The Grand Inga Dam project in the Democratic Republic of Congo aims to generate 40,000MW of clean renewable energy but faces significant financing challenges due to its estimated $80 billion cost. Financing options include strengthening domestic public finances by improving tax collection and transparency to unlock natural resource revenues, as well as harnessing private investors through risk guarantees. Multilateral development banks can play a key role by providing loans, technical assistance and risk mitigation to both the government and private sector. Overcoming obstacles like corruption and attracting sufficient financing will be critical to developing this ambitious infrastructure project.

1. Financing for the Grand Inga Dam Project
Introduction
“Africa has the largest energy poverty in the world, where more than two third of Africans are without
access to energy […] businesses languish for lack of power, lives are at risks in our
Hospitals and children underperform for lack of electricity, as over 90% of Africa’s primary schools lack
electricity1
”. With the world’s largest potential sets of dams, known as the Grand Inga Dam, Democratic
Republic of Congo (DRC) could generate a 40,000MW. Proponents argue it could provide clean
renewable energy with immense development outcomes for DRC, surrounding countries and all the way
up to Egypt and thus achieving a number of sustainable development goals (see below).2
Currently, there are two hydroelectric dams, Inga I and II – completed in 1972 and 1982 - operating at a
low output where the electricity goes to multinational companies in the mining industry. The Grand Inga
dam is the fourth and largest proposed dam of the Inga dam (lower-center on the map). The project is
currently on stand-by waiting on funding. Estimated costs are about $80 billion and the project is still in
the feasibility study stage3
conducted by the World Bank and African Development Bank (AfDB).
1
Speech - Akinwumi A. Adesina, AfDB’s President, at the High-level Consultative Stakeholder Meeting on the New
Deal on Energy for Africa, Abidjan, Cote d’Ivoire, 17/09/2015 http://www.afdb.org/en/news-and-
events/article/speech-akinwumi-a-adesina-afdbs-president-at-the-high-level-consultative-stakeholder-meeting-on-
the-new-deal-on-energy-for-africa-abidjan-cote-divoire-14689/
2
DR Congo waits on funding for world's largest hydropower project, the Guardian (2013)
http://www.theguardian.com/environment/2013/may/21/dr-congo-funding-world-largest-hydropower-dam
3
https://en.wikipedia.org/wiki/Grand_Inga_Dam#cite_note-AGN-2
Potential of 40GW of
power capacity
Grand
Inga
Dam
Equivalents to the
capacity of 20 large
nuclear power plants
One of the ten top
"Examplary
Transformational
Projects"

2. Map DRC and Inga Dam Site
Current dams and projected Grand Inga Dam (lower center)
Inga I Dam

3. However, skeptics highlight a number of issues;
The main question that arises here is as follows;
How to finance the Grand Inga Dam project in a sustainable way which
achieves development outcomes?
As this involves huge amounts of investments in
public infrastructure, there is a strong role for the
government and the private sector to play, as well
as Official Development Aid (ODA) and Multilateral
Development Banks (MDBs).
But before answering and going into details in further concepts, we first need to have some hard
facts and information about DRC to better understand the context. Following is a quick snapshot
of DRC in figures and facts;
• Loss of biodiversity
• Flooding of local agricultural lands natural
environments
• Displacement of villages and people
Environmental
• Huge risks of corruption
• Tax evasion is rampant
• Difficult environment to attract private investment
• Weak institutional capacity
Political and
economic
• It is unclear how the poor communities will benefit
from it
•It is feared that it only benefits to extractive industries
Developmental

4. One of the poorest countries in the
world…
 Low Income Country: Poverty rate at 63% in
2012. with GDP/ capita = 487USD (2013) and ranks as
186th
in the Human development index out of 187
countries4
.
 Since 2001, DRC has been slowly recovering
from a decade of conflicts. DRC remains a
fragile state with weak institutions and a
tremendous need for reconstruction and a
revival of economic growth.
 To better understand the historical roots of
poverty and conflicts in Congo, see DR
Congo: Cursed by its natural wealth
http://www.bbc.com/news/magazine-
24396390
… With the potential to be one of the richest country on earth
 Vast natural resources, with high agricultural potential
 Ironically, the country reached a remarkable GDP growth at 9% (2014), driven by extractive
industries as the country is abundantly endowed in mineral and with the potential to become
one of the main driver of African growth.
 Ranks at 154 out of 175
countries in corruption perceptions index
and scores 22/100.5
 Ranks as 187th
out of 189
countries in the Doing Business Report6
 Electricity Access Rate of 11%7
4
UNDP (2014) hdr.undp.org/sites/all/themes/hdr_theme/country-notes/COD.pdf
5
Transparency international (2015) https://www.transparency.org/
6
Doing Business Report (2015) http://www.doingbusiness.org/reports
7
Lightning Africa (2012) https://www.lightingafrica.org/
DRC
at a glance

