- Major oil fields are being developed, refineries and an oil pipeline to the coast are planned and large amounts of petrodollars soon will flow into Uganda's strained budgets. But lack of economic transparency and very poor public financial administration raise concerns of an "oil curse" in Uganda.
The first Ugandan oil has already been produced, though at a very small scale. But apart from that, there is nothing small-scaled over Uganda's current entry in the oil age.
Oil companies speak about some of the largest oil deposits in Africa at large, located around Uganda's Lake Albert. The potentials of Uganda's oil fields are emphasised by the interest they awake in some of the world's leading oil companies. Exxon Mobil (USA), Total (France), ENI (Italy) and the China National Offshore Oil Company all want to be part of this development.
Large investments are already been made or are planned in Uganda's infrastructure. Within few years, several refineries and a major oil pipeline running from Uganda to ports at the Kenyan coast are to be fuelled by the new oil fields. Deals worth billions of US dollars have been signed.
But there are concerns. Concerns that Uganda and its limited finances are not ready for an oil economy. Concerns that Uganda may follow the Nigerian route into the "oil curse", fuelling corruption and power abuse instead of financing development.
The Kampala parliament shares these concerns, at least the opposition minority. MPs have demanded transparency and a possibility to look into the many contracts already signed and referred to.
MPs and journalists have even joined forces in applying for a court order to force government to disclose details of a controversial agreement with the British Tullow Oil company. But in February, the court agreed with government secrecy, stating "national security" reasons. Transparency is not secured by Ugandan legislation.
Also financial experts are concerned. The International Monetary Fund (IMF), in a seldom open criticism today warned Uganda about the "oil curse". Martine Guerguil, IMF mission chief for Uganda, said the country is already suffering from a "pervasive weaknesses in public financial administration."
The Ugandan economy was "at an important juncture" as it was entering the oil era. "Uganda needs to boost non-oil revenue and bolster its institutional and financial capacities to avoid the 'oil curse'. Oil will bring substantial revenue, but only for a limited number of years. Channelling these resources in a careful and transparent manner is key to maintain macroeconomic stability and raise living standards in a durable way," Ms Guerguil warned.
"In an oil-exporting economy, fiscal policy plays an even more central role in maintaining macroeconomic stability," she continued. "It is thus all the more important to start putting in place processes that prevent the inappropriate use of public resources and raise Uganda's ability to invest in itself."
Ugandan authorities, however, to a lessening degree are looking to the IMF for advice on how to handle the upcoming oil economy. President Yoweri Museveni has looked to another place for inspiration.
Last month, Uganda sent a special envoy to Nigeria's Acting President Goodluck Jonathan. In Abuja, the two countries agreed to "partner in the area of capacity building in the oil and gas sector." Ugandan envoy Peters Lokeris used the opportunity to welcome Nigerian oil companies to invest in Uganda.
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