Are Biofuels Good for African Development? An Analytical Framework with Evidence from Mozambique and Tanzania

Abstract

Many low income countries in Africa are optimistic that producing biofuels domestically will not only reduce their dependence on imported fossil fuels, but also stimulate economic development, particularly in poorer rural areas. Skeptics, on the other hand, view biofuels as a threat to food security in the region and as a landgrabbing opportunity for foreign investors. As a result of this ongoing debate, national biofuels task forces have been asked to evaluate both the viability of domestic biofuels production and its broader implications for economic development. To guide these complex evaluations, this paper presents an analytical framework that prioritizes different aspects of a comprehensive national assessment and identifies suitable evaluation methods. The findings from recent assessments for Mozambique and Tanzania are used to illustrate the framework. While these two country studies found that biofuels investments could enhance development, their experiences highlight potential tradeoffs, especially at the macroeconomic and environmental levels, where further research is needed.

Keywords: biofuels, economic development, food security, poverty, Africa

JEL Classification: Q56, Q42, O44, O55