East Africa Oil Boom: Resource Curse or Infrastructure Delinquency?

Aug 26, 2014 | Ventures Africa
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East Africa is the new oil and gas frontier. Recent discoveries of commercially viable deposits in the last few years in Tanzania, Mozambique, and Uganda among others have sparked excitement and equal concern in the region. The potential of oil and gas exports have currently prompted an economic boom that could last for the next few decades, or at least until the tap runs dry. But the talk of prosperity is softened by the typical concerns over the resource curse and the Dutch disease that can easily follow the newfound fortune.

The resource curse is when the discovery and the exploitation of natural resources results in the corrosion of governance, rise of authoritarianism and decline in living standards from focusing solely on the development of the natural resources themselves. The Dutch disease is when natural resource exports results in an appreciation of the currency, consequently weakening other exports and limiting the ability of the country to diversify its exports. The new found resources make several East African states vulnerable to both problems. But it may be the infrastructure deficit that is East Africa’s greatest risk going forward.