Kampala — Uganda should invest oil revenues in Sovereign Wealth Fund (SWF) and at least developing one new economy, if it is to avoid the so called oil curse, oil experts have urged.
Experts contend that the development could be geared to areas like tourism, real estate or airlines so long as it is targeted to particular activities especially projects that bring return to the country.
"Oil is not a curse. I know people who have been blessed with it. It will be a curse for those who have been irresponsible in managing it," says Mr Israel Aye, a Partner with Sterling Partnership Legal Practitioners of Lagos, Nigeria.
"Oil can be good to you if you are good to it and bad to you if you are bad at it. It is a matter of being a responsible steward"
Speaking at the Oil and Gas Contracting seminar organised by International Law Institute (ILI), Aye argues that resource rich countries like Uganda should make the best of their discoveries.
"Take one thing and be the best at it. Ethiopia for example, took aviation and became big at it. The only hindrance Uganda would have is saying that they need seed money but today they have seed money and that is oil" Aye said.
Sovereign Wealth Fund is a pool of money derived from a country's reserves, which are set aside for investment purposes that will benefit the country's economy and citizens.
The funding for a sovereign wealth fund comes from revenue generated from the exports of natural resources. It can also come from central bank reserves that accumulate as a result of budget and trade surpluses.
Uganda has already found commercially-viable quantities of oil in the Albertine Graben in western Uganda. Albertine Graben is the only seismic active area in East Africa.
It stretches from the border of Uganda, Sudan and the Democratic Republic of Congo (DRC) in the north to Lake Edward on the Uganda-DRC border in the south-a width of 45 km and distance of over 500 kilometers and an area of about 23,000 square kilometers.
With only 30% of the graben explored, oil companies have already found more than 2.5 billion barrels of oil. Some analysts estimate that Uganda's Albertine Graben may hold more than 6 billion barrels of oil.
ILI Executive Director, Mr Swithin Munyantwali, says the oil and gas development is crucial towards the goal for countries to ensure that agreements signed with developers in this sector represent the full range of natural interests.
To do so, Munyantwali says, relevant and important laws must be drafted and implemented and that government officials representing the state must know the full extent of their legal commitments.
"Today as we see the effects of poor economic planning globally, there is an urgent need to ensure that we prudently exploit our oil and gas resources so that we can support needed infrastructure and other projects that will allow our region to claim its rightful place as a legitimate global economic powerhouse," Munyantwali said.
International Law Institute was founded on the principles of putting developing countries on a much better footing in the management of their affairs and in dealing with the more developed countries.