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How can poor countries beat the resource curse? CGD research fellow Justin Sandefur returns to the Podcast hotseat to update us on a project that posed this question to ordinary people in Tanzania. CGD teamed up with REPOA to bring hundreds of Tanzanians to Dar es Salaam to debate what to do with that country’s newly-discovered natural gas deposits. This week, Justin is back to share the project’s results.
“People are eager to see the natural gas extracted. They are eager to see it sold. They are eager to see that money used to spend on social service programs,” says Sandefur.
Economists might argue the benefits of saving the money, but Tanzanians were firm in their preference for spending it on health and education. And at the end of the day, says Sandefur, “Tanzania’s a democracy and these choices are going to be governed by the democratic choices of the Tanzanian electorate.”
Success in Tanzania could also benefit neighbors Uganda, Kenya, and Mozambique, all of whom are dealing with similar questions around the best use of natural gas. “We’re in a situation where many poor countries are now sitting on huge stocks of wealth,” says Sandefur, and that’s shifting the balance for international development policies: “It becomes less about aid flows and financing from abroad and more a question about, how is Tanzania as a democracy going to govern these new resources?”
The US Department of the Interior announced last week that the United States would no longer seek to comply with the Extractive Industries Transparency Initiative (EITI), an international multi-stakeholder organization that aims to increase revenue transparency and accountability in natural resource extraction. The move—while disappointing—is not altogether unexpected. And sadly, it will put the United States further behind the curve when it comes to corporate transparency.
If transparency in debates around matters of natural resource wealth, then so too does the way that figures get translated into public debates. Earlier this month the Lusaka Times published a claim that multinational mining companies were “robbing Zambia of an estimated $3billion annually through tax evasion and illicit financial flows.” I have written about the Zambia Copper Billions before. I don’t think the figure is at all credible, and I am not the only one. Organisations that have allowed this myth to spread have not done any favours to the people of Zambia, and they have a responsibility to put it right.
In May, President Magufuli of Tanzania appointed two special committees to investigate the contents of 277 containers stuck at Dar-es-Salaam. The committees' belief that they have uncovered a case of massive misinvoicing (i.e., misrepresentation of the value or quantity of exports) does not seem plausible for five reasons. For starters, the scale of mineral smuggling required for it to be true is implausible.