Will Tanzania’s Natural Gas Endowment Generate Sustainable Development?

Photo: AR Hendrix

Tanzania first discovered natural gas in commercially viable quantities in 2010. In March 2016, another major gas discovery of 2.7 trillion cubic feet (TCF), estimated at a value of some $8 billion was made in the Ruvu Basin Coast Region. This brings Tanzania’s total estimated gas reserves to roughly 60 TCF, and could generate up to $6 billion in annual revenue.

While the new discoveries of natural gas and the associated foreign direct investment in infrastructure could trigger further growth in an already fast-growing economy, caution is also warranted. Windfall resource rents often generate incentives for elites to curtail political freedoms and abrogate their governance responsibilities. Rules governing natural gas extraction and processing should be rigorously designed well before large-scale production begins. This paper argues that Tanzania has accomplished this. The formal governance institutions appear to be in place. The challenge will be to develop the necessary technical capacity within the government and civil society, and the political will in the ruling coalition, to ensure that Tanzania’s gas endowment is in fact harnessed for inclusive growth.

28 Jul 2017