Resource curse and corruption
You can now read our new Working Paper from the petro-state programme titled “Understanding the resource curse: A large-scale experiment on corruption in Tanzania.” We report from a large-scale field experiment in Tanzania that provides causal evidence on how expectations about future natural resource revenues shape expectations about corruption and the willingness to engage in corrupt behavior.
March 8th marked the International Women’s Day for 2018 globally, celebrating the social, economic, cultural and political achievements of women. As we Press for Progress, this blog post focuses on women on in the extractive, energy industry and beyond.
The research work by Uongozi brings to light social license to operate in Tanzania. The concept of a social license to operate (SLO) has become a key issue for companies, researchers, policy makers and other stakeholders in the extractive sector. Securing ‘social permission’ for extractive activities is increasingly seen as critical for the future profitability and sustainability of the sector. Continue reading PetroStateBlog for the period 19.02 to 04.03. 2018→
International Gas Outlook and Implications for Developing Tanzania’s Gas Projects A briefingbyUongozi institute and The Columbia Center on Sustainable Investment CCSI reviews recent international gas developments and considers the implications for the development of proposed offshore gas projects in Tanzania. International Gas Outlook and Implications for Developing Tanzania’s Gas Projects outlines trade-offs that negotiators should consider as they seek to determine domestic gas allocation in contracts with extraction companies. Continue reading Petrostate Blog for the period 05.02.2018 to 18.02. 2018→
Gas, coal and renewable energy were all in competition last year as the global economy improved. Gas demand rose 3% in the first three quarters of 2017, compared to the same period in 2016, thanks to China and Europe.
Macroeconomic performance under the program has been satisfactory.
Most quantitative targets were met, though implementation of structural measures lagged.
Authorities should step up budget implementation, particularly in development spending.
Macroeconomic policies will need to be closely coordinated.
The Citizen however points out that the growth rate put by the IMF differs from the 7% target of the Government. The Government says that Tanzania remains among the top performers in Africa for having a steady growth rate in 2017. The economy is expected to grow by 7.0 per cent and continue to grow on average of 7.4 per cent in the medium term.
Tanzania has recently discovered huge offshore natural gas fields. This has led the Government to develop local content policies (LCPs) to increase job and business opportunities for nationals in the sector. We study the process behind the development of these policies and the positions of stakeholders. We find that although there is a positive view among domestic stakeholders of imposing such policies, there is much suspicion–to such a degree that it shapes their recommendations of which policies to include in the LCP. One reason is that the Government monopolized the policy development process and abstained from conducting a consultative process. Our findings suggest that future Tanzanian policy development should include in-depth consultations to maximize the decision maker’s knowledge base, add to the transparency of the process and manage expectations. This would also contribute to effective implementation and lessen tensions, conflicts and suspicion among stakeholders.
24 and 25 August, Ingrid Hoem Sjursen (Choice Lab, NHH), Kendra Dupuy (CMI/U4) and Odd-Helge Fjeldstad (CMI/ATI) participated at the TrAcRevenues Workshop: Transparency and Accountability in Managing High-Value Natural Resources. Norwegian University of Science and Technology (NTNU) in Trondheim. The Transparency and Accountability in Managing High-Value Natural Resource Revenues (TrAcRevenues) is an initiative that examines how increased transparency can help to transform natural resource revenues in developing countries into a blessing rather than a curse.
The workshop was organized by Prof Päivi Lujala, Dept. of Geography, and gathered about 25 scholars from Europe, Africa, Asia and the US, including Michael Ross (Dept. of Political Science, UCLA) and Ragnar Torvik (Dept of Economics, NTNU).
Odd-Helge Fjeldstad presented the research programme ‘Tanzania as a future petro-state’ (2014-19), including ongoing activities and findings so far. Kendra Dupuy presented a new study titled “The global participation backlash: Implications for multistakeholder natural resource governance initiatives”. The study focused on new legislations in an increasing number of countries that put major constraints on civil society and international NGOs’ work in these countries. The discussion also briefly addressed possible implications for independent research on natural resource governance.
Ingrid Hoem Sjursen presented a new paper titled “Managing the resource curse” (joint with The Choice Lab researchers Alexander Cappelen, Bertil Tungodden and Odd-Helge Fjeldstad (CMI) and Donald Mmari (REPOA)). The key research question addressed was: “Does expectations about future gas revenues affect citizens’ attitude toward a tax increase, expectations about future corruption and trust in the government?”
The Government of Tanzania is looking for the best policies and institutional designs to turn future petroleum revenues into welfare, development and jobs. This Brief from the petro-state programme argues that the Tanzanian society will benefit more by investing in infrastructure, health and education, rather than establishing a petroleum sovereign wealth fund and investing in foreign assets.
Many natural resource abundant countries have established sovereign wealth funds as part of their strategy of managing the resource wealth. This working paper by Ragnar Torvik looks into different arguments used as reasons to establish such funds, discuss how these funds are organized, and draw some policy lessons. The paper then develops a theory of how petroleum funds may affect the economic and political equilibrium of an economy, and how this depends on initial institutions. A challenge with petroleum funds is that they may produce economic and political incentives that undermines their potential benefits. In conclusion, the paper suggests that the best way to manage the petroleum wealth of Tanzania may not be to establish a sovereign wealth fund, but rather use revenues to invest domestically in sectors such as infrastructure, education and health. Such investments may produce a better economic, as well as institutional, development.