Optimists suggest that the negative outcomes of oil programs of countries like Nigeria, Chad, Sudan, Angola, Equatorial Guinea that are the poster child of the “oil curse” can be “potentially” avoided in Uganda. Their argument is that since it’s happened elsewhere why should it happen here unless we are caught sleeping. Unfortunately there are few examples outside South Africa (Botswana is also often cited) on the continent of prudent management of natural resources. Many countries could have avoided the curse but have not.
Hoping for a better future is normal and healthy, but predicting one- as some optimists in Uganda have- is another matter altogether. Those who attempt- and they are invariably politicians or persons at the fringes of the oil industry-arrive at such conclusions by replacing analogy with analysis. It is not unusual to hear commentators say Uganda could go the way of Norway and not say Gabon- where incidentally, the oil company Tullow is the market leader. But what is the basis of this claim? Some technocrats I have spoken to are ebullient about the steps Uganda has taken to apply best practices to the oil sector.
Their enthusiasm and hard work notwithstanding the capacity of the Ugandan state remains woefully inadequate in many areas and reform programmes have not been encouraging either. Few processes succeed and are sustained in the management of public affairs from procurement to quality control. Most experts blame this on political corruption. Billions of shillings in local taxes and international aid have been squandered over the last two decades while roads, schools and hospitals suffer a malaise of poor standards.
Even those who are optimistic about how oil resources can change this by providing new money must admit that evidence has shown it’s not the lack of money alone responsible for the lethargy in state performance. Oil is a resource like any other and there is no reason to expect that the criticisms levelled today on the management of the public purse and the attendant problems of corruption, should not be applied to it. And to be fair to those who are optimistic- one could also argue that we could also apply the rate of reform to this situation.
Unfortunately again the picture is not good. Despite numerous institutions and global best practices applied by some of the finest minds in Uganda and around the world- progress in prudent management has been slow. Government consultants can fill a room with failed policies and another with new experiments being tried. Most countries that are examples of progressive management of natural resources exhibit better governance and accountability characteristics than those suffering from the oil curse- it’s that simple. Indeed take two countries that do not have oil and the one with better governance often does better.
An upcoming study on this subject am told will show that when two countries with the same governance systems are compared- even if one does discover oil- years later the social indicators remain the same because oil does not work a miracle and suddenly post more accountable governments in countries where its discovered. In Uganda problems have appeared already in two areas related to the governance deficiency here; the secrecy over Uganda’s oil agreements and the management of land rights in the oil zones.
A recent audit of expense claims by one oil company which are allowed to recover the cost of their investment showed they were reportedly charging the government for corporate social responsibility programmes such as schools built for the local community. This is a red herring and illustrates the need for independent scrutiny of the agreements. Meanwhile it appears that the flash point of violence in the oil zones will come not because of oil but land. A “land rush” which dubiously preceded the announcement of oil find has sequestered large areas straining the relationship between locals and new interests on the land.