What does Hydrocarbon Wealth mean for Foreign Aid in Mozambique?

Image: Flickr, Olivier
Image: Flickr, Olivier

Recent discoveries of vast gas and mineral resources in Mozambique are attracting unprecedented levels of foreign investment and could transform the country into a major African energy producer.

New hydrocarbon-derived revenue streams are likely to supplant Mozambique’s chronic dependence on foreign aid, consequently, reducing donors’ leverage over domestic policymaking and budget processes. Potential resource wealth affords commercial opportunities that could undermine the dominant North–South channel of aid and influence in Mozambique, but it will probably not bring an end to external dependence. Mozambique remains reliant on foreign investment for resource extraction, and many of the attendant risks of hydrocarbon development parallel those associated with aid dependence. It is unclear whether the government will surmount significant obstacles to ensuring that resource wealth spills over, and whether foreign donors will be able to redefine engagement to support the government in aligning hydrocarbon-driven growth with broader development.

16 Jul 2012

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Research by
SAIIA Policy Briefing 50, June 2012
Sub-Saharan Africa
SAIIA Programme
Economic Diplomacy
Humanitarian Aid, Natural Gas
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