How Uganda can avoid the "oil curse"
Jan 21, 2015
Recently, 2.5 million barrels of oil were discovered in the Albertine Graben in western Uganda. Today, it is estimated that Uganda will be able to support production of over 100,000 barrels of oil per day for 20 years.
For ordinary Ugandans, this news has been welcomed with two distinctive forms; the positive and the negative. In the case of oil discovery, the positive expectations are truly hopes that the valued resource and the associated revenues will deliver substantial social, economic and infrastructural improvements, whilst liberating Ugandans from poverty by boosting economic growth.
Negative expectations also exist since resource abundance is considered a “curse.” While oil discovery presents considerable opportunities, it also carries a risk commonly known as the natural resource curse - a situation where abundance of tradable natural resources such as oil ironically leads to economic stagnation, the death of other traditional and non-traditional exports such as agricultural and manufactured products, and conflicts over the allocation of resources.
This has been witnessed by some African countries for instance Nigeria – which pumped her first barrels of oil in the early 50s and has since set world records in corruption; and Angola, whose story is just as sad! Despite the huge revenue generated from oil, 70% of Angolans live below the poverty line. Already, the oil sector in Uganda is toppled with many corruption scandals; with some leading to the suspension of new deals between Uganda and foreign oil companies and to the censorship of four ministers by the 9th Parliament.
This only means that a country like Uganda, which is new in the oil sector, needs to draw lessons from countries that have a reputation for better governance and are blessed with favorable fundamentals. Ghana is one such a country. She produces 120,000 barrels of oil daily, which is close to Uganda’s 100,000. Ghana discovered oil in 2006 after decades of exploration. To a large extent, she has managed the sector well.
So, what lessons can Uganda learn from Ghana to avoid causing the wretchedness associated with corruption, civil and armed strife, and poverty plus chaos that have left some other African countries ruined? Here are a few suggestions:
Ensure transparency of revenue and distribution of allocations; the Ghanaian government has really tried to make public all the documentation that form part of the oil bidding process. This has made the political capture of oil rents and general corruption in the sector much difficult to accomplish.
Institute constitutional governance; the Ugandan government can learn from Ghana, which has tried to involve every citizen to make inputs towards the exploitation of the resource to promote good primacy of the sector.
Invest in the sector; the Ugandan government can institute policies that position herself as a key stakeholder in the oil sector. Ghana’s National Petroleum Corporation’s objective is to “become a world class company that partners with the international petroleum industry to enable Ghana find and develop oil and gas resources for the benefit of the people of Ghana as well as our partners who share in the exciting expedition.” This has ensured that the Ghanaian government not only gets money from its shares in the oil fields but that it is also fully involved in the oil’s exploration and drilling.
The Ugandan government should also use the revenues it gets from oil to fund demonstrable social projects that benefit society; giving priority to the most under deserved communities that the Ghanaian government has tried to do. In a recent interview in a local newspaper, Mr. Bob Ken, a Ghanaian Lawyer, and Governance and Management Analyst noted that “people’s expectations can be best managed by building infrastructure like roads, health centers and school and setting up of hi-tech industries to provide employment opportunities and to improve the standard of living.”
Other lesson that Uganda can learn from Ghana include;
Sensitize masses about the oil sector since they anticipate some “rapid and unrealistic expectations” in economic growth like the way it has been done in Ghana to avoid social unrest.
Develop methods and policies that control oil revenues for instance The Petroleum Revenue Management Act (PRMA) which was passed by Parliament and assented to by the President of the Republic of Ghana in April 2011 to avoid mismanagement of public funds.
With the above few recommendations from Ghana, which has not enjoyed praises but controversies as well in managing its oil sector, one can't rule out the fact that the country has made commendable efforts which Uganda can learn from.