5. Financing For Grand Inga Dam Project
 The role of ODA
As DRC is a Low income and conflict-affected country most of
the ODA inflowing is through grants and concessional loans.
About $3 billion of ODA was disbursed for DRC in 2013 and
constitutes, as for many LICs, the largest external contributor.
According to the OECD, more than 90% of ODA inflows to DRC
are grants, yet with only 12.4% going to Economic
Infrastructure and services. Similarly, most of World Bank’s
support is provided through International Development
Association (IDA)8
which focuses on the poorest countries.
However, none of the Congolese public sector or the ODA will be able to meet the infrastructure
needs of the country and finance the colossal Grand Inga Dam project alone.
Rather, seeking support and finance from the private sector and MDBs seems more promising
and has the potential to bridge the gap.
 Strengthening Domestic Public Finance:
DRC is one of the poorest economies in the world, with a fragile state. It is
thus very unlikely that the public sector will finance the Grand Inga Dam to a
large extent in the short term. However, DRC is extremely rich in terms of
natural resources. Therefore, large potential domestic resources are
untapped and need to be made available. It is widely said that domestic
revenue is a reliable and sustainable source of development finance,
reducing poverty and bridging the infrastructure gaps.
Virtuous circle of Domestic Resource Mobilization
The main obstacles in the way are pervasive corruption and lack of transparency. As many LICs,
DRC’s taxation levels are below 15% per GDP ratio.9
Indeed, like many African countries, DRC is
characterized by large informal sector, and tax evasion by extracting multinational companies. It
is urgent therefore for DRC to build stronger institutional capacity in this area10
.
8
http://www.aidflows.org/
9
From Billions to Trillions: Transforming Development Finance, WBG joint with IMF and MDBs (2015)
10
Increased Domestic Resource Mobilization in Africa: A Priority for the Post-2015 Era, International Health
Policies, 2015 (Blog Post)

6. This is exactly where ODA and
especially MDBs like the African
Development Bank & World Bank
come into play. Indeed, billions of
dollars in ODA can help unlock
trillions through supporting activities
such as:
- Better investment climates
- Better tax collection
- More efficient public
spending
 Harnessing the potential of private investors
The Grand Inga Dam is said to be feasible and already several companies
are potential bidders, which means that this project is probably financially
and commercially viable from a private sector point of view. So attracting
investors is not the biggest challenge but rather how to allocate, manage
and mitigate risks between the private and public sector. This is the key to
effective and efficient infrastructure development. Commercial, currency
and political risks are the most challenging issues here and are thus not
bore by the private sector. As they can be very expensive to cover, guarantee risks, as well as
grants and loans by MDBs or ODA can be used here to mitigate them.11
 The role of Multilateral Development Banks (MDBs)
MDBs as well as the IMF are engines of financing for
development. By investing one dollar, MDBs are
able to commit 2 to 5 dollars in new financing every
year, by catalyzing, mobilizing and crowding in.
Indeed, they provide policy advice, technical
assistance and capacity building to country. Their
stamp of approval as “honest broker” can help build
trust and partnership between the Congolese government and companies. They play a pivotal
role here; on one hand they assist and support DRC government with grants, loans, technical
assistance and capacity building, to build stronger institutions and enable better climate
investments. On the other hand, they assist both the public and the private sectors in public
11
Infrastructure Finance: Setting A Plan, Overcoming Obstacles, and Attracting Private Investment With Richard
Abadie (2015)
Domestic
Resource
Mobilization
Transparency-
fight against
corruption
Accountability
Efficient
Public
expenditures
Democratic
Engagement

7. private partnership, by providing guarantees (e.g. through MIGA) and trust. For instance, the
International Finance Corporation (IFC) is the private sector arm of the World Bank that can
stimulate private investment in DRC through loans and equity grants.12
Conclusion:
Main challenges and obstacles in financing the Grand Inga Dam project for development purposes are:
 ODA levels are too low and insufficient
 Large existing natural resources that needs to be made available for public purposes
 Pervasive corruption and lack of transparency13
impedes the harnessing of large domestic
natural resources
 Illicit flows of money; mostly tax evasion and corruption in extractive industries
In order to overcome the obstacles, solutions include:
 Unlocking immense domestic resources through stronger administration capacity
 Fight against illicit flows of money, namely corruption and tax evasion
 Balance risks sharing through guarantees and loans between private and public sector
To do so, as DRC is a fragile state, MDBs and ODA support not only in financial terms but also in technical
assistance, capacity building and guaranteeing risks for both government and private sector will be
critical in financing ambitious energy infrastructure project like Grand Inga Dam.
12
The Financing Role of the Multilateral Development Banks: The Business Model of MDBs With Susan McAdams
(2015)
13
Paying for Development: Domestic Resource Mobilization. Center for Strategic and International Studies (OpEd, 2
pages)
Better
investment
climate