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How Uganda can avoid the "oil curse"

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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.

Comments

irene waithaka's picture

Dear Sandra your concern is

Dear Sandra
your concern is so valid and am impressed by the extent you have gone to research this issue. For starters i do agree oil is so fundamnetal to Africa as we seek to be industrialized however more often than not its existence in African countries is marked with political strife, bloodshed and continued poverty. Its frustrating to the middle class when the political elites in our country use the natural resources to enrich themselves while underdeveloping the rest of us. It brings such immense pain ad emotional turmoil that even though you would wish for these resources to turn your country to ahven of peace and prosperity you also have to deal with the possibiity of a lifetime nightmare that will see many innocent lives lost. I wish you could start a foundation where you will have to lobby for all the econimic big weights in Uganda to take the initiative of ensuring an elightened and sensitive approach to the oil in your country. I wont promise you instant results but doing something is alwais better than waiting for hell to break loose. All the best and blessings to you,
with regards and lots of love
irene.

Sandra Nassali's picture

Dear Irene, thx so much for

Dear Irene, thx so much for your comment. I must say it is filled up with so much insight. Though i have not yet started a foundation on this as yet; i am doing some writing about put based on issues like gender mainstreaming, accountability and good governance. My articles are taken up by different media platforms (online and offline). I believe this adds a voice to the many out there sharing some of my concerns and those of grass root and marginalized groups like women.

Regards

Sandra

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