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Resource nationalism: Enabler or spoiler of pockets of effectiveness in ‘new oil’ Tanzania’s petroleum sector?

Working paper 144

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Rasmus Pedersen, Thabit Jacob and Peter Bofin
A great deal of attention has been paid to the distributional aspects of resource nationalism in countries in Sub-Saharan Africa, but less is known about its effects on the state’s capacity. By unpacking the relations between resource nationalism, legal and institutional reform, broader political dynamics and capacity in mainland Tanzania, this paper argues that the effect of resource nationalism is ambivalent, in that it may both enable and hinder the development of capacity. We identify two phases of resource nationalism: a soft economic one in the early years of the oil price boom; and a more radical one in more recent years, with different impacts on state agencies. Whereas Tanzania’s national oil company, the Tanzania Petroleum Development Corporation (TPDC), and its Energy and Water Utilities Regulatory Authority (EWURA) initially developed into pockets of effectiveness aimed at re-regulating and controlling the rents under the private sector, they were increasingly being undermined as radical resource nationalism aimed at re-asserting sovereignty, reshaping ownership and increasing state control. We argue that these changes were decisively influenced by shifting ideas in the country’s ruling party on the role of the state in the economy, partly driven by intensified electoral competition. Although the radicalisation of resource nationalism was under way before the ascent to power of President Magufuli in 2015, his insecure power base led to decision-making being increasingly centralised, which undermined organisational autonomy and therefore capacity. These factors point to the importance of key decision-makers in supporting capacity, while also suggesting that direct political interference is likely to undermine capacity.