3 May 2017

Africa: Obiang Visit - Did Museveni Get Useful Advice On Oil?

Photo: The Observer
President signs a painting bearing his portrait and Obiang's
analysis

What expert advice could Uganda possibly get from Equatorial Guinea, a small oil-rich West African nation with a dodgy leadership record, on how to manage our oil resource well?

This question was whispered quietly between some of the people who attended this this year's oil and gas conference last week. Those whispers filled the air even as President Museveni sauntered into Serena hotel's Victoria hall with his counterpart President Obiang Nguema Mbasogo of Equatorial Guinea, the event's main guest.

Museveni lauded Nguema for using oil to lift his country from "poverty to one of the fastest-growing economies in Africa."

Museveni added: "It is important to note that the transformation of Equatorial Guinea has been made possible through the proper utilization of their oil and gas."

Obiang, on his part, urged Uganda to be careful when negotiating oil and gas deals. He said whereas oil is a good blessing to nations that discover it, there are times when it becomes a curse.

"Oil can be linked to honey. Honey attracts many bees but some of those bees are the bad ones. Uganda needs to be vigilant to sieve the bad from the good," he warned, according to a State House statement.

But is Guinea's experience one that Uganda would want to epitomize?

EQUATORIAL GUINEA RECORD

Experience on the ground shows Equatorial Guinea has mismanaged its resource and Uganda should take Nguema's advice with a pinch of salt. Paul Lakuma, a research fellow at the Makerere University-based Economic Policy Research Centre (EPRC), told The Observer that Uganda should learn from Equatorial Guinea's mismanagement so it can manage its oil better.

"Even bad [experiences] are good lessons so that you don't repeat the same bad mistakes," Lakuma said. "The best student is one who learns from the mistakes of others."

According to the Natural Resource Governance Institute (NRGI), which tracks usage of natural resources in different countries, Obiang has performed poorly on all the parameters of oil management. Of the 58 countries ranked in natural resource management globally, Equatorial Guinea is ranked 56th.

"While Equatorial Guinea's GDP per capita is similar to many highly developed countries, more than three-quarters of its population lives in poverty, and the government has been widely criticized for the misuse of oil revenues," says the institute on its website.

UK's Financial Times has quoted Tutu Alicante, of the US-based Equatorial Guinea Justice campaign group, saying there are two realities there.

"It has the highest GDP per capita but also the widest gap between rich and poor people," it said in 2014.

This means Equatorial Guinea's oil riches have not been used to improve the lives of the ordinary people but to enrich the connected few. The World Bank puts GDP per capita in Equatorial Guinea at $11,120, ranking among the first world countries. This, however, does not mean everyone there earns that money - some of her people go hungry.

The country, which discovered oil in 1995, is the third-largest oil producer in sub-Saharan Africa - after Nigeria and Angola - supplying 304,000 barrels a day in 2011. This dropped to just above 250,000 barrels a day in the last few years, according to media reports.

Its oil and gas revenues were estimated at more than $3bn, accounting for 67 per cent of government revenues and 47 per cent of gross domestic product (GDP), said NRGI.

POOR RETURNS

NRGI says Equatorial Guinea does not have clear institutional and legal setting managing its oil. It does not provide comprehensive data on any aspect of the extractive sector and has "extremely poor government oversight and a general lack of reporting requirements."

The country is near the bottom of global rankings of government effectiveness, budgetary openness, and corruption control. Health, education and other human development indicators are at the lowest in Equatorial Guinea.

In 2013, France auctioned nine luxury cars it had seized from companies linked to Teodoro Nguema Obiang, the eldest son of Mbasogo, as part of a money-laundering probe. The USA has targeted Obiang, accusing him of building a $100m fortune through corruption and money-laundering.

Last February, Uganda sent at least 100 soldiers to the country, apparently to help in capacity building of the Equatorial Guinea soldiers, exemplifying Museveni's newfound comfort in the world's longest serving president.

Last week, Nguema said he would help Uganda in "its exploration of the oil and gas industry using the experience of Equatorial Guinea in hydrocarbons and gas."

Uganda has at least 6.5bn barrels of oil with 1.8bn barrels commercially viable. The country expects production to start by 2020. Equatorial Guinea is a clear testament of where a resource has not helped its people and if Uganda chooses to take Obiang's advice, it should be on "do as I say, not as I do" basis.

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