What Does Kenya’s Oil Discovery Mean
for Uganda?[1]
By Jacob Waiswa[2]
The oil debate in Uganda has been most
spectacular in recent years. Available information indicates that the presence
of oil deposits in Uganda was first confirmed in 2006, in the Albertine region,
west of the country, by Heritage Oil, a British international
oil and gas exploration, development and production company. Another discovery
followed in Amuria District in Eastern Uganda early this year (2012). However,
the parallel discovery of oil in the Turkana region in north-west Kenya led to
a moment of dilemma. It, in the clear sense of purpose, demanded knowledge of
the future prospects of oil exploration to the country, and other parties in the
oil business.
Once the
production capacity supersedes demand on the local, regional, and international
market, the country’s bargaining power will lower greatly as much as the prices
and work rewards. The situation compels company owners to relay off workers or
even arouse conditions for industrial strikes and instability in the country,
in response to the low work satisfaction. Also, there will be serious losses
registered by parents, funding institutions, and government after failure to
find the ultimate aim of retaining as much revenue as possible for prosperity
of its people to compensate for the costs of training of its local expertise in
oil production and management. The resulting economic confusion and backslash
eventually threatens national security, which in return unsettles the political
authorities. It will be under such circumstances that the discovery of oil will
seem to be more of doom in effect than not.
The area’s
indigenous population had genuine pride in having oil deposits amidst them. They
had to quickly seek guarantees of percentage benefits for fast development and,
probably, regain their glory, as one of the most economically powerful people
in the country. Unfortunately, the pride has turned out to be illusive as the
prospects of economic dominance spread into a wider regional of Africa. Some
benefits so far obtained from oil companies are meaningful but may soon
depreciate. Such benefits include: scholarships for higher education in oil and
natural resources management, compensation monies, and health facilities. The
concern for ensuring sustainability of these community-based programs may too
cease. The same pride and disappointment was incidentally shared by the rest of
the nation.
The already
existing cancer of corruption has already spread into the nation’s oil economy.
Ethics and integrity in every aspect of business operation are never issued to
consider. Issuance of licenses to oil companies, land grabbing, poor system of
awarding benefits (wrong people benefit) and oil governance leaves the nation
aggrieved. These vices began damaging the oil production process from the
start, which alone predicted failure. With the looming economic uncertainty and
anxieties, the corrupt officials are made even busier with what they know best.
That is, siphoning of oil revenues and demanding bribes from oil companies as
much as they can, privately, before the sector collapses. The same officials
had recklessly run the economy with a view of saving their political faces
using country’s resources so that, later, they could compensate for the losses using
the ‘pending’ oil revenues. Now, with oil wells discoveries elsewhere in the
region, it yields even greater shocks to them and misery to the nation.
Regional dominance and global master-player
approach may be the countries only savior in such circumstances. It could use
those attributes to push through its economic interests. Luckily, at the
moment, Uganda has a great deal of influence in the region, and
internationally. It will only have to strengthen the existing balance of power
and the state of affairs on the global scene. But while doing so, some
countries may emerge to claim or reclaim regional leadership as well. For
example, Tanzania was once a regional leader under Mwalimu Julius Nyerere
(RIP): it may want to reclaim its regional position. If that happens, conflict
of interests could result into regional security crisis, in which some flashes
of wars would set new power positions and, ultimately, new economic positions.
And while Uganda’s regional influence counts
most in winning and dominating the oil market in the region and global scene,
it vividly has no expertise to push through its credentials as an oil exporter.
It has to rely on foreign expertise at the moment. Even the current plan to
install a regional refinery to guarantee maximum oil profits faces a huge
challenge to the country. With much local and international disgust for
political and economic corruption being mirrored to the donor countries, it may
be very perplexing to the would-be foreign investors to trust the country’s
business environment. Besides, a lot of options exist around the region and
Africa in general. The so-called investors could be reluctant to invest in
Uganda where no experience of successful oil production has ever been
registered, where poor governance is reflected in oil production, and where the
country risks security breaches, in preference for most predictably secure economies.
However, if the regional countries cooperate in
matters of oil production, management, and trade under the East African Community
(EAC) and Common Market for Eastern and Southern Africa (COMESA), stability of
oil prices, and national economy could be ensured and sustained for the benefit
of the populace. This is so because there would be freedom of movement, common
decisions on prices and benefits, and preferential treatment to traders
operating within the regions. As it is already the case, staff of oil companies
will be moved to work anywhere in the region or the job applicants could choose
to apply and work in any of the member countries. Generally, by so doing, the
threat to peace and security of the regions, earlier highlighted, would be
under check. The government of Uganda has already showed great wisdom in its
preliminary work of facilitating regional integration and strengthening
existing structures in those regional bodies.
It will be important as well to maintain a
vibrant agriculture sector, without which even the oil works would not survive;
as they would need food and energy to sustain work needs. The food must be one
that is regionally produced to increase affordability and accessibility by the
widest population. Understandably, if the booming oil business continues to
offset food production, famine or high prices of food could be the order of the
day. Besides, inflation will increase the cost of production and lower savings.
It will thus be irrational to specialize in oil production and forget all about
agriculture, which explains well our economic survival history.
Generally, for long the government of Uganda
has neglected the development of renewable and appropriate technologies, and
hardly has it put energies and financial resources in research and innovations.
It only waits by the end of the road for individual citizens’ sweat and
achievement to subsequently claim and consider it as its own; by arguing that
it created the conditions of peace for that person or people to thrive.
It is widely believed that the discovery of
minerals such as oil never goes without some form of colonialism manifested
through the invasion of multinational firms in any such country. For some time
the authorities have coincidentally expressed great hunger for them. Often the
multinational firms are followed into oil producing countries by economic
security agencies from their respective governments. And because these firms
come from different countries, they begin to struggle for favours from indigenous
authorities. If the day’s authorities run out of favor of any one of them, the
affected country uses its military resources to overthrow the authorities in
preference for one (usually the country’s local opposition) that will champion
its economic goals. The likes of Democratic Republic of Congo (DRC) and former
Sudan have already gone through a similar cycle.
Indeed the discovery of oil in Kenya creates a
dilemma for Uganda. This calls for more sophisticated means to carefully manage
the resource, so that it still fulfills the country’s hopes and prevent
unnecessary economic and political shocks. Among them are strengthening efforts
towards regional and international cooperation, and promotion of rational and
pro-citizen or pro-nation foreign investment. While that happens it is
important as well that the country remains aware of the importances that lie in
agribusiness investment, and in supporting research and innovations.
[1] This article has been written and is to be submitted
as part of the requirements to apply for Oil in Uganda Staff Writer Vacancy at
Actionaid.
[2] Jacob Waiswa is Peace Researcher under the Peace and
Conflict Programme, Makerere University, a Private Consultant Under Dishma
Inc., a Technical Officer –Programme Development at Union of Community
development Volunteers (UCDV), with Interest in Behavioural Sciences.
