Natural resource discoveries: information campaigns for local communities

How can the interests of local communities be protected when valuable natural resources are discovered where they live? This column reports evidence from Mozambique on the importance of information campaigns to all citizens to ensure transparency and avoid mismanagement, corruption, and other undesirable aspects of the ‘resource curse’.

In recent years, Mozambique has discovered substantial amounts of natural resources. Confirmed gas reserves in the northern province of Cabo Delgado (see Figure 1) have the potential to turn the country, one of the poorest in the world, into a global player in the market for liquefied natural gas.

At the same time, the management of natural resources in Mozambique scores weakly in international rankings. This combination creates perfect conditions for the ‘natural resource curse’—the phenomenon in which abundance of natural resources leads paradoxically to lower economic growth.

Economists have attempted to explain the resource curse since Adam Smith. While there is still no consensus on its roots, recent analyses have focused on the role of politicians’ misbehavior, often associated with corruption and civil conflict.

The experience in the 1990s of African countries such as Angola, Nigeria, and Sierra Leone—rich in oil and diamonds, but also failing to benefit from their wealth in natural resources—is a classic example. While the focus has often been on national-level institutions, a growing body of evidence confirms the importance of political pressures at the local level.

The case of oil in Brazil is an example. Oil extraction raised the revenues of local governments, but the quality of public goods provision did not improve, while corruption increased. These results are also confirmed by the experience of São Tomé and Principe, with increased vote-buying following a natural resource discovery.

Local politicians and local communities

The centrality of local politicians in understanding the resource curse is clearly connected to the role of local communities. While most of the focus on the resource curse has been on the consequences of exploitation, little is known about the behavior of local communities in anticipation of a major resource windfall.

As the transparency of natural resource management is very limited among African countries, discoveries often translate into low awareness of the potential benefits of resource exploration among the communities that are most directly affected, raising uncertainties surrounding discoveries.

This is the case in Mozambique. Limited media independence and penetration have translated into poor knowledge of the discovery among communities living in Cabo Delgado. In such a scenario, following news of a discovery, local politicians could become more interested in securing political power and pursuing corrupt behavior, rather than engaging with the local community.

Promoting local institutions that strengthen political accountability could therefore help to counteract the resource curse. With higher levels of accountability, local elites would thus be more constrained to do what is best for the common good. Information campaigns can be seen as a central piece of these efforts.

Information campaigns

A recent study led by NOVAFRICA focuses on the role of informing local communities as a means to counteract the resource curse. Large-scale civic education campaigns have already proved to be effective in Mozambique in relation to political participation, but no effort had been undertaken following the discoveries in Cabo Delgado.

In this setting, NOVAFRICA followed an information campaign in the province sponsored by a wide coalition of organizations in 2017. The goal was to provide local communities with important details about the discovery of natural gas. This included the expected size of the future windfall, and the rights of local populations to benefit from the newly discovered resources.

To understand how information and accountability relate to the resource curse, 206 villages were selected as part of the study and assigned to one of three groups.

First, to understand the resource curse fully, attention cannot be limited only to citizens: local political structures also need to be taken into consideration. For this purpose, in a first group of villages, only local political leaders received the information module (see Figure 2).

In Mozambique, local leaders are the highest-ranked representatives of the government within each community and are well-defined figures. Their communities select the leaders, whom the state then acknowledges. The leaders’ competencies are mainly related to land allocation, enforcement of justice, rural development, and formal ceremonies. In addition, they must be consulted when natural resources are procured in the community, and aid or public programs are to be implemented.

The first group of villages provides a low-accountability setting, mimicking dissemination mechanisms based on existing political structures. In these settings, citizens are generally excluded from the information.

In a second group, the information module was delivered to the community as a whole (see Figure 3). This provided higher levels of accountability, and targeted communities as a means of increasing accountability among local leaders. Such community engagement has been shown to be central in raising the accountability of local politicians.

In a third comparison group of villages, no information was provided, making it possible to observe what happens in the absence of a campaign.

What have we learned?

The community-level campaign was effective in raising knowledge about the natural gas discovery among citizens and leaders. In particular, citizens became more optimistic.

But when only leaders received information, citizens did not become more knowledgeable, while leaders did. Dissemination mechanisms centered on political structures were not effective in informing communities. This suggests that leaders are either unable or unwilling to share information with community members.

In addition, targeting leaders raised elite capture and ‘rent-seeking’ by both leaders and citizens. Leaders became more in favor of corruption, and less meritocratic community members were appointed to public service.

Misuse of public funds also increased. Targeting leaders only raised by 27 percentage points the probability of leakage. Citizens showed less interest in productive activities. They increased their contacts with local leaders, and their willingness to meet with higher-level politicians.

When the information campaign targeted entire communities, no evidence of these adverse mechanisms was observed. On the contrary, citizen mobilization increased, together with trust, voice, and accountability. In these villages, violence was reduced.

The results of the study confirm the potential for a resource curse centered on misgovernance by local politicians, in anticipation of a future windfall. This is relevant for policy-makers for two main reasons:

  • First, a large-scale information campaign can be effective in raising levels of awareness in the population about a resource discovery and related debates about how it should be managed.
  • Second, there are clear effects of an information campaign on trust in government at different levels, as well as on reducing violence.

These findings are of crucial importance in light of the known association between the resource curse and localized conflict in resource-producing areas. The appropriate management of expectations of the local population and the implementation of inclusive management processes as resource exploration unfolds may be key to escaping the emergence of localized conflict.

 

 

Figure 1. Study area.

 

 

Figure 2. Village leader receiving information about the natural gas discovery, in a village where only the leader was informed.

 

Figure 3. Village meeting explaining the content of the information campaign in one of the villages where information was provided to the community at large.

 

Authors:

Alex Armand is an Assistant Professor at Nova School of Business and Economics—Universidade Nova de Lisboa, a resident member of NOVAFRICA, and a research fellow at the Institute for Fiscal Studies and the Navarra Center for International Development. 

Alexander Coutts is an Assistant Professor of Economics at Nova School of Business and Economics—Universidade Nova de Lisboa and resident member of NOVAFRICA. 

Pedro C. Vicente is an Associate Professor at Nova School of Business and Economics—Universidade Nova de Lisboa. He is also the founding scientific director of NOVAFRICA. 

Inês Vilela is a PhD student in Economics at Nova School of Business and Economics and affiliated with NOVAFRICA. Her work is in development economics with a focus on political economy and diffusion of technology in social networks.