Kariba Dam A Rhodesian Curse Or Gift To Zimbabwe?

Too many Zimbabweans are quick to use the Kariba dam as a symbol to illustrate Rhodesia’s legacy benefit to Zimbabwe. However, the questions most never address are who paid for the dam and was the dam the most efficient energy generation investment that could have been made on the amount at the time?

Kariba Paid For By Zimbabweans

Well, the fact is not a cent of Rhodesian money was spent on building the dam. The dam was paid for by Zimbabweans and Zambians to the tune of $480mil principle debt [$3.6bil in today’s money] at an interest rate of 5.5% per annum over 66 semi annual repayments. Fifty Three years later we are still paying a remaining $115mil interest [out of a total compound interest of $1,4bil] debt through a bond as we speak.

When Was The Dam Build

The dam was started in 1955 and completed in 1977. Three years later Zimbabwe got independence, albeit Zambia had already attained its independence in 1964. This literally means that the dam was a colonial edifice commissioned by an illegitimate colonial government administering Northern & Southern Rhodesia and Nyasaland for the interests of colonial exploitation. All at the exclusion of the black nationals whose resources and capital would eventually pay for the debt then and in future.

Collateral for the dam was our parents slave labor, exorbitant taxes, our generation’s future taxes, tariffs extracted from black Rhodesians and our resources (in particular chrome, coal, iron and copper in Zambia) for which companies like Anglo America, Rio Tinto and Mimosa needed the extra power to process.

In other words we have all been paying for this dam ever-since it was built and we will be paying for it into the foreseeable future. Basically, we [Zimbabweans & Zambians not Rhodesians] built the Kariba Dam.

Electricity For Mines Not People

Nevertheless what is compelling is throughout the phased completion of this dam, the mines mentioned above, their smelters in Zimbabwe and Zambia paid a discounted tariff for electricity. The balance was subsidized by ordinary Zimbabwean and Zambian citizens who paid a premium [in taxes, low wages and high tariffs] for electricity they didn’t actually use.

Bear in mind that when Zimbabwe got independence only 8% of Zimbabweans had access to electricity. Less than 3% of Zambians had the same. However, to breakeven the Central African Power Corporation according to its agreement with the banks had to collect nothing less than $1.82mil [3/7ths of 1% of debt] annually from electricity tariffs while amortizing their debt at $60mil per annum. How was that possible?

With electricity in Rhodesia being subsidized by taxes. This meant that the whole of Zimbabwe’s exploited labor force and all those villagers paying bicycle tax, cow tax, hut tax, grain tax and other such taxes were paying the difference between the tariff collection and annual debt repayment for a project that had no direct benefit to them.

This will be a painful reality to the millions of Zimbabweans who studied under candle light to acquire their qualifications while subsidizing the privileged few.

Kariba Did Not Give Us Bang For The Buck

In many ways Kariba has been a huge opportunity cost burden on Zimbabwe because it was not geared to supply electricity to the majority of Zimbabweans or their future industries.

In contrast it was an inefficient private project to supply select British & American owned mines and processing plants in the Copperbelt and Zimbabwe with cheap, subsidized electricity to process and export cheap chrome and copper to their overseas holding companies. This was at the expense of the ordinary Zimbabwean who had to pay +$1.8bil [+$3.6bil in todays’ money] for the asset investment and power generation.

Had Kariba been designed and built cost effectively for the purpose of powering the growth needs of Zimbabwe. At its investment value, the dam would have easily delivered more electricity to ordinary Zimbabweans then and in the long term [35-50yrs into the future], even if it meant a nominal increase in capital.

Put another way, if we had received bang for our buck on Kariba, Zimbabwe wouldn’t be having chronic electricity shortages at today’s low 38% electricity penetration.

Corrupt Bidding

This low return on investment from the project brings us to the fact that the dam was not commissioned on a fair bid basis that would deliver value for Zimbabweans.

Instead it was a means for European bankers, the IBRD, British & Rhodesian politicians, miners and industrialists to stuff their pockets. The bid was awarded in an inside fix to a division of the Fiat Group called Impresit. Meanwhile an expensive debt [at 5%/annum on the US dollar] was procured from the International Bank Of Reconstruction and Development by an all Rhodesian/British board enticed by commission, their interests in mining companies the Central African Power Corporation and capitalist banking interests.

The deal was financed and huge concessions and mining rights were used to underwrite parts of the debt.

It’s clear that huge commissions were dispersed to the players on the table which all added to the cost we are paying back today. This is a clear manifestation of European capital combines exploiting Africa for resources, labor and debt servitude.

Fair Bid Would Yield Different Results

Had the dam been built in a fair bidding process. It would likely have gone to a Chinese company and been financed by cheap debt, built using cheap Chinese labor, generating us more power at a lower cost than the +$3.6bil paid.

As a real practice comparison, Kariba’s 1626mw dam was built at a cost of $3.6bil in today’s money. Whereas Ethiopia has a $5bil dam that produces 6000mw of electricity. So in essence Zimbabwe invested $1.9mil for each mega watt of electricity it receives. Two and a half times more than Ethiopia which invested $833 333 for every mega watt they receive.

Legacy Decisions Costing Us Projects Today

These are legacy investment decisions made by an illegitimate government that still affect us till today.

Today it’s not so easy for our government to just finance new infrastructure projects because we are still yoked to various Rhodesian debts that were fraught with corruption, costly debt and kickbacks that include this inefficient monolith.

I won’t labor the issue of sanctions at this point because I think the case is clear.

The Biggest Dam In The World Is Chinese

Considering that today China’s Three Gorges Dam is the biggest dam in the world, employing some of the best electricity generation technology of our time.

In my analysis, it could be argued that it would have been more beneficial for Zimbabwe if Rhodesia had not built us this monolith through their corrupt, exploitative colonial European nepotism and we had built ourselves a dam in a fair open bidding process.

What Lessons Are To Taken From This

Maybe we would have been better off having a value priced Chinese built dam over an inefficient costly Italian monolith financed by fraudster New York bankers.

The lesson to be taken forward from this: hypothetically, 3mil middle income Zimbabweans contributing $1400*[1] each next year into an energy development investment fund. We could potentially build ourselves a $5bil 6000mw dam or solar plant (which ever is more environmentally friendly) cash without the burden of interest.

This would mean ordinary black Zimbabweans could create generational wealth for themselves overtime just like the bankers who funded Kariba did, while eliminating our electricity blues. #ZimbabweSolutionsForZimbabweanProblems

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NOTE:

[1] An estimated 3-4mil Zimbabwean diasporians remit $2bil formally and $1.5bil informally back to Zimbabwe annually. This is a total of $3.5bil or $800/person sent back to Zimbabwe for mostly consumption. Imagine if we could harness just one year’s remittances for capital investments that could generate a return for people and their families in Zimbabwe?

Rutendo Bereza Matinyarare Of Frontline Strat Marketing Consultancy