Angelo Izama
28 October 2009
opinion
Optimists suggest that the negative outcomes of oil programmes 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 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. 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, I'm 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 it's discovered. Two related problems have recently appeared here in Uganda: 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 illustrates the need for independent scrutiny of the agreements. 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.
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There is no such a thing as Oil Curse, but there such a thing as Ignorance and Corruption Curse, the inability of African countries to control the harnessing and exploitation of its resources - be they oil or metals - for Africa's own benefit. The new scramble for African resources is now well under way. The firt time the exploiters sent emissaries under the guise of exporting religion, then the missionaries asked native Africans to close their eyes to pray, but only to discover on opening their eyes, their land was gone. Now they have transnational actors from propestecting, economic planners, to financial investors and policy framers, working with corrupt African technocrats and politicians doing the wanton exploitation. By making judicious unscrupulous financial arrangement favourable to these transnational entities, such as inflated interests rates on the ponzi schemers and their corrupt African collaborators are siphoning the oil boom even before a single well is sank. After the resources are depleted the Africans are left poorer, sicker - from the environmental degradation, and cynically bitter or dead. Oil only stands out, from other resources suchh as copper, because of the unprecedented swift and fast pace and magnitude (of money), and equality fast pace of destruction it has wrought.
The oil curse is really a money curse. Money competes with money. The money that comes in from exportation of any resource will damage any economy by outbidding the local economy for labor and all the other resources money buys. If you let the money in wholesale, it will wreck you. If you keep that money out, what's the use of obtaining it? Foreign money is useful only in small quantities: enough to purchase those needs that it does not make sense to produce for yourself. Your goal should be to see that those needs are few and far between. Go for independence, and put export on the back burner. Uganda's government is working on a whole bunch of "right tracks". Unfortunately, being an oil exporter is not one of them.