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Uganda’s hope for transparent oil development wanes

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By Frank Mutulu

Kampala, UGANDA – Exactly seven years ago, October 2006, Ugandan President Yoweri Museveni’s announcement – that Australian oil exploration company Hardman Resources had discovered oil in the western region of the country – brought hope to a country in dire need.

From top government officials to peasants deep in the countryside, Museveni’s good news renewed anticipation over the future cash returns of the East African country’s oil and gas industry, whose exploration began in earnest in western Uganda in 1989.

Uganda pushed for transparent and open oil development with the memory of Congo and Nigeria’s bloody wars over black gold still vivid. The world believed Uganda would avoid the resource curse. It would be different.

In 2008, the government through a consultative process formulated an impressive National Oil and Gas Policy that impressed everyone. The policy factored in global best practices and if implemented would rival the West in terms of transparency and accountability. It articulated functions for all government institutions with meticulous separation of powers. Licensing would factor oil companies’ environmental history among other vital aspects.

Five years later the policy remains just that. A policy document that has been revised to dilute the lofty 2008 blueprint. That’s where hope for the ‘Pearl of Africa’ began waning.

When freelance writer Nithin Coca visited Kampala in 2012 and asked Ugandans about oil development, many laughed, saying, “The resource curse? We’re already in the resource curse.”

Corruption, the behavioral monster that like a cancer rears its ugly face in developing countries, threatens Uganda’s next big thing and departure from agriculture, its mainstay income earner. Effective oil development will earn Uganda an estimated $2 billion in annual revenues.

“The problem, which I think donors understand but can’t do much about, is that in Uganda and elsewhere in Africa corruption doesn’t begin or end with oil. It has long been part of the fabric of political society to make an extra buck. But a shift in mentality takes more than just a few years to happen,” wrote Amrit Naresh in a published article on Open Oil’s website, a firm that advocates for transparency in the oil industry.

Ugandan officials have already been implicated in several oil-related corruption scandals involving millions of dollars from oil companies. Those in the highest echelons of power are not unscathed.

Leaked U.S. diplomatic cables in 2011, courtesy of whistle-blower website Wikileaks, indicated the most visible oil company operating in Uganda, Tullow Oil (UK), alleged that President Museveni received personal payments from ENI, an Italian oil firm.

“General Yoweri Museveni. To get money from a Muzungu [a white man], or anybody, for my personal use, is contempt of the highest order,” was the President’s response to the leaked cables, in an impromptu press conference.

Similarly, other government officials mentioned in oil scandals, including the prime minister and Tullow Oil as an entity have refuted the allegations but Ugandans believe that corruption will blow away proceeds from oil, as chaff from rice.

“…The discovery of oil is no guarantee that the strongly entrenched structures of poverty will be uprooted, or that the fruits of development will be enjoyed by everybody. Rather, it presents a skewed platform of risk and reward,” said Dr. Rose Nakayi, a lecturer at Uganda’s Makerere University, School of Law.

“The oil ‘blessing’ is therefore likely to be empowering for already privileged groups and disempowering to the majority poor.”

Nakayi argues that poverty will not be eradicated but a new form will be produced. She gives an example of Hoima, Uganda’s oil boom town near the Albertine oil-rich region, where a land-dependent peasant is bought out by a wealthy tycoon.

She explained, “He celebrates his new status as a ‘millionaire.’ He marries a second wife, and also purchases a motorcycle (boda boda). He has lost ‘property’ (land and house) and acquired, among others, a chattel. He has changed from being a ‘rich-poor-man’ to a ‘poor-rich-man’. If the motorcycle is stolen tomorrow, he will still have to struggle; earn enough to maintain the rented house, new wife and extended family.”

While Nakayi’s message is veiled, some Ugandans, such as Cissy Kagaba, Executive Director of Anti Corruption Coalition Uganda, have been bolder.

“I don’t want to be a doomsday prophet but the future of the oil industry is bleak. We shall not achieve our revenues, the money will be stolen and eaten by the connected few,” Kagaba said as reported by AllAfrica.com.

Frank Mutulu is The Atlantic Post’s East Africa Correspondent, based in Nairobi, Kenya. 

Posted on October 16, 2013

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