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IPSS lecture explores discovery of oil in Uganda and possible learning lessons from Botswana

Much of the literature on natural resources, particularly oil, paints a rather pessimistic picture. Based on conducted research, Dr. Mbabazi presented a set of alternatives that aim to look at oil as an opportunity rather than a curse.

Event

14 November 2017

On 2 November 2017, IPSS hosted a lecture titled: “Oil in Uganda: Resource Curse or Development Boon? Learning the Lessons from Botswana” delivered by Dr. Pamela Mbabazi, Head of Research and Policy Analysis at IPSS. Uganda is set to become one of Africa’s large oil producers in the next few years. It has made 21 oil and gas discoveries with an estimated accumulation of 6.5 billion barrels of oil deposits, making it the 3rd largest oil holder in Sub-Saharan Africa. According to Dr. Mbabazi, local perceptions of the infant industry have been extremely critical and negative. This was due in part to two factors, i) the failure of other African countries to properly manage oil revenues and ii) the high level of corruption currently afflicting the nation.

 

Much of the literature on natural resources, particularly oil, paints a rather pessimistic picture. Based on conducted research, Dr. Mbabazi presented a set of alternatives that aim to look at oil as an opportunity rather than a curse.

 

Her presentation addressed the following questions:

  • What are the general opinions/views of the oil industry in Uganda?
  • Why are the majority of those views critical?
  • Is this criticism justified?
  • What can be done to avert this criticism, or turn it into optimism?

 

First, she briefly explained the Resource Curse Theory and addressed institutions as a means to curtailing the resource curse. Second, she gave a brief introduction to Uganda’s emerging oil industry and provided context to the situation on the ground. Here, Dr. Mbabazi noted that Uganda has made considerable progress since 1986 when President Museveni came to power. The country’s ability to combat HIV/AIDS, create national peace and stability (following the defeat of the Lord’s Resistance Army and all other rebel groups), and strengthen some public institutions, are telling cases in point.

 

The construction of a domestic oil refinery and the use of reserves to satisfy the domestic market before exporting the commodity demonstrate some of the positive policies Uganda is making as well as the lessons learned from past failures. Nevertheless, much as Uganda has made progress in some areas, there remains cause for concern such as the high level of corruption and high poverty rates. There is a general fear in Uganda that oil will only further solidify state-sponsored corruption rather than promote national development.

 

Third, she discussed the policies in place covering the emerging oil industry including the controversial bills. Regarding this, Dr. Mbabazi highlighted that while the controversial oil bill raised a lot of eyebrows, attempts have been made to improve the legislation for Uganda’s oil industry. There are still areas of concern, which the government would do well to re-visit and address accordingly. In order to avoid the resource curse, administrative effectiveness, respect of rules and public trust in the government are all necessary prerequisites.

 

Dr. Mbabazi also discussed the role of domestic and international media in shaping the public’s perception of the oil industry. There is growing apprehension about Uganda’s emerging oil industry due in part by the high levels of corruption witnessed by the population, weak institutions, lack of transparency and failure of other African states in managing natural resources.

 

Dr. Mbabazi concluded by presenting her analysis on whether or not the criticism is justified and presented opportunities to learn from, drawing lessons from the relatively successful case of Botswana. She highlighted that Botswana’s success can largely be traced to the evolution of a genuinely conscious elite leadership which has worked through consultation, consensus-building and inclusive strategies to drive successful development. Although Uganda has taken steps to create competent capacity in the field with a number of qualified specialists in the oil industry, a lot more needs to be done. For Uganda to take full advantage of its oil reserves and become Africa’s first oil success story, it must combat corruption, become more transparent and accountable, strengthen public institutions, make decisions with the public interest in mind and build social cohesion.

 

From the above, various observations by both Dr. Mbabazi and the audience were made. The first was the trans-boundary implications of the oil resource. One audience member asked if Uganda’s oil reserves lying close to the border with the Democratic Republic of Congo (DRC) would cause any conflict. Dr. Mbabazi said the issue might potentially pose a challenge in the future.

 

The second issue raised was the environmental repercussions of processing the oil. Dr. Mbabazi highlighted that the impact on the environment would be high but that it has been taken into consideration by the government which would need strong institutions to put safety measures into place.

 

In conclusion, Dr. Mbabazi highlighted that Uganda is in a unique and fortunate position. It has the opportunity to learn from the mistakes made by other African oil producing countries and has the knowledge available on how to do so. Uganda is undoubtedly at a crossroads; what it does with its oil reserves will have a profound impact on its future.

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