A new aid landscape in Africa

East Africa is undergoing a natural resource boom that has the potential to reshape national economies and development aid in the region. Questions remain whether key Danish development partners, including Tanzania, Mozambique, and Uganda, can harness newfound oil, gas, and minerals for industrial development and poverty reduction or will fall into similar ‘resource curse’ tarps experienced by their counterparts in West Africa.

What are the challenges facing East Africa resource-rich countries? Does aid have a role to play in this new and evolving environment? How will politics serve to strengthen or weaken how natural resources can ignite development? The new DIIS reportPolicies and finance for economic development and trade explores these questions on natural resource development and reviews recent aid for trade initiatives.

It looks into:

• how newfound oil and gas resources in Tanzania, Uganda, and Mozambique will be exploited by the respective governments in the future. Based on the proposition that country- and sector-specific political dynamics are at the heart of different development outcomes, it argues that ruling elites will continue to prioritize social over productive sectors.
• the inherent political nature of the negotiation of petroleum contracts in Africa and the choices and trade-offs that invariably affect the terms and conditions of exploration and production activities.
• recent developments and econometric and evaluation studies of Aid for Trade (A4T) and the need for more focus on recipient country targeting, project portfolios with complementary interventions at different levels, targeting trade impacts and outcomes other than increased exports, adopting a more structured approach in work with private sector actors, and improved results measurement.

The report has been commissioned by the Ministry of Foreign Affairs as part of the grant ‘Tendencies in Development Policies’ with five themes: new partnerships, the results agenda, foreign aid in fragile regions, financing economic development, and new social movements