Since the discovery of oil, every Ugandan that I have talked with – minister, senior civil servant or peasant – is confident that Uganda will soon make poverty history. They are convinced that enough jobs will be created and abundant foreign exchange will enable the country to import all it wants. Uganda is expected to join the ranks of Asian tigers and dragons soon.
Since the discovery of oil, every Ugandan that I have talked with – minister, senior civil servant or peasant – is confident that Uganda will soon make poverty history. They are convinced that enough jobs will be created and abundant foreign exchange will enable the country to import all it wants. Uganda is expected to join the ranks of Asian tigers and dragons soon.
To speed up oil production, national priorities are expected to shift towards the oil sector, which raises three problems. Uganda will become dependent on a single raw commodity – which like other commodities – is vulnerable to price fluctuations and will compete with emerging bio-fuels and renewable sources of energy – driving down oil prices.
Fossil fuel has already experienced price fluctuations – in the 1980s and right now December 2008 – because of low demand.
Ugandans know full well how fluctuating export prices adversely affect government revenue and household incomes. Therefore a diversified economy combining manufacturing, agriculture, tourism and oil would be the best development model to apply and minimize instability.
Before colonialism, communities in east and central Africa had developed independent, integrated and self-sustaining economies. The region had vibrant industrial and agricultural sectors. At the family level, mixed cropping was the norm to stabilize output.
The incorporation of African countries into the global economy at the start of the twentieth century destroyed pre-existing economic structures and commercial arrangements.
African countries began to produce raw materials – in some cases one commodity only like peanuts in Gambia and Senegal and Copper in Zambia – in exchange for manufactured products, experiencing unfavorable terms of trade and balance of payments difficulties – hence heavy borrowing.
Uganda originally produced cotton and later coffee, tea and tobacco. She dropped the production of manufactured products because she was more efficient in the production of raw materials than manufactured products as determined by colonial authorities. Uganda’s vibrant pre-colonial manufacturing sector collapsed – completely.
Attempts to revive full-scale industrialization were discouraged by foreign advisors from the World Bank, United Nations Industrial Organization (UNIDO) and the Commonwealth in preference for diversification of the agricultural sector which has not worked under the NRM government since the 1990s.
Besides, much of the revenue from exports, donations and remittances has disappeared into the pockets of a few highly placed and well connected Ugandans.
Revenue from Uganda’s oil is likely to suffer the ‘curse’ of Africa’s natural resources.
Equatorial Guinea with a population of half a million is the third largest oil producer in Sub-Saharan Africa after Nigeria and Angola. In per capita terms, Equatorial Guinea is one of the richest countries in Africa. Yet the majority of the people remain among the poorest in the world.
Oil revenue has disappeared into the pockets of those related to the president. Thus Equatorial Guinea exemplifies Africa’s resource curse – the paradox by which nations rich in oil and other natural resources tend to suffer rather than benefit.
The abundance of ‘easy money’ has also undermined healthy political and economic developments.
Although Nigeria’s oil revenue is in billions of dollars, poverty is worse today than before oil was discovered. Environmental degradation and conflict in oil rich areas have intensified.
Angola – another African country endowed with natural wealth – is among nations at the bottom of the human development index. Some 70 percent of the population is below the poverty line, 80 percent has no access to basic medical care, life expectancy at birth hovers around forty years and some thirty percent of children die before their fifth birthday. Credible reports have pointed out that some 35 percent of government oil revenue never makes it to the public budget – due to corruption.
Given the high level of corruption in Uganda and the demand for expensive high-tech items like the US$ 50 million presidential jet – that supersedes jets of most world leaders from rich countries – there is no way Uganda’s oil revenue will trickle down to the ordinary people to end poverty.
Trickle down can happen only if the people of Uganda become bold and demand government’s transparency and accountability.