In John Ghazvinian’s highly insightful book ‘Untapped’, he states ‘many people are aware there is seriously big money to be made from oil in Africa, but people are also aware that big money has usually brought serious misery for Africa’s people’.
Uganda lies at a crossroads and lively civil society groups, media and even US analysts offer foreboding warnings.
The decisions taken now could lead to future prosperity, democratisation and regional cooperation, or the onset of the ‘oil curse’, a blend of stagnation, autocracy and regional disintegration.
Oil will flex business muscles from early 2010 and in time petro-dollars will flood the national purse; Uganda is set to change but will it be blood for oil or black gold?
The ‘oil curse’ can be best understood by considering Nigeria, a country in which oil earnings from 1970 have amounted to $350 billion but have resulted in only increasing acute poverty. Oil profits have triggered a vicious cycle of conflict, corruption and an atrophy of traditional export goods.
Uganda does have an advantage, their exploitation is relatively late, the pitfalls of oil earnings are well understood and they are treading carefully.
The Ugandan government refuses to concede control of production, delaying projected 2009 start dates in their determination to avoid the export of crude, seen as the beginning of the vicious cycle of decline. They face embittered oil companies, but this foresight could well fuel Uganda’s equitable development.
These actions have been accompanied with the right words. Museveni is determined that oil will resolve Uganda’s energy crisis, freeing business from the frequent power shortages.
He has warned that oil profits will not be used to buy champagne, a reference to oil rich Gabon who in 1984 became the highest per-capita consumer of champagne.
The government has also promised to ensure protection of existent agriculture and industry, avoiding the sluggish dependence on exported oil.
Uganda cannot afford to squander resources, as a country in which 93% of the population continues to suffer from the ruthless inaccessibility to electricity. It is this need and opportunity that provokes alarm at the naked similarities Uganda suffers to other oil producing states, who failed.
Transparency is a crucial component to avoid corruption. This is an aspect in which the Ugandan government have been reluctant to concede information, which given the number of Ugandan ministers ensnared in corruption scandals gives cause for concern.
The government has refused to declare the ‘Production Sharing Agreements’, inducing frenetic activity as the political opposition apply to the International Transparency watchdog to demand access to the information.
This is accompanied by disregard to the local ‘oil producing’ communities, an alarming prospect for any prospective oil company familiar with the marauding gangs of the Niger delta.
The local Banyoro community are demanding a significant proportion of oil profits to be invested directly into their affected community.
This has not been addressed.
Museveni described the discovery of oil in Uganda as ‘the work of God’ in 2006 and it certainly offers fresh prospects for the afflicted nation, but it comes with a solemn tag.