Post #455

ℹ️What Is the "Presource Curse"? [ Policy Review ] 🧭 In 2010–2011 major gas discoveries in the Rovuma Basin turned Mozambique into a future LNG giant and politicians began to loudly promise investments in tourism, security, and infrastructure at every corner. Surprisingly, these were not empty words — the local elites did refrain from looting all the gas on the spot. ▶️Instead, they managed to demonstrate their incompetence in a more inventive way, illustrating an exotic concept known as the “presource curse.” Many have heard of the resource curse: revenues from extraction make the development of the rest of the economy unattractive, resulting in dependence on global prices, freezing the growth of living standards. But there are situations where the mere expectation of high revenues has an already disastrous effect. This is exactly what happened to Mozambique in the early 2010s. ▶️In Mozambique, anticipating future gas income from Cabo Delgado, a group of officials from the Intelligence and Security Service (SISE) and the Ministry of Defence decided to set up 3 shell companies — the Mozambican Tuna Company (EMATUM), Mozambique Asset Management (MAM), and ProIndicus — which were officially supposed to engage in fishing and coastal security. 🌫 In reality, they existed only on paper and were used for corruption. In 2013–2014, the three companies colluded with representatives of the Swiss bank Credit Suisse and raised around $2 billion under state guarantees. The officials behind these companies thought they could siphon off the money and repay the debts later — once gas from Rovuma made the services of their companies attractive to foreign investors. Instead, the scheme was exposed far earlier than planned—in 2016—triggering an investor exodus, the suspension of foreign aid, and a rupture in Mozambique’s cooperation with the IMF. Gas production, originally planned for 2019, was postponed because of the inability to secure new financing after the scandal. 🌐 But there is more to the "presource curse" than Mozambique. The same tendency — focusing on the future resource revenues after major discoveries — could also be seen in the 2000s and 2010s in Uganda and Ghana with their promising oil finds, as well as in other countries. #PolicyReview Independent, Honest, Yours - @devilsbelow