Hu Si Ying

Editor: Praharsh Mehrotra

Illustration by Chen Hsuan Ju


In this article, we discuss the rising conflicts along the Nile focusing on the disputes between Egypt and Ethiopia, the economic benefits of dam development as well as the detriments for riparian nations. We examine how dam developments bring about significant opportunities for African nations, which have optimal conditions for renewable energy, and how energy provision increases productivity and growth in African nations. Finally, we discuss the possible future directions that riparian nations can implement to overcome the disputes in light of conflict of interests.


The Nile is often revered in the region of Africa and is synonymous with locals. It is a symbol of livelihood and has historical significance- it is often lauded as the cradle of one of the oldest civilisations: Egyptian civilisation. The Nile river is one of the largest in the world and it stretches across the vast nations of 10 African countries- Burundi, Tanzania, Rwanda, the Democratic Republic of the Congo, Kenya, Uganda, Sudan, Ethiopia, and South Sudan as well as Egypt (National Geographic, n.d).

The Nile has remained significant all this time and provides livelihoods through fishing and irrigation and has estimated to provide irrigation and hydroelectric power worth USD 7-11 billion (Whittington, Wu , & Sadoff, 2013) which is a gargantuan amount given that a number of riparian countries are judged to be lower income countries (Nile Basin Water Resources Atlas, n.d). That said, the amount of economic value cannot be easily ascertained accurately as it differs person to person. For instance, farmers have differing values on water as an input cost as it hinges on the final crop value. For instance, large scale farmers who plant lower value crops may then have lower economic value for water compared to the farmers who produce organic/high-value crops (Whittington, Wu , & Sadoff, 2013).

Egypt has long received preferential treatment that dates back to colonial periods. Treaties that have been established long ago in 1929 and 1959 granted Egypt preferential treatment and access over the Nile. The treaties were a result from the agreements that were established between the then colonial power Great Britain of Egypt and East Africa. These treaties allowed Egypt to have a significant control over the Nile and as such could dismiss the other needs of other riparian nations such as Ethiopia which provides 70%-80% of the water in the Nile (Dash, 2016).

For instance, Egypt began developments of the Aswan dam in the 1960s and this dam although brought about significant benefits to the nation also had other cascading effects onto other riparian nations such as causing an overall decrease in the fertility of deltas along the Nile, other effects include the overall decline in fish volume and potential destruction of wetland habitats (Hughes, 2009). Now, other riparian nations have begun ideas of dam creation for economic progress igniting the anger of nations such as Egypt and Sudan. This article primarily discusses the conflict between Ethiopia and Egypt over Ethiopia’s new Grand Ethiopian Renaissance Dam (GERD).

Source: World Bank

Figure 1

Economic Implications: Ethiopia And Egypt

Ethiopia is Africa’s second largest nation and one of the poorest with an estimated GDP Per Capita of $772 (refer to Figure 1). As such, developmental growth remains a key strategy in Ethiopia’s aim to reduce poverty and to reach lower-middle income status by 2025. Ethiopia remains a nation that faces severe power shortages especially in rural areas where up to 80% of the population lives (Getie, 2020).

Electricity remains the backbone of any economy and has a significant impact on job creations and productivity (Energypedia, n.d) as such it is a significant factor to help propel Ethiopia towards their goal. Given the infrastructure constraints, one of the strategies adopted by the Ethiopian government is the construction of the GERD which once completed will be the largest hydroelectric dam in Africa and 8thin the world (The Conversation, 2018). Given Ethiopia’s strategic location along the Nile, it has the optimal conditions for hydroelectric dams. Estimates have shown that it will have the capacity to generate 60 00MW of electricity (The Conversation, 2019) which is a significant step up considering the nation only has the capacity of about 2300 MW (Usaid, n.d).

Egypt on the other hand has been a recipient of the benefits of renewable energy from previous endeavors with the Aswan dam. Reports have suggested that the Aswan dams have contributed to over 7.1 billion EGP or added over 2.7-4% to the Egyptian economy in 1997 (Tol, Strzepek, & Yohe, 2008). However, dam constructions of neighbouring riparian nations could have disastrous effects onto Egypt. Water supply shortages remain the largest threat to Egypt (Mbaku, 2020).

Dam constructions in upstream Ethiopia would mean that Ethiopia will need to store water in their dams to regulate the flow of hydroelectricity, as such the water supply downstream will be affected. According to a study by the Geological Society of America’s journal GSA Today reports that the GERD developments will affect Egypt’s water supply up to 25% (Stanley & Clemente, 2017). Furthermore, Egypt has long enjoyed the economic benefits of renewable energy created by the Aswan dam which could produce 8 billion KW and electrification for towns and villages throughout Egypt (Tol, Strzepek, & Yohe, 2008). With the new development of the GERD, an estimated one-third of hydro power will be affected, this significant fall in hydro power will in return cause major disruptions to the lives of Egyptians and their economy.

The Environment vs. Development Trade off

The significant environmental impacts of GERD construction include changes in surface water level, groundwater levels and soil salinity (Aziz, Zeleňáková, Mésároš, Purcz, & Abd-Elhamid, 2019). This environmental impact will be felt by countries in the Nile delta, including Egypt. While the economic benefits of the development will accrue to a development starved Ethiopia, Egypt will not only lose economic opportunity because of reduced flow downstream, but also bear the cost of the environmental damage due to GERD. There is also proof of a rise in seismic activity due to the sheer weight of dams. Reservoir-induced seismicity cannot be ruled out as a future environmental risk (Gupta, 2002).

The Way Forward

The points of conflict between Egypt and Ethiopia over the maintenance of GERD are reflective of Egypt’s rising environmental and economic concerns. Egypt is demanding that the dam should not be filled too quickly and that water will be released in periods of drought.. It wishes for the reservoir to be filled over a 12- to 20-year period, whereas Ethiopia has pushed for a five- to seven-year period. Egypt is hoping that during periods of drought, Ethiopia will release water from its reservoirs.

It is evident that an effective conflict resolution system is the need of the hour, especially since concerns are evolving and differences over the management of the dam will continue to exist between upper and lower riparian states. With climate change rapidly evolving to become a serious concern in the east African region, there is an even greater need for a conflict resolution system for matters concerning the Nile.

A regional framework for the management of the Nile called the Nile Basin Initiative was launched in 1999. According to Brookings, these countries should return to the NBI’s Cooperative Framework Agreement (CFA), which was concluded in 2010. There is an urgent need to ensure that countries such as Egypt and Sudan sort out their disagreements that made them decline signing the CFA (Mbaku & M, 2020).There is also a need to improve bilateral relations between countries in the Nile delta so that these can be leveraged to manage misunderstandings pertaining to GERD, instead of using multilateral organizations to put pressure on one another.

There is also a need to reduce dependency on the Nile. Egypt is a country that has one of the driest climates. Alternative sources of renewable energy such as solar energy should be rapidly invested in and effective water conservation techniques need to be deployed. The ambitious Benban solar project in Egypt is demonstrative of the Egyptian government’s commitment to the rapid development of the solar energy sector. The pace of investment has to be accelerated if the government intends to protect the population from the risk that climatic vagaries and GERD’s operation poses to hydroelectricity generation.


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